The American Monetary Institute (AMI) are against Ellen Browns proposal and been rather harsh in their treatment of her suggestion (but it's fair criticism).
I joined a discussion on her blog and was immediately thrown out, first by Ellen herself and later by the moderator of the blog, Jere Hough, when I tried to reenter the discussion. Ellen said that my post was out of topic and Jere just played stupid and/or disregarded my arguments as flawed without any argumentation what so ever. It became clear that Jere tried to conceal my argumentation by censuring and smearing (he removed some of my post) but never by argumentation. I played along and tried to explain as simple as possible but he continued to play stupid and just aborted my argumentation without any logic at all. It got to the point where it got really ridiculous where Jere denied very basic properties of the debt money system; such as the fact that a debt is created at the same time on the same amount as the created credit making the debt monetary system a zero sum game (I will explain this later).
I have in this blog concentrated my argumentation that Jere faked not to understand and/or ridiculed. I've been posting the same argumentation on other forums and there's been no problem for them to follow my argumentation, and I don't think the readers of this blog will have any problems doing so either. The question is why Ellen Brown and Jere Hough are trying to dim this out?
So here we go:
Let say you are bidding on a house and there are other people bidding as well. But you don't actually have the money – you're bidding with ”money” that the bank offers you as a ”loan”. The other bidders don't have their money either so they are also bidding with ”money” that their banks ”offers” as ”loans”. But the fact of the matter is that the banks don't have the money either – they invent it at the same time as the ”loan” is made (a loan of what? Might be a reasonable question). So the high price of the house is not due to ”market forces” but due to bankers ability to create from nothing what everyone else has to work to get - ”money” in the form of debt (in other words: parasitism). It's not a ”free market” mechanism at work – it's a debt slave race – the one willing to go into most debt (created from nothing by the banks) is ”winning” the bid. You won't even own the house, even if the banks want you to believe so.
Let's say you ”win” the debt slave race and buy into servitude to the banks by renting the house from the banks (which what you actually do- again: you don't own the house). You will then get a ”loan” from the bank to pay the seller. The bank simply create this as new ”money” by putting x dollar on the sellers account and at the same time create an equal debt to you (x dollar). Your debt is equal to the created ”money” on the sellers account – meaning that if you and the seller get in love, get married and move together, the seller would be able to pay your debt and the money would disappear (amortize comes from the Latin word morte=kill - kill the debt – kill the money). This is a basic property of all debt based money: the created debt is always equal to the amount created credit (”money”). So if all the debt in the society was paid off only cash (permanent money) would exist since all debt ”money” (credit) would be killed by paying the debt.
This phony money created by indebting everyone and everything by book keeping entries far exceed the real money consisting of coin and paper money. The phony money is about 95% (at best, 98% is probably a more realistic figure) of the money supply, the coins and paper money only constitute 5% (at the most) of the money supply. So if all depositors did a bank run and tried to withdraw their cash about 95% of the money would never be paid. Thats why the banks need to have the interest so the depositors think that money can grow so they don't make withdrawals and check the banks bluff aka "promise to pay".
So, to sum it up:
When new credit is created in a debt based monetary system an asset and a debt on the same amount are created. Someone is holding an asset on X dollar and someone else is holding the corresponding debt.
Now, lets study some implications of these properties :
Let’s divide the population into two parts:
1) One part holding the debts
2) The other part holding the corresponding dollar assets
These two parts are, in mathematical and monetary aspect, equal in size since all created credit equals the total amount of debt. Again: if all debt are paid all the created dollar will cease to exist (=0).
Now lets say an additional amount of dollars (Δx) are going to be created (mostly due to the banks interest). This can only be done by putting someone in debt in a debt based system (obviously). But those already holding enough dollar assets don’t need to borrow any money so the only option is to indebt those with small dollar assets or those already in debt. If those already holding debts take loans they will get deeper into debt. If those with small dollar assets take a loan they will move from the asset part of the population to the indebted part of the population. Hence: fewer people will be left on the asset side and more people will be on the debt side even more indebted.
If additional debt money is created the scenario above repeat itself creating a situation where more debt leads to greater an greater inequalities (which is also empirically easy to show).
Further more:
Lets say a politician wants to redistribute (by taxation, “trickle down” or what ever) so that the indebted part of the population can pay their debts by taking Δx dollars from rich people. But this means that an equal amount (Δx) of the money supply will be destroyed (since killing the debt equals killing the same amount of money). Hence: any attempt to redistribute within the debt based monetary system from those who have money to those in debt would destroy part of the money supply. So politics is trapped in an undemocratic situation where it can’t do anything about the inequalities without destroying the money supply - no matter if it's right or left wing politic.
All this is avoided by the permanent money AMI suggest. Permanent money (as Lincolns Greenbacks) don’t need anyone going into debt – it should avoid dividing the populations into debts slaves and those holding corresponding assets (where the debt slaves are desperately trying to get hold on the fewer and fewer rich peoples money in order to pay their debts). Permanent money can also be redistributed without destroying the money supply.
So to sum it up why debt based money stinks:
1) It interfere in the market economy by pressing up prizes with non existing money creating artificial high prices on certain objects (houses, for instance - notice that the debt "money" don't exist until the loan is signed, meaning the debt "money" didn't exist during the bid process)
2) It make the population into debt slaves
3) It's highly undemocratic
4) It's parasitic
5) It concentrates wealth
6) It prevent redistribution of the wealth since any redistribution would destroy the money supply.
Ellen Brown and Jere Hough don't want to discuss these issues. I wonder why?
