Monetary Reform

As a committed American revolutionary and one who accepts Lord Acton's warning about the corrupting effects of concentrated power, especially over the power over money and ownership of productive capital, I do not ignore the implications of Baron Mayer Amschel Rothschild when he proclaimed, "Let me issue and control a nation’s money and I care not who writes the laws." (Frederick Merton, The Rothschilds, A Family Portrait, New York: Atheneum, 1962.) There are no realistic checks on the power over money in the system advocated by Robertson. Combining the monopoly power over money with a monopoly over the nightsticks, jails and other normal instruments of state coercive power is a certain formula for totalitarianism, even if the elite in control of money and state power were Mother Teresas. Power corrupts and as one whose life is dedicated to the design of laws and institutions that systematically diffuse all forms of social and governance power to the level of the individual human being, I find Robertson's solution to the money problem politically naive, socially dangerous and ultimately the opposite of economic justice, as we in the Just Third Way (http://www.cesj.org/thirdway/comparison3rdway.htm) would define that term. (http://www.cesj.org/definitions/glossary.html#Anchor-Justice-4127)

I agree with Robertson that modern money (i.e., so-called fiat money) is created out of thin air, and I believe that money should be used in ways that enhance the sanctity of life and the sovereignty (i.e., economic independence) of every human person.

But money is a form of credit and therefore should be backed by something more concrete than the promise of a central authority. It is a contradiction in terms for him to talk about "debt-free" money since in human economic exchanges a buyer is automatically in debt to a seller until the buyer returns something of equal value (or money that can be exchangeable into something of equal value) to the seller.

I see nothing in Robertson that even deals with credit as an essential means by which the poor and middle-income people without savings can be supplied with interest-free and insured capital credit to become owners of the new capital needed in the world to create abundance for all. His solution is that the poor reduce consumption to own capital, a certain formula for a continually growing wealth gap among nations and within nations. He seems not to be at all familiar with Louis Kelso's writings, particularly The New Capitalists: A Proposal for Freeing Economic Growth from the Slavery of Savings (with Mortimer Adler, 1961, downloadable at www.kelsoinstitute.org) and Harold Moulton's The Formation of Capital (Brookings, 1935) And the millions of American workers who have become owners of over 10,000 US companies (and other around the world who emulated them) would never have done so if Kelso and others had not orchestrated a campaign to get laws enacted that democratized capital credit for corporations and cooperatives. Robertson's reforms ignore the socially progressive uses of capital credit and fail to distinguish between good (i.e., productive) and bad (i.e., non-productive or even destructive) uses of credit , as proposed under our Capital Homestead Act.

My response here is not to attack, but to offer a more just, more empowering and effective solution to the injustices inherent in world's monetary system. Our monetary alternative to Robertson's reforms can be read in chapter VII in our book, Capital Homesteading for Every Citizen, which can be downloaded free at http://www.cesj.org/homestead/capitalhomesteading.pdf

Our Center for Economic and Social Justice would be happy to co-sponsor a debate in Washington on our alternative approaches to monetary reform with James Robertson and John Bunzel. Ideally it would be after the ARP event at the Federal Reserve on April 21st, which is absorbing much of our time.

Re: MONETARY: Discussion of Monetary Reform