Money, Usury, and the New Feudal State (Thurman James)

Thurman James -- World News Trust

Sept. 2, 2009 -- The power to create and issue money ought to be the sole dominion of government and should never reside in the hands of private institutions, but today all new money created in the United States comes into being in the form of loans from corporate banks, not the U.S. Treasury.

One of the major effects of this method of money creation is that enormous wealth ends up under the control of a tiny minority of the people, and those who wield such power get to determine where the money goes and what projects get funded (or opposed).

The U.S. fractional reserve banking system generates new money by allowing private banks to make interest bearing loans to consumers, corporations, and governments; creating money from the ether with only a few strokes of a keyboard. All new money in our economy comes into existence in the form of interest bearing debt.

Only the federal government has the constitutional authority to create money and spend it into circulation without inflationary results. Fractional reserve banking destroys democratic institutions because private banks create money which is then loaned to the government at interest, creating inflation as soon it is enters the marketplace.

According to Stephen Zarlenga, director of the American Monetary Institute, the path to monetary reform is threefold and each change must be enacted simultaneously to work.

First, incorporate the Federal Reserve System into the US Treasury where all new money is created by government as money, not interest-bearing debt, and spent into circulation to promote the general welfare; monitored to be neither inflationary nor deflationary. Second, halt the banks privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit is converted into US government money. Banks then act as intermediaries accepting savings deposits and loaning them out to borrowers; what people think they do now. Third, spend new money into circulation on infrastructure, including education and health care needed for a growing society, starting with the $1.6 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding government at all levels.

Ending fractional reserve banking is critical to any effort in reversing America's headlong rush toward becoming a neo-feudal nation of even greater social inequity and debt serfdom, but monetary reform alone is not the whole solution.

Usury, the charging of excessive interest, turns every monetary transaction into one of debt enthralment, and requires nations to maintain endless economic growth and inflationary expansion of money supplies.

Many ancient cultures strictly regulated interest rates, as did the United States until about 1980. Some nations, predominantly Islamic cultures, consider all forms of interest to be usury and forbid the practice out right. A society that tolerates usury, from their standpoint, multiplies the wealth of the rich at the expense of the poor, who are thereby forced to live in perpetual debt and servitude.

From that perspective it's easy to see why so many devout Muslims are distrustful of western culture. Any honest assessment of modern America reveals that much of our population has indeed become debt serfs, bonded to the wealthy corporate entities that hold their mortgage notes and other debt claims. Personal bankruptcy, once almost unheard of in our culture, is commonplace and families often splinter under the pressure of such overwhelming burdens.

Rather than continue supporting an economic model that enables the destruction of lives for the sake of corporate profits and executive bonuses, perhaps we ought to attack the problem at its root by regulating or abolishing the practice of loaning money at interest altogether.

Strict regulation of lending rates would be an excellent first step in the right direction, but there are other creative methods of financing that should also be explored. In many Arab cultures, rather than charging interest on borrowed money, lending institutions enter into something akin to a business partnership with borrowers and both parties assume a portion of the risk for the duration of the loan.

For instance, if a family wishes to finance a home, the buyers approach a lender and offer a substantial portion of the purchase price, say thirty or forty percent as down payment. The lending institution then purchases the home and both parties enter something resembling a rent to own contract. The family pays the bank an agreed sum each month for the right to occupy the property and ownership transfers incrementally to the family until the lender has recouped it's investment plus a reasonable fee for facilitating the transaction.

Obviously, without strict regulation, lending institutions could still charge borrowers exorbitant fees and then we're right back to the same old problems, but there are still other reforms available that would make such greed-induced behavior much more visible and less appealing to those predisposed to such abusive behavior, but that's another topic entirely.

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Thurman James is an aspiring writer, artist and advocate for peaceful revolution. He seeks real world solutions to real world problems, even when the solutions he finds are far off the beaten American path. He believes in doing what matters, and encouraging others to do the same.

This essay first appeared at An American Heretic