Archive for May 2017

Letter to Les Leopold, author of Runaway Inequality

05/07/2017

Dear Les Leopold,

Thanks very much for your excellent book, Runaway Inequality. I agree that there is no issue more central to survival of democracy than that of runaway inequality.

My question to you is about responses to the problem. You cite a number of things which must be done, such as returning to a progressive income tax structure and refocusing federal expenditures, all of which are important.

But with regard to monetary policy you stop short of the real reform that is needed, namely to revoke the special privileges of banks to create money and return that authority to the people through their government where it constitutionally belongs. That, as I am sure you must know, offers a way to make the investments needed in infrastructure that will boost the economy, providing jobs, without increasing the tax burden and without increasing federal debt.

It also stems the tide of wealth concentration into the hands of the few. The process of wealth concentration acts in many ways, but two of the most fundamental are 1) that interest payments go to banks for every dollar that is created and 2) that interest payments on the government debt go to those wealthy enough to loan to the government. These are both systematic transfers of wealth from the many, the borrowers and the taxpayers, to the few, the lenders.

Even under the enlightened fiscal times after the depression and WWII, wealth was accumulating into the hands of the few. It was just accumulating more slowly than it has with the trickle-down economics that has been in place since 1980. This is starkly shown in two figures from Elizabeth Warrens’ new book, This Fight Is Our Fight, on pages 106 and 146.

State banks are fine, but they simply do not address the problem on which you focus. State banks don’t solve the problems of debt-money creation by private banks and of the rip-off of taxpayers via the national debt. If you nationalized the entire banking system, then at least all of the profits from money creation could go to the public sector. That would be equivalent to nationalizing the creation of money, like the NEED Act proposes, plus nationalizing all banking. But just creating state banks doesn’t do it, and I doubt that you are prepared to propose nationalizing the entire banking system. The conservative solution is to nationalize money creation, as the Constitution calls for, and let the banks remain private, lending money they actually have, like other lenders currently do, rather than creating it out of nothing.

Thanks again for your good work on this important matter.

Sincerely yours,
John N. Howell