Posted by WARREN MOSLER on August 13th, 2012
This entry was posted on Monday, August 13th, 2012 at 12:08 pm and is filed under Government Spending.
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I’ve heard that a picture can say a thousand words.
Save America Reply:August 14th, 2012 at 8:19 am
@Ed Rombach,I am gonna post it here too, its that good:
Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of national government. Money possesses no value to the state other than that given to it by circulation…… The government should create issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power. Abraham Lincoln, Senate document 23, 1865.
Ed Rombach Reply:August 14th, 2012 at 8:55 am
Can you provide a link?
Save America Reply:August 14th, 2012 at 9:30 am
http://cpe.us.com/article/famous-monetary-quotes/ According to these guys:
President Abraham Lincoln
Abstract of Lincoln’s Monetary Policy
Library of Congress
No.23, 76th Congress, 1st session, page 91
Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of national government.
Money possesses no value to the state other than that given to it by circulation.
Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money [interest].
No duty is more imperative for the government than the duty it ;owes the people to furnish them with a sound and uniform currency, an of regulating the circulation of the medium of exchange so that labor will be protected from a vicious currency [private bank-created, interest-bearing debt], and commerce will be facilitated by cheap and safe exchanges.
The available supply of gold and silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money intrinsic value that may come into use.
The monetary needs of increasing numbers of people advancing towards higher standards of living can and should be met by the government. Such needs can be met by the issue of national currency and credit through the operation of a national banking system [or designated monetary authority.] The circulation of a medium of exchange issued and backed by the government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by taxation, re-deposit and otherwise. Government has the power to regulate the currency and credit of the nation.
Government should stand behind its currency and credit and the bank deposits of the nation. No individual should suffer a loss of money through depreciation or inflated currency of Bank bankruptcy.
Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by taxation and otherwise, need not and should not borrow capital at interest as a means of financing government work and public enterprises.
The government should create issue and circulate al the currency and credit needed to satisfy the spending power of the government and the buying power of the consumers.
The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity.
By adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government.
Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power.
Sergei Reply:August 14th, 2012 at 9:00 am
Interesting quote. But a quick google says it is fake.
Any link to the primary source?
Ed Rombach Reply:August 14th, 2012 at 10:09 am
Putting aside whether this quote attributed to Abraham Lincoln is real or a fake, it sounds very MMT-like. Anyone care to comment on that?
Save America Reply:August 14th, 2012 at 11:27 am
@Sergei, Come on Ed and Sergei, lets go down the rabbit hole and see where it takes us: So far I have found this: It seems this mcgeer guy wrote a book in the 30′s, and based his book off of policy proposals he got from Lincoln, and the library of congress certified his research?
The above is an abstract of Lincoln’s monetary policy from Mayor McGeer’s Conquest of Poverty and has been certified as correct by the Legislative Reference Service of the Library of Congress at the instance of Hon. Kent Keller, Member of the House of Representatives. See 76th Congress, 1st Session, Jan 3 – Aug 5, 1939, Senate Documents #10304, Vol 3, Senate Document 23, “National Economy and the Banking System of the United States” by Robert L. Owen, presented by Mr. Logan on January 24, 1939, page 91. For those of you who like researching the original, try your local university or state library. Ask if their library is a federal repository. Senate Document 23 will probably be on microfiche. It is much easier to order it in booklet form from Peter Cook, Monetary Science Publishing, Box 86, Wickliffe, OH 44092. Ask for #761001-A, “2076 – Tricentennial U. S. A.
Unless Roosevelt nationalizes the Federal Reserve banking system and uses the power of the American government to do what Lincoln did during the Civil War and what the bankers were permitted by the governments to do during the recent war, viz., to create the purchasing power of government necessary to put the people to work to save the nation, the N.I.R.A. policy will take the United States into the worst economic calamity that it has ever experienced.
MMTer Mcteer, I never heard of the guy, but it is obvious if you read some of his book, he was basing his policy proposals directly off what Lincoln did during the war.
Save America Reply:August 14th, 2012 at 12:12 pm
@Sergei, LOL! Guernsey as the source for Mcgeers MMT memes:
Much of the credit for the Canadian public banking model goes to a Canadian mayor named Gerald Gratton McGeer. He has been largely lost to history, and his book The Conquest of Poverty has been long out of print; but according to local historian Will Abrams, it was McGeer’s lengthy presentations to the Ottawa Common Banking Committee that clarified for bankers, economists and legislators how well a publicly-owned bank could work. McGeer’s model was based on the public banking system of Guernsey, an island state between Britain and France. The Guernsey government began issuing currency to pay for public works as far back as 1816. To this day, its system of publicly-issued money has allowed its inhabitants to maintain full employment and enjoy quality infrastructure, while paying modest taxes and without suffering from price inflation.
LOL! Nothing ever changes, same old tricks, same old problems:
This Commission stands condemned under “the ancient truth” that propounds this economic postulate :
“ When the lucrative profession of usury becomes likewise a post of honour, the State is ruined and the people are doomed to the wretchedness of destitution.”
I cannot see how this Commission can be expected to even consider the establishment of a national banking system empowered to manage public credit, other than to find ways and means of condemning it.
I cannot see how bankers can investigate their own mismanagement.
Nor can I see how this Commission can investigate the management of national currency and public credit during the time that Sir Thomas White (formerly connected with the financial groups closely associated with MacKenzie & Mann and the Canadian Bank of Commerce) was Minister of Finance.
It is impossible to believe that Sir Thomas White and Mr. Leman can, with any degree of comfortable safety, conduct a searching enquiry into the credit peregrinations of Sir Herbert Holt as President of the Royal Bank of Canada ; nor are they likely to disclose the more than significant relations that exist between finance and industry when so prominent an industrialist as Sir Charles Gordon presides over the destinies of the textile industry and the Bank of Montreal.
There is not the least prospect of this Commission investigating and disclosing the truth in detail of the transaction last November wherein the government advanced to the banks $35,000,000 in Dominion legal tender notes by making a double shuffle of Dominion 4% notes, bank credit and legal tender currency notes. At the time the issue was made the Prime Minister declared that :
“ It was in accordance with the idea that the easing of money is highly desirable in the interest of business recovery,”
indicating that credit was tight and would be loosened up.
That commercial Great Britain is no longer willing to accept blindly the blind and misguided leadership of the Bank of England and the author of the Macmillan report is now definitely indicated. As recently as July 20th of the present year I received a letter from the Secretary of the Empire’s most representative commercial and industrial organization, the London Chamber of Commerce, in which he said :
“ I think we all owe a very great debt of gratitude to the American President for having defeated the conspiracy at the Economic Conference to get the world back on to gold. I agree with you, however, that unless he appropriates the national credit in order to give the people of the States the necessary purchasing power to enjoy the vast abundance of real wealth which is at their disposition, his domestic policy must in the long run fail.”
Warren, you are just a reincarnation of this guy, and the circumstances are all a replay of what has come before, philip k Dick was right, we all keep reliving the same disastrous reality over and over and over again! Its groundhog day!
MamMoTh Reply:August 14th, 2012 at 12:15 pm
Look, this is what I was talking about, Paolo Barnard has been successful enough in spreading the MMT word in Italy and the separatists from the North are pushing for a referendum on the Euro. TNext, they will keep the monopoly on the lira and leave the tomatoes to the southerners.
jsn Reply:August 15th, 2012 at 10:45 am
If you read Spaulding’s “History of the Legal Tender Paper Money” about the monetary evolution of the Union in the Civil War you will find MMT, minus the JG, was well understood by the proponents of fiat money and the counter arguments were identical to those we hear today.
Save America Reply:August 15th, 2012 at 11:55 am
@Sergei, JSN, here is Spauldings Legal Tender:
Why do we keep reinventing the wheel. MMT is very old.
JSN you seem familiar with ancient history, what is the key failure that we keep having to learn over and over again this knowledge? If McGeer in the 30′s said the bank of canada would forever be a spearhead forward into modern civilizations banking, but it seems around the 70′s the bank of canada lost out to the sith lords too. He was wrong, the guys in spauldings time were wrong, even if warren made in any progress, history suggests he will eventually lose out as well.
Lost to history, the fate of MMT several times now over the past 200 years, pathetic.
Save America Reply:August 15th, 2012 at 12:38 pm
@Sergei, JSN, the muslims seems to have a similar problem, having to relearn previous instittuional memory:
An abridged version of this article was published in Banker Middle East during November 2002
The contractum trinius was a legal trick used by European merchants in the Middle Ages to allow borrowing at usury, something that the Church fiercely opposed
had read about the contractum trinius some months before first encountering the full documentation behind an Islamic banking murabahah contract.
The above set of legal devices is nothing other than a trick to circumvent riba, a modern day Islamic contractum trinius. The fact that the text of these contracts is so difficult to come by is one shameful fact of Islamic banking. If so clean, why so secretive?
These are all signs that something has gone badly wrong in this industry. But I’m not saying that it is all the fault of the people on the inside. The Western academic establishment is at least partly responsible for the way that the Islamic financiers are thinking. For example, because Brealey and Myers have written a standard text on corporate finance, they are probably as big a force in Islamic finance as Judge Taqi Usmani. It is awfully hard to escape from the value judgements that the overwhelming mass of usury-based finance books contain. That’s why an educated Muslim in Islamic finance can ask his client a shocking question such as ‘what cost of finance are you looking for?’ without thinking twice. He’s been taught by Brealey and Myers that fixed-rate finance plays a part in any ‘good’ financing structure and so off he goes in search of a way to do fixed-rate finance Islamically. The possibility that fixed-rate finance may be completely incompatible with Islam in the first place may not even occur.
But there are two other reasons that prevent Islamic banks from giving up on the doubtful fixed rate products and adopting profit and loss sharing instead. The first is that the clients often prefer to take finance on a fixed rate basis. The second, more overwhelming problem, is the nature of the very business process underlying commercial banking itself.
Even the muslims are FREAKING DOOMED! We are all FREAKING DOOMED! The banksters are squeezing all our crotchez ;)
will someone be excommunicated for this?
Mmteo muttered beneath his breath: “And yet it correlates!”
(Nay, it identifies.)
Jose Guilherme Reply:August 13th, 2012 at 6:26 pm
“Eppur se co-relazionano”?
“It might work in practice, comrade, but it doesn’t work in theory.”
Save America Reply:August 14th, 2012 at 3:00 am
@netbacker, LOL! Hush komrade, in soviet russia, the people will be stomped until the theory is proven correct!
what’s the name of that blog ?
A good read by Ambrose Evans-Pritchard that got me to thinking about how to reconcile the idea of “Savings Desires” with “Demand Leakages”. Some scary comments about potential for WWIII too.
[...] a chart that gets to what I am driving at. I got it from Warren Mosler who spied it on an Italian finance [...]
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