Donnerstag, 1. Mai 2008

Peter James on Money

Peter James is the Republican candidate for Congress in Maryland’s 4th congressional district. Running as a “Ron Paul Republican”, he caught my attention when speaking at the Freedom Rally in Washington DC on April 15th.

There is one thing that Peter James cares about more than anything else and that’s the current monetary system. On his website this reads as follows:

There is one single issue that so threatens our nation that all others pale by comparison. That is the creation of Money as Debt by the private banking monopoly. This is the greatest scam ever operated in history. It is a classic Ponzi scheme of gigantic proportions. Once you understand how the current money issuance system works, you will never look upon the world in quite the same way.

So to have people understand how the current monetary system works is a major concern of his. He wants to educate people on the issue, starting as early as kids in grade school. After all, he says, “it is a fundamental right to know what money is”.

Concerning the deficiencies of the current monetary system, one of the solutions he proposes is the issuance of local currencies. Consequently he is currently introducing such a local currency (Just Money) in his hometown Germantown, MD.

A good introduction to all this is to look at the resources on the Issue page of Peter James’s webpage. For the understanding of the following interview it is probably essential that you at least have seen the “Money as Debt” video.


TFL (The Free Lunch): You are running as a Ron Paul Republican?

PJ: Yes.

TFL: That’s a label you endorse, and you think that this is something that can help winning elections?

PJ: I don’t. I think it’s backwards. I think it’s not so much about winning elections as it is about bringing these issues to the forefront. I think the big thing is… the typical Democrat wants to spend on entitlements. It used to be the Republicans who didn’t want to spend anything. Now they like to spend on war. But Republicans are always saying, well, we have to cut taxes and we have to cut spending. And of course, the Democrats think we have to spend more, not knowing where it’s going to come from. But the problem with both of those, first of all the spending more solution, there is no money, so it has to be borrowed. The problem with cutting spending is that when you cut spending and pay off the debt the money get’s extinguished. People in America don’t know when money get’s lent, it increases the money supply, when money get’s paid back, it extinguishes it. So you have a few years worth of paying off the debt and in balancing the budget, then you have a collapse of the money supply and a depression, a recession. So the real solution is a third solution that neither party is talking about, neither conservative, or liberal, or Republican, or Democrat. They’re not talking this. It’s out of the public discourse. And that’s the monetary system. That’s most important, whether it loses or it wins elections. […]

TFL: May I quote you from your web page. You write “There is one single issue that so threatens our nation that all others pale by comparison. That is the creation of Money as Debt by the private banking monopoly. This is the greatest scam ever operated in history. It is a classic Ponzi scheme of gigantic proportions. Once you understand how the current money issuance system works, you will never look upon the world in quite the same way”. So, how can people understand how it works? You tell people to educate themselves and you have links to different resources on your webpage, among them the “Money is Debt” video and you tell people to watch that. Can common people understand this?

PJ: Sure. My response is that one third of the people who watch it completely understand it, still with a bit of disbelief. A third of the people sort of get it, but they are in total disbelief. There is something called cognitive dissonance, and when you are presented with information that is far afield from what you currently believe, there is a tendency in human nature just to dismiss it out of hand. So, if Galileo runs around saying the earth is not the centre of the universe, not only people disbelieve, but even the scientists of the day when they look through the telescope and he explains it - they kind of get it but they don’t believe it. So, there were probably lots of educated men at his time who can look at the evidence and understand it, but still dismiss it because it didn’t fit into their beliefs.

TFL: And isn’t also part of it that the media don’t report it? This is simply not an issue in the business sections…

PJ: Because the bankers own the media. The big bankers own the media and it wouldn’t be in their best interest. It’s not taught in schools right now. I went down to a meeting of this Academy of Finance that runs a program to teach finance to kids, and for some reason they cancelled me. But my goal is to get this taught in grade school. It’s interesting to note that Sanford I Weill, the ex chairman of Citigroup, a multibillionaire, he funded that academy. So, you know, if you control all sources of information…

TFL: OK, but on the other hand there aren’t any prominent economists, at least none that I am aware of, that talk about this. Why do you think that is the case?

PJ: Because the fellowships are paid for by the banks. If you look at the Federal Reserve board, which is supposed to be made up of seven members and is currently only made up of five members, the law stipulates that they must be equally representative; industry, agriculture, commerce, and they are not. They are either all bankers or they are all economists who got their fellowship and get their funding for their academic work by the banking community. So when you stack the deck […] I had several macroeconomic professors that came on and did understand this. First of all it’s a study of macroeconomics and it’s just something that’s not really taught. I’ve talked to a lot of people who take economics courses and they’ve never heard such a thing. They have no clue of what money is. They look at it as a - either a fixed commodity […] Economics to me is not a science. It’s like a pseudo-science, because they don’t start from the basic elements and work up.

TFL: But again, if most of these economists, trained economists don’t get it. How can ordinary people get it?

PJ: This is not that hard to get. It’s really not hard. How do some of these young kids get on the Internet and look up these resources and get it? It’s not that hard to get. It’s simple. Simply stated, money is borrowed from a bank, the bank creates it. Most people think, money is sitting around in a vault [and] that depositors put it there, and they are borrowing that money. But […] it’s created out of thin air, get’s into circulation. That increases the money supply. When you go back to pay it off, it’s extinguished from the money supply, and the money to pay the interest is never created. Hence that goes up, and up, and up, and a certain percentage of the people are foreclosed. So, if I can say that within under a minute, then it seems to me, it shouldn’t be that hard to really understand. It’s choosing to understand that maybe something is wrong; it’s choosing to want to know how money works.

TFL: OK. And what is your proposed solution to this [the monetary issue]? What do you want to push for in case you get elected to congress? What can you do about it as a congressman?

PJ: Well, the first thing you do - it doesn’t require you. Abraham Lincoln said governments should only be there to do what we can’t do for ourselves. What we can do for ourselves is accepting Just Money. So one of Ron Paul’s solutions is to have competing currencies, private currencies… He likes gold backed currencies, because people can have confidence - 100 percent gold backed. People like Milton Friedman think we should have a 100 percent, no fractional banking. So a private currency, just like a Federal Express and UPS started competing with the post office. The post office was horrible. People had to wait long lines. They didn’t get their mail delivered. Now the post office is very responsive to the marketplace […] Having healthy competition helps in any situation, in any problem. And then the next is actually, go back to what the Constitution says. We’ve had the change between government issuing the money and private banking monopoly’s issued money. That’s happened eight times in our history. Thomas Jefferson killed the first Bank of North America, Andrew Jackson killed the second bank, and Andrew Jackson was the last president to not just have a balanced budget, but have no public debt […]

TFL: So you advocate abolishing the Federal Reserve?

PJ: Yes:

TFL: What should replace it?

PJ: Nothing; nothing. There is maybe some regulatory function that the government should carry out not private…

TFL: Yes, but what about the congress having the privilege to issue the money?

PJ: That’s what the Constitution says…

TFL: Right, but how should they do it?

PJ: Well, through the treasury. They basically mandate that x amount of money shall be issued from the treasury and they will appropriate it. And the best appropriation of newly issued money is for infrastructure. When you issue money and start spending it on your operating budget, then it means that there is an unlimited amount of money, and hence you get inflation. So the best issuance of the money – and there is something called a sovereignty proposal which has been signed by 3000 local municipalities and county governments around the country. […] Infrastructure is, I think, underfunded by 400 million in Maryland. It’s to issue the money to being used on road projects, possibly schools, public marketplaces. […] Investing in infrastructure that benefits all or nearly all the people is the best use of that newly issued money. And then it would circulate without interest, and in many historical examples we’ve seen the creation of zero public debt. So you could really – you could choose to do away with taxes entirely by just issuing the money, and then it would be a tax on everyone, because it would actually cause inflation, but that inflation would be the tax. Or you could decide to tax it back out and then have no inflation.

[…]

TFL: But this is something completely different from going back to a gold standard as some people, most prominently probably Ron Paul, advocate?

PJ: Yeah, I mean, that’s what the Constitution provides and that’s probably where we want to get back to. We may look at other precious metals [as well]. It was gold and [emphasis] silver. And there is a big fight at Williams Jennings Bryan over the silver. Typically gold is more courted by the rich. And right now the problem with going directly back to the gold standard is that most of the gold is held by these huge bankers under the auspices of the IMF and the World Bank. It’s my understanding they’ve leased a lot of the gold out to other banks for various purposes. So, you know, whoever owns the gold rules. And so it’s the golden rule backwards. But when you have the gold concentrated within a few hands… By going back to a gold standard you basically reward the thieves of all this hundred years or so. You are rewarding them by making them rich […]. Philosophically, under the rule of law, we want to get there [a gold standard] because that’s what the Constitution is about. Practically there could be a big problem when gold is so tightly held in a few hands.

TFL: How realistic, do you think is such a fundamental change concerning the monetary system of the United States of America?

PJ: I think, if the Ron Paul movement still goes and if all the groups started to concentrate - because I think probably the majority of the Ron Paul supporters don’t even understand the monetary issue […] There is a phenomenon in human nature. It’s maybe called the Hundred Monkey Theory, that when a certain percentage of the population - whether it’s five percent, ten percent, twenty percent - get’s it, no matter what the issue, once they get it, the rest of the population falls in line. It becomes a common knowledge. […] It’s reaching that initial point, and I think it’s very possible, but it means to have the support and the understanding of the people. You can change the law, but if the people really don’t understand the fundamentals, it’s not going to stick […] One of my [approaches] is going to the school boards saying, we have to teach our children what money is. I mean, this is a fundamental right, to know what money is. And short of giving the congress’s 435 people you have to convince, that’s like trying to turn a super tanker […] The better way I see is the issuance of the local currencies. And they have to be done prudently. If it’s not done prudently, you loose credibility. So my goal is to fix the problem locally. And this economic collapse, if it get’s worse and worse and we are going to a full depression, then certainly people may be willing to listen, but we have to be there to have an alternative.

TFL: You now refer to the current crisis on the financial markets. Some people say that maybe real dire times lie ahead. There is lot’s of credit out there, and the bust of the real estate bubble may be just one of the first signs of the troubles yet to come. What do you think? How bad is it going to get?

PJ: We saw the Dotcom. They changed the laws, I think in 82, that you now can use stocks as backing in loans and security sells. That caused in part the big stock boom bubble that burst, and people moved all their money into real estate and that caused that bubble that burst. Now we are seeing people that have – I think the average American has 8.000 $ on their credit cards, and some people have 30.000 $ or 50.000 $. So we’ve seen three of the major banks sell their interest in VISA. Maybe they know something we don’t, but I see the next credit card credit crises busting. But we have 250 trillion derivatives worldwide. I think the US share is maybe 43 to 45 trillion of these derivatives that are highly leveraged on the underlying debt. When the underlying debt goes bad all these derivatives – and they are using it in order to create the money… they’ve got to expand the debt geometrically. Now they’ve got this worldwide, this 250 trillion worth the debt which is backing the money. When the debt disappears, there is, I think dire consequences.

TFL: Many people, mostly on the left, prominently among them e.g. economist and New York Times columnist Paul Krugman, argue that it’s the greed and a lack of oversight, a lack of regulation in financial markets. You think the problem is much more fundamental?

PJ: Yeah, I think we can say right now, oh, it’s subprime loans. In other words, if you don’t get people to look at the fundamentals, mathematical, systematic problems… Now certainly subprime loans make up almost two thirds of the loans that are going bad, but that’s natural because the higher interest makes the bird come home to roost lots sooner because it compounds much quicker […] But there is still that other third that’s there and always there. You see, there is always - maybe it’s been only one and a half percent foreclosure rate. And that’s something society can deal with because, sad to say, people’s nature is not to care about others. […] So one and a half percent foreclosures don’t seem to get people’s [attention]. And that goes on, year in year out, based on this mathematical system of really acquiring wealth. Now the system has gotten out of hand and we’re seeing three percent or higher foreclosure rates. We’re seeing the dollar drop fifteen percent a year, and people are starting to notice because they are not so much worried about those four, three percent that are getting foreclosed, they worry about what might be next. And so we are at least in a climate that people may [pay attention]. But what happened in the 30ies is a similar thing. There was a panic in 29 and then this recession that was prolonged by the Federal Reserve. And the solution there was to go out and to confiscate all the gold. And so I fear that they’re proposing that the Federal Reserve now regulates all finance, all financial markets. From the local State Chartered Bank or Credit Union down to insurance or whatever, and people still don’t get it that the Federal Reserve is a private corporation. So the solution, the cure is much worse than the disease, and I’m afraid, given this depression, what people will look for is immediately to government to solve it […]

TFL: Now to the local currency that you issue. This is a local solution. How does it work? Did you have any legal problems? I mean there was this…

PJ: The Liberty Dollar?

TFL: Right, the Liberty Dollar. Their metals have been confiscated. People were indicted. You didn’t run into any problems?

PJ: Oh, not yet.

TFL: So, why does it work?

PJ: Well, legally, on the legal standpoint, the Liberty Dollar got into trouble because there is a statute, a federal statute that says you cannot mint a coin and have it circulate as money. […] I assume this law was passed […] mostly against counterfeiters. I think it was inaptly applied to the Liberty Dollar. But as long as you issue money, it has to be above a dollar denomination, and it has to not resemble [Federal Reserve money]. So people that issue this money might make it bigger or smaller and it still looks like it, but it’s a different size […] In other words, if you would confuse this [shows one of the Just Money notes] with a Federal Reserve note then it would be unlawful, but I doubt that there would be anyone who would confuse it. So legally it’s fine, but if you look at probably the best example of a local currency that works is the WIR Bank. It’s in Switzerland. And now they have over 60.000 merchants that exchange it. 2004 is the last figures I saw, they have about 900 million in circulation, Swiss Franc equivalents.

TFL: How wide spread is this Just Money that you issue?

PJ: Oh, we’ve issued a little over 300 $ so far. We haven’t even started to merchandise. […] We’ll get this to the Chamber of Commerce […], and then we’ll be asking merchants to accept it. So we are looking at merchants that might… A pizza place might have a two for one offer on Tuesday nights. So instead when a merchant gets a coupon which is a form of money because it can be exchanged, it gets cancelled out, just like money that gets extinguished when it’s paid back. So when they come and pay their coupon at the pizza place, it gets extinguished and the pizza merchant looses the value of the pizza. What we propose is that instead of having a coupon they have a shared coupon in the form of one of these [shows again one of the Just Money notes] and people would pay five dollars, five Federal Reserve notes and they would pay five [units of Just Money] and then the merchant could go out and get a haircut, or get his car repaired, or spend that money at other merchants. If we are facing a constriction of the Federal Reserve notes – when there is less [money] circulating – that means maybe one out of ten people has to be laid off and loose their job. […] There is physically not enough money in circulation. So some people cannot pay their mortgage, they can’t pay their rent. So that’s what is happening now. So if we inject – say there is a constriction of 10 percent of Federal Reserve notes – if we can inject 10 percent of Just Money then we’re coming back to a sustainable level.

TFL: But when you issue these notes you get Federal Reserve notes in return [currently you can get Just Money notes in return for dollars].

PJ: Well, this is the prime component of the funding of the campaign and the educational effort we’re trying to do. Eventually that will disappear and the notes will be backed in the form of… If we need more money in circulation we’ll do interest free loans. Like the way the WIR Bank works is that the merchants, instead of going to a bank to expand their business, will go to each other. And I think they pay about a one percent administrative fee, a one time fee that covers the operation of the bank, but they will borrow against the security of the business or the actual physical building […] and then they pay the workers with this local currency. So they pay zero interest for the loans because it’s shared amongst – similar to barn building. Barn building in America was a big thing where communities get together and they build one guy’s barn and then the next weekend they would go and build the next guy’s barn and it would pass around the community.

TFL: This kind of barn building. Is it still in place nowadays?

PJ: Well, when you look at the Amish communities in Lancaster, yes, there it’s still in place. When you look at the Mormons in the West, in Utah, wherever you find them, yes, they build homes, entire homes.

-- end of first part.

There will be a second part of this Interview which deals mostly with politics, the American power structure, and the influence of semi-secretive organizations on American politics.

Sonntag, 27. April 2008

Shawn House about the Freedom Revolution in Lancaster County

Shawn House is the organizer of the Lancaster County Ron Paul Meetup group. I (The Free Lunch) talked to him on the day of the primary in Pennsylvania.

TFL: Your group has been pushing hard for today. But isn’t it all over yet? I mean, McCain is the presumptive nominee. Why are you still working so hard for Ron Paul?

SH: Because when there’s still a chance to get someone elected who would be such a good leader, we don’t want to give up hope, and if we can get our delegates elected here in Pennsylvania, and they can join other delegates that have been elected in all the other states in the United States, we can converge on St Paul in September, and things could change – just as they did with Ronald Reagan and Gerald Ford in the 1980ies, when Gerald Ford was the presumptive Republican presidential nominee and Ronald Reagan got that nomination. So it’s not over yet.

TFL: OK, but how realistic is that. I mean, when it comes to the numbers, Ron Paul got on average something like 5 to 10 % in the primaries [in some of the caucuses he of course did better].

SH: But it’s not only the primaries. He won a lot of straw polls. There is a lot of voter fraud documented in New Hampshire, right where it started. This issue with the Diebold machines… We’re committed. None of us is getting paid.

TFL: I’m not sure how much a role voter fraud played. In my opinion, this was definitely not the reason why Ron Paul didn’t win.

SH: Well, combine that with lack of media attention and lack of coverage. When you look at the numbers on the Internet… when you google Ron Paul you get 117.000 unique people where John Mc Cain had quite a few less. He raised more money than any [Republican] presidential candidate. But if the MSM refuses to do any stories, refuses to report any of these issues, then naturally the citizens who aren’t well informed are gonna go with whatever they are told. And if they don’t hear anything from Ron Paul and all they hear is McCain, McCain, McCain, well, then that’s what we are gonna get.

TFL: I think that many people don’t even know that Ron Paul is still in the race. Has that been a problem for your group?

SH: Absolutely. Yes, yes [he laughs].

TFL: Can you elaborate a bit on that?

SH: Because of the media misinterpreting a video statement that Dr Paul put out, the headlines in the newspapers were reading – while they didn’t report anything else – that Ron Paul had dropped out. When the TV media starts telling you that Ron Paul dropped out, when he never said that, and people believe what they hear on the TV. We’ve had billboards up. We had six billboards in Lancaster. That’s not enough. We raised money. That’s not enough. We have people participating. That certainly helped, but it may not be enough. So Ron Paul doesn’t win. He doesn’t win but the revolution isn’t just about Ron Paul. This is the Freedom Revolution. And so we continue onward.

TFL: OK, so what’s the long term perspective of your group in particular and of what you call the Freedom Revolution?

SH: We have a lot of diversity in our group. So the thought is to become a liberty caucus, a caucus where people get together. They get together and they discuss. They continue to educate, they make the voters aware of the National ID, and they make them aware of the erosion of the sovereignty of our nation, and we speak out against the unconstitutional wars, and the unjust acts that our government has perpetuated on other countries, and we bring this to the forefront, and continue to educate those consumers through the Internet, through video, through major media. We have activities and then come election time we find candidates that are liberty minded, that are constitutionally minded, that are conservative when it comes to govern, and we run candidates. We have a PAC, a political action committee, the Central Pennsylvania Liberty PAC, and we use that money to fund activities and to support candidates, whether they are Democrat or Republican, because there is really no difference between Republicans and Democrats. We’ve seen that today where people will change party affiliation just like that… They are all free agents, just like the sports teams. There is no party allegiance anymore…

TFL: Many people in the Ron Paul movement say, let’s change the Republican Party, take the party over, bring it back to its roots, fiscal conservatism, noninterventionism etc. Others think that to work from within a third party would be a better strategy. What’s your take on this?

SH: I’ve done that. I’ve been involved with the third parties. And it’s very biased. We see with Ron Paul as a registered Republican how he is being marginalized and basically stifled. And they do the exact same thing with the third parties. If we ran someone as auditor general as a Republican we need a thousand signatures of registered Republicans. If we run somebody as a Third Party candidate such as the Libertarians we need twenty three thousand signatures. So we have to spend hours, and thousands of hours getting valid signatures to then have them challenged by lawyers in the Democrat and Republican parties, and if we can’t defend them we get fined, a financial fine as a party. If we get our candidates on the ballot, and the Libertarians have done it for twenty five years, they still don’t include them in the debates. So they still don’t include them in the chance of the soapbox to spread the word to the masses about why they are running as a particular candidate. And people in this country are so ingrained with Republicanism and the Democrats that they automatically pull the party lever across the board one way or the other. Now I see, as I’m getting older, some wisdom to working within the Republican Party to change it. The Republican Party can’t even get people to run as committee people. So this is where we need to go if we are serious to work within the Republican Party But even those who’ve joined the Republican Party to support a Republican candidate have been stifled, have been not allowed to participate. They have been disqualified. Delegates that have been elected as Republican delegates to represent Ron Paul have been purposely targeted and removed. So, we’ve heard in the past, and it’s probably still true, that the Republican will tell you one thing but they will cut you off at the knees when it’s time to get something done… We’ve got to do something, and right now I feeling to keep my voter registration as a Republican and my party affiliation as a member of the Libertarian Party.

TFL: So, for you as a group, do you have any plans to become more active in the local Republican Party? Let’s say, people running as committee persons?

SH: Exactly.

TFL: People are doing that right now?

SH: That’s what Lisa [another very active member of the group] was talking about last night for needing ten people to write in someone to become a committee person. So we are trying to do that, and we have folks in our group that are already elected Republican committee people.

TFL: How much of a minority do these represent within the Republican Party, here on the local level... And are there any tensions with the more mainstream Republicans?

SH: I’m not really sure. I honestly don’t know. There might be, because, we as registered Republicans, have not gotten behind John McCain. So that could be a sign of tension, that we have not supported the endorsed candidate and that we are running our own delegates to get elected. So there could be tension that I am not aware of…

TFL: The Ron Paul crowd and your Meetup group as well, is a very diverse group of people, people with all kinds of backgrounds. How do all these people get along with one another?

SH: Well they do and they don’t. Some people haven’t participated because some people were too hard on them. But it’s a matter of a leader to keep the group focused on what the purpose is, and to make sure there is tolerance… We have a wonderful microcosm of the world right here in Lancaster County with religious diversity where people are left alone such as the Amish or the Mennonite. And maybe it’s reflective of our group because we could have easily the Amish involved in our group if they participated, but they don’t participate.
[… ]

TFL: When talking about the future of your group you mentioned having a liberty caucus. What should that be like?

SH: Well, continue a gathering of people that are defenders of liberty, supporters of liberty, and wanted educate people about liberty, freedom and responsibility. And so, instead of just saying we gonna start a Republican caucus, we gonna let Republicans, and Democrats, and Libertarians, and independent people getting involved as long as they are committed to the principals of the Constitution, limited government, self-responsibility, no entangling alliances, things that Ron Paul helped define, which he had just taken from the Founding Fathers but helped define in today’s age, as strong currency, an understanding of Austrian economics, things of that nature. So the group that I envision, and others, I believe, do too, would be probably 70 percent education. Because education is the key, since our public school system has failed. And besides education we’re looking at activism, and we are looking at elections.

TFL: So you might also endorse candidates, independent from what party they are running for?

SH: As long as they are fiscally conservative, maybe socially liberal, kind of smaller libertarian… And we can have people that are running for public office. If we don’t have a good Republican, a good Democrat, a good Independent or Libertarian or Green Party that we could support we might encourage people to do none of the above. Or we might encourage people to do write ins. But through our educational effort and outreach we want to influence the vote, influence the powers to be, to be more conservative for our endorsement as an active organisation



Shawn House in front of one of the Ron Paul billboards in Lancaster County.