Economy Ellen Brown Original

Ellen Brown: Rather Than Sink Main Street by Raising Interest Rates, the Fed Could Save It. Here’s How. 

The central bank has the tools to help American families suffering from rising food and energy bills right now, with a bit of updating to its rules.
[Kurtis Garbutt / CC BY 2.0]

By Ellen Brown / Original to ScheerPost

Inflation is plaguing consumer markets, putting pressure on the Federal Reserve to raise interest rates to tighten the money supply. But as Rex Nutting writes in a MarketWatch column titled “Why Interest Rates Aren’t Really the Right Tool to Control Inflation”:

It may be heresy to those who think the Fed is all-powerful, but the honest answer is that raising interest rates wouldn’t put out the fire. Short of throwing millions of people out of work in a recession, higher rates wouldn’t bring supply and demand back into balance, a necessary condition for price stability.

The Fed (and those who are clamoring for the Fed to raise rates immediately) have misdiagnosed the problem with the economy and are demanding the wrong kind of medicine. …

Prices are going up because crucial inputs—labor, electronics, energy, housing, transportation—are in short supply. Normally, the way to solve this imbalance would be to give workers and businesses incentives to increase their supply. …

The Fed has been assigned the job of fixing this. Unfortunately, the Fed doesn’t have the tools to do it. Monetary policy works (in theory) by tweaking demand, but it has no direct impact on supply.

The Dire Effects of the “Wrong Kind of Medicine”

Not only will raising interest rates not fix the supply crisis, but according to Alasdair Macleod, head of research at GoldMoney in London, U.K., that wrong medicine is likely to trigger the next financial crisis. He thinks it is imminent and will start in Europe, where negative interest rates brought the cost of doing repo trades to zero. As a result, the European repo market is now over €10 trillion ($11.4 trillion), far more than the capital available to unwind it (to reverse or close the trades). Rising interest rates will trigger that unwinding, says MacLeod, and the ECB lacks the tools to avoid the resulting crisis. Meanwhile, oil prices have risen over 50% and natural gas over 60% in Europe in the past year, “due to a supply crisis of its governments’ own making,” writes Macleod. Member governments are heavily in debt, yet European Central Bank president Christine Lagarde wants to borrow more to finance the transition to carbon neutral. Macleod writes darkly

As for the euro’s future, it seems unlikely that the ECB has the capability of dealing with the crisis that will unfold.… The deconstruction of this shabby arrangement should prove the end of the euro and possibly of the European Union itself. 

German journalist Ernst Wolff paints an even darker scenario. He contends that the globalist European leaders heading the World Economic Forum (WEF) are crashing the global economy intentionally, in order to clear the chessboard for the WEF’s “Great Reset.” They’re doing this, he says, because they have to. The global bankers’ boom-and-bust financial system is now so top-heavy and debt-laden that it cannot be sustained. Problem/reaction/solution: desperate people will welcome the WEF’s Great Reset, in which they will own nothing but will be offered a marginally adequate Universal Basic Income with onerous strings attached. This subsistence income will be doled out through a central bank digital currency (CBDC) controlled nationally by the country’s central bank and globally by the IMF as issuer of the reserve currency and, ultimately, of a single global currency. 

There are indications, however, that the U.S. Fed is not going along with this Eurocentric globalist push. Financial blogger Tom Luongo points to Jerome Powell’s clash with Christine Lagarde in May last year over her insistence that central banks require private banks to monitor the business of their clients, and to the Fed’s raising its repo rate to 0.25% in June, attracting investors earning zero interest in the European repo market into the U.S. dollar and away from the euro. Luongo suggests that the Fed’s resistance to the globalist plan comes from the Wall Street banks that own the New York Fed, which are not willing to give up the U.S. dollar’s status as global reserve currency and could be driven out of business by a CBDC distributed directly through individual central bank accounts. 

Preserving the current Wall Street-dominated system, however, hardly helps Main Street. The pandemic added $5 trillion to the fortunes of the billionaire class; but government-instituted lockdowns permanently shuttered more than 100,000 U.S. businesses and left vast portions of the population living on the edge. According to a recent study from Johns Hopkins University, the detrimental impact of global lockdowns substantially outweighed their public health benefits. 

Is It Time to Amend the Federal Reserve Act?

The U.S. dollar is backed by the full faith and credit of the United States: it retains its value because the American public is willing to take it in exchange for their goods and services. But the public has not been allowed access to the bottomless pool of central bank liquidity that backstops this public credit. 

According to Cornell Law School Prof. Robert Hockett, however, the framers of the Federal Reserve Act intended for Main Street businesses to be able to tap this liquidity pool. He argues that the Fed already has the monetary tools it needs to rescue the real, productive economy. They just haven’t been used – for over a century. The Fed can stay in its own lane and stimulate local production using monetary policy baked into the Federal Reserve Act itself.  

Cornell Law School’s Prof. Robert Hockett wrote in Forbes in March last year that the Federal Reserve System was originally designed to be “something akin to a network of regional development finance institutions. … Each of the twelve regional Federal Reserve Banks was to provide short-term funding directly or indirectly (through local banks) to developing businesses that needed it. This they did by ‘discounting’ – in effect, purchasing – commercial paper from those businesses.” Investopedia explains

Commercial paper is a commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities…. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.

In determining what kinds of commercial paper to discount, wrote Hockett, “the Federal Reserve Act both was – and ironically remains – quite explicit about this: Fed discount lending is solely for ‘productive,’ not ‘speculative’ purposes.”  

In a follow-up article, Hockett explained that the drafters of the Federal Reserve Act, notably Carter Glass and Paul Warburg, were essentially following the Real Bills Doctrine (RBD). Previously known as the “commercial loan theory of banking,” it held that banks could create credit-money deposits on their balance sheets without triggering inflation if the money were issued against loans backed by commercial paper. When the borrowing companies repaid their loans from their sales receipts, the newly created money would just void out the debt and be extinguished. Their intent was that banks could sell their commercial loans at a discount at the Fed’s Discount Window, freeing up their balance sheets for more loans. Hockett wrote:

The RBD in its crude formulation held that so long as the lending of endogenous [bank-created] credit-money was kept productive, not speculative, inflation and deflation would be not only less likely, but effectively impossible. And the experience of German banks during Germany’s late 19th century Hamiltonian ‘growth miracle,’ with which the German immigrant Warburg, himself a banker, was intimately familiar, appeared to verify this. So did Glass’s experience with agricultural lending in the American South. 

According to Prof. Carl Walsh, writing in The Federal Reserve Bank of San Francisco Newsletter in 1991: 

The preamble sets out very clearly that one purpose of the Federal Reserve Act was to afford the means of discounting commercial loans. In its report on the proposed bill, the House Banking and Currency Committee viewed a fundamental objective of the bill to be the “creation of a joint mechanism for the extension of credit to banks which possess sound assets and which desire to liquidate them for the purpose of meeting legitimate commercial, agricultural, and industrial demands on the part of their clientele.”

“Liquidating” loans backed by “real bills” basically meant turning a company’s receivables into bank-issued credit that could be spent on the workers and materials needed to produce its goods and services, bringing supply in balance with demand. That “monetization” of debt might not drive up prices, but external factors obviously could. Today those factors include supply chain problems, worker shortages, and resource shortages. In the 1920s, the trigger was speculation in the stock market. 

The real bills policy was discredited after the stock market crash of 1929, due to overly-strict application by the Fed. As the tale is told in Wikipedia

Fed Board member Adolph C. Miller in 1929 launched his Direct Pressure initiative. It required all member banks seeking Federal Reserve discount window assistance to affirm that they had never made speculative loans, especially of the stock-market variety. No self-respecting banker seeking to borrow emergency reserves from the Fed was willing to undergo such interrogation, especially given that a “hard-boiled” Fed was unlikely to grant such aid. Instead, the banks chose to fail (and the Fed let them), which they did in large numbers, almost 9000 of them. 

But the policy’s original objective remains sound: “creation of a joint mechanism for the extension of credit to banks which possess sound assets and which desire to liquidate them for the purpose of meeting legitimate commercial, agricultural, and industrial demands on the part of their clientele.”

Walsh noted that discount window borrowing is currently available only for easing very short-term reserve shortages. When the Fed wants to expand bank lending, it purchases government securities from the banking sector, allowing bank reserves to expand. But he observed that this maneuver does not necessarily increase bank lending, and that some commentators argued that the Fed should be allowed to purchase existing loans from banks that could then use the funds to back new loans on the “real bills” theory. 

Compare North Dakota’s “Mini-Fed”

How might that work today? For some idea, we can look to the highly successful state-owned Bank of North Dakota, which has been described as a “mini-Fed” for the local banks of that state. Again quoting Wikipedia:

The BND serves as a wholesale bank for the state’s community banks and credit unions. It participates in loans created by the local banks by expanding their size, providing loan guarantees, and “buying down” interest rates. Additionally, it buys loans from bank portfolios as well as community bank stocks. The bank provides other banking services to local banks, such as clearing checks, acting as depository for their reserves, and providing federal funds.   

According to a May 2020 article in The Washington Post titled “North Dakota Businesses Dominated the PPP”:

Small businesses there secured more PPP [Paycheck Protection Plan] funds, relative to the state’s workforce, than their competitors in any other state …. 

What’s their secret? Much credit goes to the century-old Bank of North Dakota …. 

According to Eric Hardmeyer, BND’s president and chief executive, BND connected the state’s small bankers with politicians and U.S. Small Business Administration officials and even bought some of their PPP loans to help spread out the cost and risk.

… BND offers few retail services or direct loans, with the notable exception of student loans. Instead it partners with local banks, multiplying their lending power and guiding them through the ever-evolving global financial system….

BND has already rolled out two local successor programs to the PPP, intended to help businesses restart and rebuild. It has also offered deferments on its $1.1 billion portfolio of student loans.

Updating the Federal Reserve Act

The Paycheck Protection Plan was one of many relief programs established in March 2020 that were funded with Fed credit and capitalized with money from the Treasury. But Treasury backing would not actually be necessary to restore the Fed’s Discount Window to its original function. The Federal Reserve Act would just need a bit of tweaking to bring it into the 21st century. 

To start, Hockett says we need many more Federal Reserve branches than the original twelve, which are not distributed proportionately to today’s populations. The three-month limit on commercial loans and six-month limit on municipal government loans in Federal Reserve Act §10b also need to be extended; and we need a national funding agency for infrastructure, similar to the Reconstruction Finance Corporation that restored the depression-ridden U.S. economy in the 1930s. Hockett has drafted a bill for implementing his proposals, found here.

That could work for long-term production, but families faced with rising food and energy bills need help right now. Until production catches up with demand, the innovative Cornell professor suggests that the Fed can counteract the speculation that is driving up those prices with “Open Market Operations,” using its new Chicago Fed trading desk to short them in the market. Direct market intervention is highly controversial and could obviously be misused; but the tool exists, and, if properly directed, it could help satisfy the Fed’s mandate to maintain consumer price stability. For more on that rather complicated subject, see here and here.

To sum up: today’s price inflation was triggered not so much by “too much money” as by “too little supply,” due to lockdowns and mandates. The Fed can help restock consumer supplies using tools already in its toolbox. They include Open Market Operations to counteract speculation, and the Discount Window to purchase loans from local banks that would be willing to fund Main Street businesses if they had some help from the national Lender of Last Resort. We need the sort of Discount Window envisioned by the drafters of the Federal Reserve Act, one providing the liquidity to backstop bank advances against the future productivity of local businesses.  

Ellen Brown
Ellen Brown

Ellen Brown is a regular contributor to ScheerPost. She is an attorney, founder of the Public Banking Institute, and author of thirteen books including the best-selling Web of Debt. Her latest book is Banking on the People: Democratizing Money in the Digital Age and her 400+ blog articles are at EllenBrown.com.

52 comments

  1. The sure fire way to enjoy lower inflation is by way of real economic growth so that interest rates can rise safely without trepidation. The path to arriving here is now market driven with the addition of market gold and silver backed currency supplied, priced and distributed from the hand of the free market where the consumer has been granted an open door to the monetary stage, a door that was opened by the POTUS on Dec 31, 1974. Americans look to have fallen asleep or simply got too comfortable with using IOU’s. That’s all that needs to shift in an organic process that avoids a debt bubble POP and an economic crash.

    Gold is money when treated that way by the free market, something the Fed is not permitted to do.

    https://www.usgoldbureau.com/gold-confiscation

    1. There is no such thing as a free market, and gold is metal. The true nature of money is law.

      There are three types of markets: Elastic, Inelastic, and Mixed. Of the three, the one that is most free is Elastic. All market types are man made creations, and are not to be worshiped as if they are god.

      Ellen’s talk above is about tweaks to the law, to then change how CREDIT is issued. Credit is a type of money, that comes into being against the future.

      The two thousand year history of gold coins was fiat, meaning faith in the law, and that people would accept it. As soon as the coin got the King’s stamp, and was made good for taxes, it was the money.

      1. Said like a true socialist. Monetary law is not predicated on politics but on work and trade and transactions. The law that presides is the law of weights and measures, the exact law that central banks have been following since Bretton Woods. Central banks came to realize that a fully elastic , market driven price model was required to be congruent with economic reality.

        —>>> Of the three, the one that is most free is Elastic.

        Yes and that is enhanced with real-time pricing and the use of real-time price comparisons for what we can call balanced barter where no debt is required in the trades.

    2. Gold was, is, and will remain a commodity.

      1974 was a damaging year; the legalization of gold and ERISA.
      I wrote to both William Simon and Alan Cranstan opposing
      that legalization.
      Sec. Simon said it was time that Americans had the freedom
      to own gold and Sen. Cranston said it might created 200 jobs
      in California.

      michael zitterman
      mikiesmoky@aol.com

    3. Gold is a commodity the U.S. dollar is not a commodity and allows much needed plasticity to the system. The U.S. dollar is valued because it is the only way that federal taxes can be paid.

  2. The Bank of North Dakota is owned by the citizens (the state) and thus its policies are determined by the state. On the other hand, the Fed is owned by the private banks and thus its policies are determined in the interest of its owners.

    The question is whether the leopard can change its spots. And thus, the question is whether the numerous efforts to create public banks at the city and state levels will have sufficient resources to promulgate the same programs as BND including sufficient assets to accept tax and other government deposits and meet the fiscal demands of programs such as that of BND. Are these banks in the process of realization published any pro formas to project what their balance sheets and programs might exist on establishment? How will they mirror BND and how will or should they be carving new or different ground?

    1. The Fed owns the all USD price tool data for global trade and the only price tool for gold, whether it acts as a commodity or as market based money. The USD has a symbiotic and empowering relationship with market gold as its measure of value when gold is monetized and distributed by the free market.

      Why measure the trade value of oil based transactions when oil flows when the USD price tool can measure the trade value of flowing gold payments that go all around the world….. and round …. and round …. and round … etc, etc. By contrast, oil doesn’t support real economic growth as a form of money. It goes up in smoke !

      Did you do any of that price data research, Tom ? A state bank cannot hold a candle to the Fed’s influence in sustainable real economic growth on a global basis.

    2. Being owned by the State is totally different from being owned by the citizens. It means being controlled by whoever ( which party) is in charge in the state at a given time.
      The Fed is not owned by private banks in any sense of the word.

  3. Total crap. It would take me far too much effort to explain why, but crap on many levels. The Fed has always been under control of the Power Elite and it’s slavish devotion to them and their desire to fill the unfillable hole that is their greed, has created a monster. A monster that will eat us all.

    1. Did you consider what’s needed for large scale systemic debt-free transactions ? A fully free floating price model is indispensable to that end-in-mind. That’s where the Fed has focused its attention since 1944 when it was realized that the fixed price peg on gold had to be dissolved. It was an abomination to free market principles and the laws of supply and demand.

      The USD’s true economic power is not in the currency (debt) but in the price tool that was created on the “other end” by free market participants. Prices are used in all debt-free transactions for fair and agreed upon trades and also for market balancing in consideration of macro supply and demand management/planning.

  4. First of all the FED is neither federal nor a reserve. It was a way to make trillions in interest for those who lent money to governments needlessly. America, the so -called great country, the richest of the rich, cannot run its own banking and monetary system without the FED. Of course it can, and the People can do it best, not fat cat bankers hell bent on greed or manipulation. The FED must go, and with it all of America’s debt being declared illegal, usurious, and a unscrupulous. Ameria should take the lead and make its own currency, by of and for the only people that matter, us.

    1. All countries have a Central Bank. Ir really does not matter if you call it a “Federal Reserve Bank” .
      That’s just semantics

    2. The Fed will leave the building with a wink and a smile and a skip in its step once the free market comes to the economy’s rescue with its own debt-free money as allowed by law since Dec 31, 1974 , a date that came after the total re-engineering of the global price model in 1971.

      Before the POTUS could reestablish gold for market ownership and its use in trade, the price model had to be relinquished to the marketplace for applying free market fundamentals that didn’t exist beforehand.

      Know your history ! The world is waiting for the US consumer to use his/her own sovereign money.

      https://www.usgoldbureau.com/gold-confiscation

    3. Very well said. Most people do not realize that the U.S. Constitution places the power to create money in the Congress. If the Congress would, in fact, create the U.S. money, they would be doing something to fulfill their responsibilities. The FED system has elevated oligarchs and corrupted the government and critical social institutions. We cannot afford the FED any longer and climate change makes the illusion of unlimited growth quite unbelievable. We do not need to discuss how to tweak the system. We need to discuss how to replace the system.

      1. There are few conspiratorial opinions floating around in the marketplace based on a poor understanding of real economic growth and what’s needed to sustain it in a growing and scalable world with growing needs

        We once traded without the use of debt. Besides simple barter, the use of gold and silver is likely most notable but that presented a problem over time as economies of scale grew. The liquidity factor for finite gold was limited as long as the measurement of value , meaning the price, was fixed and pegged. There was no choice but to run low and run out of liquidity over time. Since the total earthy mass is limited and finite, pulling more and more bullion out of the ground was a ridiculous thought since it would eventually become a dead end street. The alternative was to allow the price (buying power) to be scalable, as per market law, and scalable by the very people who use it in agreed market trades. We have that condition today.

        What’s lacking is that people have a difficult time in changing their habits when we keep reaching for IOU’s. That’s a market choice, not a required must.

        A review of history will show two glaring facts in our monetary path that are recent.

        1) The fixed price peg was severe and released to the marketplace in 1971.
        2). The POTUS introduced Executive Order 11825 on Dec 31, 1974 reinstating the ownership and use of gold to the people.

        If we review the order of events , from 1944 to date, all the moves that were made were in service to an outcome that can serve sustainable real economic growth if only the market was to support it by using its own sovereign money.

        Old habits die hard. The door is wide open to make market trades without the use of debt.

        https://www.usgoldbureau.com/gold-confiscation

      2. What the Fed is in actuality is the US Central Bank. Great to replace it, but then we would need to create a central bank to accomplish the Fed’s monetary functions.

      3. You’re permitted to trade with gold (debt-free) on the basis of market agreement. You have been since Dec 31, 1974. I think a few folks in here missed an important page in US history.

  5. Oh, Ellen . If the writing hasn’t been on your walls for decades, how can you see? When are all perverted bets off the table for you when reporting on some of Dante’s stars in the Fifth Circle of Hell: economists and bankers and lords of war.

    They are insane. So we treat them as sane? That’s not how it goes for me in one of my fields: social services case management.

    Whew.

    I think you know “they” are inhumane at birth. You know who “they” are (read their bible, Forbes Magazine).

    Capitalism is the virus, and in the hands of the Financial Mengeles, with Eichmanns running their shows, and so many of us in the 80 Percent in collective Stockholm Syndrome, we are cooked. Poor amphibians floating in the slow slow cooker.

    Do you at times , Ellen, feel like a broken record?

    I’ve taught this and written variations to the following for decades. Decades!

    But here you go. By someone else:

    https://usprovgov.asia/forum/view/202007

    1. Bankers are not your enemy. Over-leveraged inflationary debt is the enemy. Real economic growth allows for inflationary debt to safely purged and removed from circulation. Why not focus on the economy rather than chasing windmills?

    1. Self dealing criminals. El Chapo and Pablo Escobar had more scruples than these chosen ones!

      Quoting Martens …..

      Dallas Fed President Robert Kaplan, Boston Fed President Eric Rosengren and Fed Vice Chair Richard Clarida have resigned over their own individual trading scandals and not one of them has been charged with anything as directly in violation of Fed policy as trading on the very day the FOMC is in session.

      We fact-checked the Occupy the Fed report by downloading the dates of all FOMC meetings from 2015 through 2020 and comparing them to the trading transactions listed on Powell’s financial disclosure forms filed with the Office of Government Ethics (OGE) for years 2015 through 2020. We can verify that Powell traded on April 29, 2015 and on December 11, 2019. Both were the final day of the FOMC meeting. (You can read the minutes of those respective FOMC meetings here and here.)

      The charts below show what Powell sold on those dates. We have eliminated any purchase transactions to avoid any possibility that the Fed would claim that these were made for dividend reinvestment purposes.

      The FOMC meets eight times a year, roughly every six weeks. Multiply that by the six years of financial disclosures that the OGE has made available for Powell and you have a total of 48 FOMC meetings. Multiply the 48 meetings by two, since the FOMC meets for two days, and Powell had 96 opportunities to screw up and accidentally trade on an FOMC meeting date. But it happened on only two days during that six-year span of time – according to what we know thus far. And in both the years of 2015 and 2019, highly unusual activities were occurring at the Fed.

      The year 2015 would mark the first time that the Fed had raised interest rates since it slashed them to the zero-bound range in 2008. There was a great deal of media talk in April regarding what was going to happen in various markets when the Fed raised its benchmark Fed Funds rates. The Fed didn’t raise its benchmark rate until December 17, 2015.

      The year 2019 marked the beginning of an unprecedented, emergency repo lending operation by the Fed. While the Fed made public that the repo loans were being provided to its 24 primary dealers, only the Fed knew that six large trading houses on Wall Street were getting the lion’s share of those loans. One of the six was Goldman Sachs. On December 11, 2019, the final day of the FOMC meeting, Powell sold between $115,000 and $300,000 of two Goldman Sachs proprietary mutual funds. The funds are listed as “GS” rather than Goldman Sachs on his financial disclosure forms. (See chart below.)

      According to the Fed’s own H.4.1 report, on December 11, 2019, the same day that Powell dumped between $167,000 and $430,000 of predominantly stock mutual funds and ETFs, the Fed had an outstanding balance of $212.95 billion in emergency repo loans that had been used to prop up trading houses on Wall Street, including Goldman Sachs.

      A larger question in all of this is why Powell is even allowed to be holding Goldman Sachs proprietary funds since Goldman Sachs is supervised by the Fed.

      The Occupy the Fed report also makes the following charge against Powell:

      “Instead of providing specific dates for the majority of his transactions, Powell improperly groups trades of like securities behind the phrase ‘Multiple’ on every OGE form he has filed.”

      A report last year in the Washington Post indicated that a Fed spokeswoman had indicated to them that these “multiple” transactions “were for automatic dividend reinvestments – essentially transactions on autopilot and not subject to individual decisions.”

      Very little is known about the Occupy the Fed group that scooped mainstream media with this story other than that it appears to be a fairly new group. Its Twitter account shows that it was opened in January 2021. Its Substack account shows it began on January 17, presumably of this year since only two articles are listed. Under “Who are we” on the Substack account, the following description is provided:

      “We’re a group of like-minded regular people (workers, professionals, seniors, savers and others) who are disgusted and fed up with systemic corruption at the Federal Reserve and the total perversion of our American capitalist democracy. We’ve taken no money from special interests. We are doing this on personal time and expense because we’ve had enough.”

      1. the total perversion of our American capitalist democracy. We’ve taken no money from special interests. We are doing this on personal time and expense because we’ve had enough.”
        _______________________

        America is/was a Federal Republic… not a democracy. The founding fathers considered democracies to be the worst form of government.

        After the progressive era acts of Wilson, the “republic” became compromised to the money power. For example, Senators (after the 17’th) have to acquire lobbyist money to pander for your vote. Prior to the 17’th they were simply selected by the State Legislatures. In other words, the 17’th is more democratic, and hence worse, as the public is maneuvered by sloganeering paid for by special interests.

        Senators were supposed to be above the political fray, and not beholden to special monied interests. Senators are insulated from populist politics if they are selected and sent by their legislatures, as the founders intended.

        Also, you cannot just say “capitalist or capitalism.” There are two main types of capitalism, industrial and finance. You must define the type, because it is critical to understanding. Dr. Hudson has many articles explaining the difference.

        The U.S. WAS Industrial capitalism, and now is finance capitalism. The changeover from one type to the other occurred during Wilson’s progressive era.

        Hitler prevented the National Socialist Government workers from engaging in the stock market, buying bonds, taking bribes from special interests, and hence becoming mammonites chasing after sordid gain. That way government workers had a direct connection to the taxpayer, who paid their salaries.

      2. Great reporting, Paul.
        Got to keep an eye on Occupy the Fed, from here on out.
        Thanks.

  6. Beside supply side food and energy,
    is there a proposal that addresses and alters the financialized gouging from property/shelter, insurance premiums, healthcare premiums and fees?
    These are kitchen table issues that are squeezing 70% of ordinary household budgets.

  7. “To sum up: today’s price inflation was triggered not so much by “too much money” as by “too little supply,” due to lockdowns and mandates. ”
    Not really. “too little supply” is the corollary of “too much demand” which is a result of both “too much money”( federal stimulus) and “less things to buy”( less restaurants, hotels, flights etc).
    The so called solutions do not solve anything as Main Street businesses will neither increase the supply of semiconductors, steel, oil, gas or other commodities nor solve the supply chain and transportation bottlenecks that are also fueling inflation.
    Of course there is still the risk of recession due to Fed higher interest rates….
    So what to do ? Spend less , save more ( in safe, high yield, inflation proof assets – whatever they may be) work more and pray !

    1. Trading without the use of debt solves this, as it supports real economic growth and allows the central banks to safely raise rates to have inflationary debt purged and retied from circulation.

      It short, the rising debt-to-GDP ratio is reversed.

  8. What everyone forgets is that, ANY new start up company needs an adequate level of free enterprise equity capital, to allow the business to trade until it reaches profitability. A detailed solution had already been presented in a series of presentations to the Bank of England starting in 1992-4, which then went on to underpin the development of a debate about how to re-invigorate the US economy using the same underlying principle of the the Oklahoma Land Rush . In the interim, a free PDF book; The Road Ahead from a Grass Roots Perspective, was published setting out the basic principles. http://www.chriscoles.com

    These proposals have been openly debated for near 20 years and no one has objected to the underlying principles. All previous Governor’s of the Bank of England have read them, Even to the point where a letter of support was issued. So, why not try some new thinking?

  9. Great article Ellen with realistic ideas to use existing mechanisms to manage the rising prices crisis without crashing the economy.

    A stock market crash, I note is not a concern of yours. Proper order.

  10. Ellen Brown and the Bank of North Dakota proves it for 100+ years.
    We need public banking and the best answer federally would be to
    make every post office a small business friendly bank….works in Germany and would work here.

  11. We were educated/trained to believe in supply and demand and available money and interest rates determine the market and inflation. They don’t! All the restraints put on the markets because of the Great Depression, Glass-Steagall, SEC , FTC, usury restrictions and others like the compromises of Dodd-Frank after 2008 like CFTC, have been eliminated, corrupted or were never effective.
    High speed trading on Wall Street determines what prices are; not supply and demand. The trading and shipping and production are all done by Corporations owned and controlled by the same .00001% and their well compensated mercenaries and minions. In her book “The Asylum” Leah McGrath Goodman details one of the strategies used was to have oil tankers sail indefinitely much like current container ships. Old but informative interview. https://www.youtube.com/watch?v=QInotGyZ3Eg
    Narratives like supply chain problems and labor shortages are just smoke screens that fits what the well educated/trained expect. Otherwise there might be food riots like those that precipitated the Arab Spring. https://www.countercurrents.org/dsharma210710.htm
    FDR, who came from a banking family, said his greatest achievement was saving capitalism. Unfortunately, capitalism seems intent on destroying itself and taking down much of the world with it. The pathological narcissists don’t seem to be able to control themselves.

    1. @Antisandman
      “The trading and shipping and production are all done by Corporations owned and controlled by the same .00001% and their well compensated mercenaries and minions. ”
      Which category includes Chairman Xi which ultimately is in charge of a very significant chunk of trading, shipping and production and whose decisions affect practically everybody???

      1. And that is precisely the problem for Wall Street, City of London and Brussels. China can create its money. The interest paid on any loan is returned to be reissued to production, infrastructure or services. The capitalist banksters take the interest and speculate driving inflation and impoverishing the 99%. That is why the Chinese economy has grown so rapidly with inflation only slightly in the housing market. 90% of Chinese own their own home. Hardly any discuss the hidden and inexorable inflation built into money created at interest by privately held corporations. At 5% annual interest there is a doubling every 14 years. If Judas had invested one piece of silver, say a dime, and his family kept reinvesting, that thin dime would be so much silver as to be more than twice the mass of earth. Obviously impossible. The capitalist know the limits of money created at private interest has reached its limit. They are frantically casting about to find a solution without giving up their power.

  12. The Rothschild error,
    Started over 200 years ago. My belief that the Vatican financed a false jew Family, in setting up there behaviour. To control banking finance. The Dakota model is best for local businesses. The false Jews, are Khazarian, of Turkic decent. They are of course Gentile. Who took up the Talmud. In our Bible it states that they are the Synagogue of Satan. Rothschild financed the Bolsheviks, taken a theses from there reletive Carl Marks. Lenin and Stalin, are Bolshevik Jews. They killed 62 million Gentile Russian’s. Getting revenge on the tzar of the 9 century. At the Revolution, The Vatican sent gold by train to the Bolsheviks. The Orthodox church of Russia grabbed it, collusion with Rothschild . Hitler, was a stooge of the Vatican. So the devil’s in the Vatican want the back es and virus, to kill off millions. And then a financial collapse. Caused by virus engineered, to kill. By then, the earthquake in Western America will organised havoc, with the tsunami going over the Earth.

    1. Very interesting and original thinking ( after translation in English)!
      Although not very relevant to inflation !
      FYI, Stalin was Orthodox Christian and even trained in his youth to become a priest.
      The Vatican is also organizing earthquakes and tsunamis? That’s a new one!

      1. The American people will wake up sooner or later but hopefully before we all walk the plank together. That sea of inflation , based on debt creation, just gets deeper by the month.

        Are you aware that the people have been free to monetize and trade their own sovereign market gold since dec 31, 1974 on the back of Executive Order 11825 ? It’s worthy to note the date because it only came after the whole price model and the pricing of gold had been fully relinquished to the marketplace.

        A fully free floating price model allows for unlimited liquidity in the context of applying balanced barter where we can simply compared agreed upon prices in real-time. This market practice has already begun with the use of market gold and market silver.

        Enjoy the journey because it’s already begun…. market driven too. No top-down interference but it’s also symbiotic with the USD !

        https://members.lode.one/register/joinwith/1130057960/link

  13. I’m beginning to think it would take one Oligarch, who became self aware. Just one. It could happen…not every Oligarch suffers from money-sickness, and is a sociopath.

    There are 26 states with a referendum process, so just one of the referendum states would be enough to start a movement.

    The Oligarch would have to purchase T bills to be donated as temporary reserves for a State Bank. Once the bank is on its feet, especially with money recalled from wall street, then the TBills revert back to the Oligarch. Former reserve TBills are now released to move onto the next state, and start the state bank process again. The TBill “pile” is used sequentially and repeatedly to initiate State Banks and hence “mini-feds” in each state.

    Voting public, who tend to be simple minded, could be sold on the benefits and “no cost” to them. All gain, and no pain. The BND could be used as an example, which makes the prospect more palatable to voters.

    Likely, the FED will not reform itself unless outside force is brought to bear. We can all hope that maybe somebody at the FED is listening to Professor Robert Hocket or Ellen, because the “real bills” doctrine would actually work.

    1. How is this doctrine reduce the price of gas, oil commodities and goods manufactured elsewhere ( China for instance) ?

      1. An oligarch is not necessarily a function of personality or morality. The common denominator is found in the structure because they are all formed within hierarchy and this is where the apex becomes a dangerous place, rank with temptation and like a light to moths in what it attracts.

        It’s incumbent of the free market to create a “rounder world” where the apex is weaned out.

        We cannot pour new wine into old wineskins.

  14. A single paradigm changing policy could integrate beneficial price and asset deflation into profit making economic systems. This policy mimics the way the private banks create over 90% of our money now monopolistically ONLY AS DEBT, that is with the accounting entries of debits and credits, but in this case they would create it as monetary gifts. A 50% Discount/Rebate policy at the point of retail sale would immediately double everyone’s purchasing power because you could then buy $100 worth of goods or services for $50. All any retailer would need to do would be to open up a new account labeled Discounts/Rebates with a normal credit balance for all of the discounts they gave to their customers. Then the FED or some other monetary authority mandated to do so would rebate-debit the entirety of those discounts back to the retailer so that they could be whole on their overheads and profit margins. Voila! The end of inflation forever, everyone has twice as much purchasing power, the amount of demand for every enterprise’s goods and services is potentially doubled which of course pleases them and a host of other benefits like tax reductions and eliminations are enabled with the rest of the policy program of the new monetary paradigm. You can see the evolving program for the new monetary paradigm here: https://www.amazon.com/dp/B07PLNJLRN/ref=sr_1_1?keywords=wisdomics-Gracenomics&qid=1552358772&s=books&sr=1-1-catcorr

    1. So the idea is that the FED will print money to pay for 50% of everything that is we buy ?
      how is this going to solve inflation caused by external sources?
      Let’s assume that the retailer buys a TV set from Asia for 70$ and sells it for 100 $ ( you pay 50 and the FED 50).
      Tomorrow the manufacturer sells for 80 $ and the retailer sells it for 110$ (you pay 55 and the FED 55).
      So you still have 10% inflation!

  15. EQUITABLE TAX RECONFIGURATION PLUS:

    The main catalyst to enable businesses to increase sales and profits is energized consumers.

    What effect upon consumers would a permanent income tax credit equal to 100% of the Social Security taxes paid on the first $40,000 of income? The maximum credit would be $2,480 per year ($40,000 x 0.062 = $206.67 per month).

    The effect upon consumers would be substantial, thus benefiting business sales and profits, i.e., the old “two birds with one stone”.

    The funding of this tax credit would come from the elimination of the “ceiling” upon which Social Security taxes are levied and by making all other types of income subject to SS tax, without limitations.

    An additional “adjustment” to Social Security should be a ten percent increase to SS recipients.

    The Federal Reserve Board is tasked with managing the pace of our economy, maximizing employment, and maintaining a relatively stable dollar. Its main tools have been adjustments to short-term interest rates (Federal Funds rate and Discount rate) and its operations to increase or decrease liquidity. Those are prosaic and problematic tools. The “manipulation” of rates is the main cause of “business cycles” and is damaging to our economics and, especially, to younger and weaker enterprises. Perhaps worst of all, it forces the transfer of wealth from the weaker to the strongest which exacerbates the “wealth gap”. Another weakness is that it may take 12-18 months for “adjustments” to affect our economics and could be problematic.

    I suggest a different method of controlling the pace of the economy. The concept of affecting the economy by interest rate adjustments would be replaced by establishing a separate withholding that would be managed by the Federal Reserve Board. The Fed, on a monthly basis, would publish a factor (a % of gross pay) which would cause a reduction or increase in net pay, thus affecting the strength of our economics, almost immediately. The newly established “withholding” account would be owned by the taxpayer, can only hold cash and cannot be hypothecated.

    One of the most important benefits would be to create the conditions for low interest rates which would stimulate the production of goods and services, while maintaining low inflation.

    Interest rates would be market based, i.e., the Fed would not control rates via Discount and Federal Funds rates.

    PLUS:

    Eliminate the anti-trust exemption for unions.
    Reverse all minimum wage laws (See separate article). <<<<< IMPERATIVE

    michael zitterman
    mikiesmoky@aol.com

    04/21/17
    Modified 12/28/21

  16. Other than strategic smoke screen, why would the vultures upon the body politic save anything that’s now left from their death-dealing covid coup upon the old abnormal, like petty entrepreneurial storefronts of the free market facade of liberal democracy? Let’s not just look, either, to our own lockdown loss of American dreaming but to the absoltuely impoverished conditions of the empire’s colonies, now faced with rising famine, to see some of what they have in store for us all in the new abnormal. What madness of our own keeps us making reasoned appeals to these monsters?

    “The individual cannot bargain with the State. The State recognises no coinage but power: and it issues the coins itself.” (Ursula Le Guin)

    1. They don’t have the tools but not for the conspiratorial reason you lay awake fanaticizing about in your attempt to rationalize what you haven’t yet been exposed to as the fundamental reality predicated on economic law.

      There is no safe and sane way for central banks to draw large amounts of inflated debt out of circulation safely until such time that we see debt-free market currency show up to organically grease the wheels of real economic growth and this is something that a central bank is forbidden from introducing because they have no safe and sane way to make a safe introduction that doesn’t rip the world apart with a sudden debt bubble POP. If a top-down attempt was made, we’d see a global POP in the massive debt bubbles with emphasis on currencies and bonds, creating a total global panic and empty store shelves with weeks, maybe days.

      It can be done safely but the introduction has to be market driven with an organic rate of governance from the bottom-up.

      1. Inflation is the flame that gets doused by real economic growth that can now be fueled by debt-free market based transactions. Real economic growth is the focal point and the end in mind.

  17. Ms Brown seems to assume that the ‘Masters of the Universe’ even care to thoughtfully solve problems in the public sector. My sense is that they use financial institutions and political policies solely to enrich themselves in the mistaken Puritan belief that God showers riches on the worthy and poverty on the unworthy. They are not particularly greedy, but vastly, unpardonably heretical.

  18. Oh. So, we can eat those dollars, that debt, right. They have to be stopped by any means necessary. Over 7,700 grocery stores are controlled by one billionaire. Food food food.

    You know in your heart of hearts they must go the way of the dodo.

    You can have story after story to illustrate the perversion of capitalism and the perverted captains of industry and their masters.

    https://www.zerohedge.com/economics/americas-largest-landlord-just-got-even-bigger-blackstone-buys-12000-sunbelt-apartments

    America’s Largest Landlord Just Got Even Bigger: Blackstone Buys 12,000 Sunbelt Apartments For $5.8 Billion

    A friend asked me: Why isn’t congress using the anti monopoly laws to break Blackstone up? They are allowing Blackstone to get bigger and bigger and monopolize housing and they are getting damned near free money from the Fed to do so. Mnuchin couldn’t throw money at Schwarzman fast enough.

    1. So why are you not trading without the use of debt and help solve the inflationary debt issue from the grass roots ??? There’s no legal requirement to use legal tender. The Fed will gladly leave the building with a wink and a smile and a skip in its step when the free market responds to the needs for real economic growth, something that will require the market’s own debt-free money.

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