United States Notes, Inflation, Deflation, Bank of North Dakota, Fractional-Reserve, Socialism, Monetarism, Chicago School, Austrian School, Federal Reserve

I received some intelligent questions concerning using United States Notes and doing away with the National Debt, in addition to some questions regarding the Bank of North Dakota and other issues/points.

Here they are.

Paul Eggs [wrote]

Very nice read Tom. I am so far behind you guys, so if my question is dumb please just reply moron to this thread!!

If what you are saying is true and debt free money works ... How do you know how much to put in circulation? Is it directly proportioned to population?

Also The Bank of ND has earned profits that go directly back to the state for roads and services... etc... Does there system allow fractional reserve lending? If so what ratio? Based on the surplus of money in ND why doesnt each state have it's own central bank and give the interest back to the state? is this a form of "socialism"?

Again if these questions are remedial maybe you could post link and I will try to figure it out myself.

Sincerest Thanks [paragraphing line-breaks added]

Paul is referring there to my post entitled, "Bullion Bozos: Tally Sticks, Fiat, Bill Still, Gold, Silver, and Banksters."

Here's my reply to Paul's questions.

Hi Paul,

Thanks for the compliment about my post.

As for how to avoid inflation or deflation, the variables are many; but they are fairly able to be tracked already. The problems we've seen regarding it largely stem not from a lack of knowing which variables to monitor but rather that politicians have been known to change the things upon which the equations rest.

I remember Max Keiser covering an example in a segment back when he was on Al Jazeera. He explained correctly that the contents, quality, and quantity in the basket of goods used to determine the CPI have changed over time not just because people's choice of desired products changed but so the government could report lower inflation than had actually occurred. I don't recall the exact figures, but the size of a beef steak might be reduced by some percentage, which then would be reflected in the final CPI. Maintaining the same weight and quality of the beef would have reflected a higher rate of inflation. However, there are variables within variables, in that weather and land use and so forth could impact upon beef prices regardless. For instance, I'm a vegan. I switched from being a beefeater (everyday) to zero beef. The more people who might be that, the less beef as an industry might track inflation/deflation. Therefore, it is not necessarily wrong for the content choices within the basket of goods to change. It is though important that value-for-value remain as constant as we are able to get our measurements and interpretations to reflect that and necessarily bearing in mind overall quality of life individually and societally.

For all practical purposes, it is an art form where computer power and honest, careful, unselfish intentions are important — honesty being the most important, since America could assemble a team of people who could do a very reasonable job at setting up a monitoring system that would predict inflation and deflation much as the weather service does now for weather (and getting better in constant terms — laying aside drastic changes such as a super volcano or something).

There is no reason though that if it is constitutionally mandated and if we enforce the provisions that we couldn't have $100 buying essentially the same standard and quality of life 100 years from now. There is also no reason why those with only $100 now to spend couldn't have $200 in the future without inflation. The limitations are truly only in our hearts.

All other things being equal, doubling the money supply of an economy that doubles means zero inflation or deflation. How large do we want the economy/supply to become? Does it need to be tied to population? It doesn't appear to me that it does. If you see anything I'm missing here, let me know.

All of this though raises huge issues concerning where the lines would have to be drawn regarding the mixed-economy. If we started seeing inflation, by what mechanism would we reduce the money supply? Who would hold the people's money? How would the reduction be spread across the economy? Would the reduction in people's holdings be handled on a flat scale or a sliding (progressive) scale such as with income-tax brackets now?

Personally and as a Christian of the non-Calvinist variety, I'm not for a flat percentage taking from the poor. The poor always suffer more with flat schemes, and those schemes set the poor back for no good reason.

Many of the issues I've raised here are technicalities for continued debate and discussion; but in any case, the debate should be public. The days must end and soon when J. P. Morgan types make the decisions behind closed doors and in a contrived rush giving the excuse that the people are too stupid.

As for your question about the Bank of North Dakota (BND), I'm not sure what you're asking when you say does it allow fractional-reserve lending.

If you look at their most recent annual report, you will see that in the broadest terms, total loans were $2,845,860,000 on deposits of $3,021,234,000. That doesn't appear to be fractional-reserve banking to me. However, you'd have to look at the actual legislation and case law, if any, to determine whether or not the bank is prohibited from employing fractional-reserve banking.

Yes, BND is definitely a socialistic island, and people such as Ellen Brown have been calling for the various states to do exactly what you've asked about. I've written posts trying to draw attention to the possibility especially for California for instance. They are in very serious trouble, and California is huge. If CA could convert to the BND model, it would go a long way to converting the nation and world.

The banksters though will fight it tooth and nail and likely worse. There really are sociopaths within that system sitting on the top floors in the premium corner offices. They definitely expend the lives of others to hold onto and expand their private empires. It's sheer evil.

I have nothing against socialism over total privatization. My final view though is that people turn away from coercion across-the-board.

As for whether or not the BND model is the best, I say that it is not; however, it is better than current practices.

You should understand that I have a Christian worldview that is not widely shared. I don't always raise that when writing about eliminating the national debt, which in any case, is the right thing to do. An atheist certainly would not be wrong from a Christian perspective were that atheist to be for eliminating the national debt.

The national debt is the single most destructive aspect in the American and world economy [excluding militarism and such], but zero-reserve banking isn't far behind it and is nevertheless tied to it now. Monetarism, per the Chicago School, et al., is wrong; and turning the economy over to the Austrian School of economics would be vastly worst than Monetarism.

Going to United States Notes (improved and enhanced) is not a panacea. It is only a stepping stone. There is though no major obstacle in terms of the average intelligence level of the American people that should prevent them from readily seeing and comprehending the distinct advantages over the current Federal Reserve System or Austrianism, which is just a recipe for totalitarian monopoly finally residing in one person. The type of person who would arrive there based upon the spirit of individual, private acquisitiveness is just not going to be beneficial and bountiful for the people as a whole.

We really do need to care about the general welfare. We really do need to take the reins away from the sociopathic.

I hope this has done justice to your inquiry.

I may turn it into a blog post since your questions are likely to be shared by the more intelligent and inquisitive. So, I didn't reply with "moron."

Peace,

Tom

You may also be interested in: "Gold-Bug Austrian Batted Zero: Ron Paul, Competing Currencies: Free Competition in Currency Act."

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  • Tom Usher

    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
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