I can’t imagine a more exciting time to be an American. After eight years of deterioration in our foreign relations, civil rights, and economic policy, Barak Obama will bring meaningful change to our country. My parents had the privilege to witness the rise of Martin Luther King as our country’s greatest civil rights leader. I am priviledged to witness the election of America’s first Afro-American president.
Facing the worst economic crisis since the Great Depression, Obama is wasting no time in putting together an economic security team. His consideration of Paul Volker for the post of Treasury Secretary has great significance. For several years now Volker has been observing with increasing alarm the economic imbalances that lead to the current crisis. As Fed Chairman under Jimmy Carter in the 1970s, Volker restored confidence in the dollar by raising interest rates. Doing so took a great deal of vision and courage because high interest rates impede economic growth. But he succeeded in putting the economy on solid footing for the longer term. Considering Volker for the post of Treasury Secretary demonstrates that Obama understands the type of economic leadership our country needs.
But the current crisis is merely a symptom of the deep structural problems in our world’s financial system, problems that also lie at the root of our environmental crisis.
Catherine Austin Fitts’ audio seminars on The Falling Dollar introduced me to fiat currency and the likelihood of a monetary collapse sometime in the next decade or so. In her interview with James Turk she pointed out that some environmentalists do not like precious metals. However, though improper mining practices do have a negative environmental impact, she argued that the long term effects of fiat currency and the fractional reserve banking system have done far worse. James Turk added that in the 1960’s Paul Einzig predicted the detrimental environmental outcome of our world’s monetary practices.
I have been planning to research Enzig’s writings to develop my understanding of this problem. Then, today, Providence dropped this wonderful video presentation, Money As Debt, into my lap.
Aside from explaining with great clarity why our monetary system must eventually crumble under its own weight, Paul Grignon’s fourty-seven minute presentation demonstrates the incompatibility of our fractional reserve banking system with ecological sustainabilty.
In our economic system, the consumption of natural resources must keep pace with the growth of money-debt supply to avoid hyperinflation (hyperinflation can only be avoided when the material output of the eoncomy keeps pace with the growth in money supply). The system makes plundering the earth’s resources not only profitable, but continuously necessary.
Anyone interested in sustainable living must understand and embrace this understanding of our monetary practices. To save the planet, we must develop an alternative system, one that does not require exponential growth in both the money supply and the consumption of natural resources.
And if you choose to protect your personal assets by purchasing precious metals, know that doing so constitutes an act of economic and political protest. By withdrawing value from the monetary system and storing it in a way that does not require interest payments from any counter party, you undermine the money-debt mechanism that our banking system feeds on.
Please watch Grignon’s presentation and think about these ideas. He gets to the sustainability problem at the end of the video, but please watch all of it: very few people have presented the history and practices of fractional reserve banking with this level of clarity and insight. And then bring your questions and comments back here for discussion. I’m really excited about the level of clarity that Grignon brings to these issues.
Note: I recommend that you mute the sound on the video and let it run all the way to the end without watching it, and then rewind it to the beginning and unmute. This way you will buffer the entire video and avoid the annoying interruptions that occur when streaming video content over the web.
Have a great day!
© 2008 Philip Glaser