America’s New Vulnerability

America’s New Vulnerability
By T. Edward Westen

President Trump has played fast and loose with treaties, agreements, trade, and relationships with allies, trade partners and international organizations around the world. He has asserted that treaties, agreements, trade, and relationships with allies, trade partners, and international organizations are “bad deals” made by predecessors in the White House. The empirical evidence and facts do not support his assertions. Regardless, his actions have negative consequences for Americans as well as those nations party to those treaties, trade arrangements, and international organizations with which he unilaterally terminated.

When President Trump assumed office, he did not sell his businesses and put his assets into a blind trust. This opened him to accepting money from his fellow Americans, the United States government, foreigners, foreign governments, and international organizations whenever staying in his properties. By returning monies to the U.S. Treasury for profits his accountants attribute to stays by U.S. government employees, President Trump is attempting to avoid prosecution and impeachment on the charge of violating the emoluments clauses in the U. S. Constitution (Art. I Section 9, Clause 8). But, he is also admitting that he profits when anyone stays in his properties.

Since President Trump is in a position to profit from his business, especially his properties, he is also in a position to incur losses from those properties. Also, since the properties are so dear to him, they represent a way to get President Trump’s attention. President Trump’s properties are America’s newest vulnerability.
I can think of at least a half-a-dozen, legal ways to exploit that vulnerability to get President Trump’s attention by focusing on his properties. But, I am relatively confident all those who have been impacted by his reneging on treaties, agreements and trade have better imaginations than I.

     If you are not an American, forward this to your foreign minister. President Trump’s weakness may not be visible to non-Americans. If you are American, get your creative juices flowing.

 

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Awash in a Sea of Money — Or — Unemployed Money is not a Good Sign

 

 

I got an offer in the mail to take out a 2nd mortgage on my house yesterday.  I get offers to refinance at least once a week personally addressed to me, but the letters all have the same salutation” Dear Home Owner.  Combine these offers with the figures I hear being spent on elections, the profits banks made in the first quarter and all of the advertising for investment services and I conclude there must be one hell of a lot of money out there looking for a place to go to work.  Now for money to go to work, it simply has to earn a return, not actually do useful work mind you, but the language of money had settled on “money going to work.”

 

While I suppose it is nice to have the opportunity to increase my debt load, given the offer I received to take out a 2nd mortgage, what this sea of money looking for work tells me the unemployment rate for the average dollar is rather high (and that does not count the ones I and little old ladies put under our mattresses because we grew up with parents who grew up during the Great Depression). Under the current regime of creating money, the unemployment rate of money has generally signaled boom which is followed by a bust.  Not the attractive kind of bust an artist might sculpt for museum placement, but the kind that leaves lives shattered.  Indeed, at the present time in the US alone we have more people on the verge of homelessness despite working two or more jobs and indenturing their children. (OK, I am dramatizing it by asserting the indenture of children, but am I?)

 

That offer I got to take out a 2nd mortgage on my house is actually a desperate act by someone who holds more money than they know what to do with.  They have run out of creative ways to “put their money to work.”  So they are relying on complete strangers to think that increasing one’s debt burden is a good idea.  The simplistic economic wisdom behind putting money to work is the basis for trickle-down economics. Things will be OK if we give the rich enough money so that some of it comes our way.  Unfortunately, when it comes out way in the form of an increased burden of debt, it typically does not harm to us debtors than it helps.

 

So, by my way of thinking, it is more evidence that we need to change to way we create money.  Under the current system, we put money into the hands of those who already have it or the assets it can buy in hopes that they are greedy enough to invest some in productive activities (job creation) or that they are spoiled enough to actually buy something.  Well, it isn’t working.  So, time to put my plan into action and create money by giving it, yes, giving, to citizens just because they are citizens.  Us common citizens spend.  We get very little money, and we have had to learn to spend wisely.  However, if given a windfall, we will spend it.  Unlike the rich who insist on a return on their expenditures, we just go out and buy a beer, or a popsicle (depending upon our age and religion); to hell with the returns.

 

 

 

 

 

 

One day I would like to be a writer

One day I would like to be a writer. I am almost 74 years old so if it is going to be, it will have to be sooner rather than later for my ‘laters’ keep getting fewer with every passing day. In December of 2016, a blogging friend convinced me to write fiction. I quickly got into writing science fiction novellas-time travel. I wrote the novellas in episodes. My goal for each episode was 1,000 words. 1,000 words a day took between 90 minutes and 3 hours. The time variance was due to which platform I used to write: tablet or smartphone or computer. The computer was fastest. I may have missed writing as many as seven days in that time, never two consecutive ones until three weeks ago. Three weeks ago, I finished the draft of my 8th novella. Buried n the Park, https://www.amazon.com/Buried-Detectives-Batan-Philipson-Cases-ebook/dp/B07C6ZN9FX/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1523889455&sr=1-1&keywords=buried+in+the+park
and started to proofread and self-edit it I chose the 8th novella to proofread and edit because it is the easiest to put in a form to self-publish. The other seven have some idiosyncratic writing problems with which I need to deal and to polish (knock off some rough edges and sharp corners). I assumed the 8th would have the fewest rough edges and corens to knock off. The combination of proofreading and editing is the first thing that has interfered with what you might call my creative, productive, writing flow these sixteen months.
Proofreading and editing one’s own work is a bear. A large hungry, irritated, motherbear with two cubs. A Grizzly Bear with sharp teeth and claws. The first time through, I read it out loud. That slows me down enough, so I don’t get back into the story and forget what I am doing-proofing and editing. Reading what one writes out loud is more likely to show the author, me in this case, grammar, syntax and tone problems. It also allows me to catch some typos and innovative autocorrect substitutions. The second and third time through I used Grammarly, an app or software package that reminds me that the English language has two voices and I should be in the active one. It also ferrets out all those comma-based errors I have learned to make in my years of casual, non-reviewed, non-propofed and non-edited writing.
I do need to get back to daily writing. Not just any writing, but project writing—say another novella. I write to an old friend every day. Indeed, I use that as the basis for a blog to which I attach episodes of my novellas. But, daily letters to my friend and his wife don’t count in the writing part of my life—they are important but not done to write. Back in 2014 my friend was hospitalized and diagnosed with cancer. I live some 2,000 miles away and started daily letters to keep my spirits up and his chin up while he was down. That is a whole different category of using words than writing fiction. However, using my daily letters to him as a blog and appending my daily episodes to the blog resulted in my having four readers: my friend and three bloggers who read and comment on my episodes every day.
You have heard that writing is an isolated, lonely profession. It well may be. But, I have three readers who comment daily. If you write, you know what a boon that is. You know how that can lift your spirits. Someone is reading. Yes, 158 other people have signed on as followers of my blog. So technically I am writing for them too. And, on a good day, six to eight may like my post. But, the three who comment, are priceless. Occasionally, one will comment on something amiss in my writing. Many Thanks to them. They comment on the flow of the story, the prospects for one or more character in the story or tell me someone in the story did something of which they approve, disapprove or the like. The important thing is they read and comment. Having regular readers, as I have, has been one reason I have churned out somewhere around a half a million words and has been one of the main motivations for my continuing to churn out 1,000 or so words a day. So, if it is possible, get a reader or two who comment on the story. My readers never give me technical writing comments. Rather they tell me how they feel about characters. Accordingly, I have used the same characters in any story where appropriate. One of my characters, a woman of indeterminant age I once described as wearing tweed like Jane Marple, as portrayed by Margret Rutherford in films of Agatha Christie novels, has been in every one of my eight novellas and the eighth one is not science fiction!
35 years ago, I heard, “Know and write to an audience.” If someone is reading what you write and making comments, your job of writing to an audience is much easier. I got lucky as three readers became my audience.
I started writing by doing a short piece of fiction about a policeman seeing a four-year-old girl jump off a swing in park He took her and to police headquarters because she was an unaccompanied juvenile out after dark. That is story from the policeman’s point of view. I then wrote the story from the little girl’ point of view. Finally, I wrote it from the relevant adult in the little girl’s life’s point of view. Those three pieces required a novella to explain what happened. That became Amanda7, my first time-travel novella and the one I am now editing and proofing for self-publication.
My next six novellas were, to my mind logical places to take the stories of the characters developed in Amanda7, indeed, the epilogs to each of the third through the sixth novella led into the fourth through seventh novellas. You could say, the end of one novella leaves something unaddressed that requires more writing. A starting point for the next project. Indeed, since I write each novella in episodes of about 1,000 words, I make it a point to leave something that must be addressed tomorrow or later. My readers occasionally have commented on my leaving Pauline tied to the railroad tracks with a train coming full speed—cliffhangers or as I remember them from the 1950’s Saturday Morning Movies at the theatre, a stagecoach going off a cliff TO BE CONTINUED.

Cliffhangers not only keep the kids coming back to the Theater next week, and my readers coming back tomorrow, they keep me writing. I want to know what happens next too. Now since I write an episode and publish it before I write the next episode, I have written myself into many a corner. Using this approach turns writing into a challenge for an author. I neither recommend it nor would dissuade one from writing this way. I simply am telling you there are other ways to write than the experts tell you.
I read some posts and lots of the comments on those posts about writing, it seems to be a very popular blogging topic. I thought, writing is idiosyncratic. Here is what worked for me for 16 months. Check out deartedandjody in a few months from now and see if it is still working.
Now that Buried in the Park is available on Kindle, along with thousands of other ebooks, how do I let more readers know and entice them to at least sample it (Amazon provices for a taste of each book)?

I thought I would post the information about my book on Facebook and ask my friends to share it. I was surprised that two immediately shared and eight others liked but did not share and three bought the book. I wrote long emails to two friends who showed encouragement and tell me they plan to buy the book. I have a few more friends to write to, but this is not marketing. I suppose next I need to send a letter to the local news paper. However, this is still not a marketing plan. So, I need an inspiration for marketing that does not cost more than the royalties it will generate. At 33 cents a book that does not leave a big budget.
Any suggestions?

Warmest regards, Ed

 

Big Brother Wants to Keep Tabs on the Press and More

I heard an NPR report this morning that make the hairs on the back of my neck stand up. I could not find it under NPR, but was able to find the same report at MSN https://www.msn.com/en-us/news/us/homeland-security-database-would-track-journalists-media-influencers-report/ar-AAvzXl3
Essentially, I conclude the worst when it comes to any branch of any government collecting information except to apportion the seats in the U.S. House of Representatives. The twit has declared war on the free press in this country with his casting the charge of fake news at any report he does not like. While the White House Press Office is in a contest with FOX opinion shows for originating the second most fake news stories in America today, the twit’s tweets are in first place, it is disturbing to see Homeland Security get into the data collection business of writers, editors and other purveyors of information in America. Homeland Security collecting data on “identifying ‘any and all media coverage related to the Department of Homeland Security or a particular event”’ smacks of Big Brother, or the KGB, or the Gestapo watching in their authoritarian contexts.

I can well understand the desire to protect Americans from influence from foreign nationals in elections. However, given the position that twit has taken on ‘no collusion’ and his anti-Muller Investigation, this effort by Homeland Security cannot be viewed as an effort to protect American voters from false influence, but rather an opportunity for the right wings in the administration to attempt to stifle the free exchange of ideas and reporting by making those using free speech and press look over their shoulders to see who is watching. With information comes more opportunities to threaten, intimidate and suppress. Are we returning to McCarthy Era attempts to control others by accusation and black balling? This data base and the specifications for the “contractor do no remove my fears that we are not.

One Constitutional Issue After Another

March 28, 2018

I was some what amused yesterday with the talking heads and the twit’s administration proposal to add a question about citizenship to the Census. I heard all sorts of nonsense from left and right but somehow the talking heads on the two segments I watched on two networks missed an actual reference to the words in Article One I stipulating that all Free Persons and Indentured Servants were to be counted for the purposes of apportionment. These talking heads are paid, right? If they had stipulated the purpose first, perhaps their blithering about their points of view would have been tolerable.

I got to thinking about my comments on the 2nd Amendment and realized that the articulated reason for that Amendment was to reassure the voters of NY that they could keep their guns to fight off a tyrannical central government if it came to that. So that makes the back ground for the Second Amendment at odds with the provision under law, U.S. Code › Title 18 › Part I › Chapter 115 › § 2385, that it is illegal to advocate the violent overthrow of the US Government, much less actively attempt it. My my we are a conflicted nation.

I would observe that the frequency with which Constitutional Issues come to the fore today is probably a testament to the fact that the twit has not read the document and if quoted to him, he clearly does not understand its words—some of them are just too big for a self proclaimed genius to wrap his genius head around.

I did note that Nicole Wallace yesterday in addressing the Stormy Daniels news said, in effect, ‘if this guy can’t negotiate a hush agreement with a porn star how can we trust him to negotiate with North Korea?’ (I am paraphrasing).

 

The Twit’s Tariffs — a bad idea, he should try thinking once

Let’s examine the twit’s justification for the tariff on steel and aluminum. There seem to be three threads. 1) we need to have this capability for national defense, 2) We need to keep jobs in America, and 3) we are being treated unfairly by other countries and taken advantage of by them.

By imposing a 25% tariff on steel, this means that the 180,000 or so steelworkers and the handful of corporations will indeed remain n business and perhaps even grow a bit. However, the imposition of the tariff will increase the steel components across every industry in American that uses steel by 25%, a cost that is passed on to the buyers of these goods and services. Let’s suppose this impacts 1,000,000 workers directly and indirectly. The employment in those industries will decrease by at least 180,000 jobs and the costs of products will go up with fewer people purchasing them so there will likely be even more unemployment in those steel and aluminum using industrious. So, to maintain the capacity for national defense, the twit has ensured that we will have lower overall production and employment and higher costs, not to mention the increased costs of all goods using steel. It would be cheaper for the country if we simply subsidized the steel industry and kept the production levels where they meet defense needs and stockpile their output until needed, if ever. By subsidizing steel and aluminum we would not incur the unemployment in industries using steel and aluminum as inputs and increase the cost of their goods which increases the cost of goods to the American Consumer. Subsidize is the more rational and economically sound approach to maintaining steel and aluminum production capabilities for national defense (armament) purposes.

Keeping job in America is a hot-button issue. Unfortunately, when tariffs are involved, fewer jobs remain in America as they are lost not to foreign competition but to increased prices of the output of those jobs remaining here that need the tariff to protect them. So, under the guise of keeping jobs in America, tariffs actually increase the decline of jobs. Reread the prior paragraph.

The twit alleges often and loudly that foreign countries are taking advantage of America and that there isn’t an even playing field. However, I have never heard him explain how foreign countries are taking advantage of American in trade. The closest the twit has come to illustrate this is to point at the trade deficit that results when we spend more in country x than country x spends here. What that means is that country x uses its resources and labor to produce things that we get from them in exchange for our currency (probably electronic bookkeeping entries). So we get real things and they get money. Remember there is nothing backing our money except faith that it is money. So we get something for an idea (money) of value. Unfortunately, if the countries with a positive trade balance of our dollars ever figure out they are giving us something for nothing in return our easy life will come to a sudden end. The twit is really not quite understanding that we win when we have a deficit, we win big. And he wants to put a stop to that by claiming unfair trade practices that he can’t explain or name.

 

The Twit’s Tariffs

 

Another day, another tariff as the twit in the White House tries to reduce the US trade deficit. Unfortunately, things are often not what they seem nor as bad as they sound. Specifically, trade deficits are not what they seem nor as bad as they sound. Unfortunately, the twit in the White House, who claims to be a rich guy, does not seem to understand money. He seems to think our dollars paid for China’s development to our detriment. Let’s look at the facts.

 

 

China sends good to America in exchange for US Dollars. The goods that China sells in America require raw material inputs and labor to fashion them. Since we run a trade deficit with China that means they sell us more goods than we sell to them so the extra goods they sell to us require we ship them US Dollars (a good percentage of which are electronic entries in financial accounts. the rest of pieces of paper with printing on them).

 

 

Take a look at a US Dollar. What backs it up, Gold? NO, nothing backs it up. You will find that the law, as printed on the front, mandates that ‘this note is legal tender for all debts public and private.’ It is fiat money. It is money because the US Government says it is and because almost all Americans think it is money. However, the law requiring one accept it as payment stops at our borders (and the borders of countries using the US Dollar as currency). Yet, the Chinese and almost all other nations accept our US Dollars in payment. If you think about it foreign nations and nationals accepting US Dollars in payment is very strange.

 

 

The US issues a lot of US Dollars on a virtually continuous basis. One would think that would create inflation. However, sufficient US Dollars go to foreign entities who sell us goods and services in exchange for those dollars. So, one break on inflation is the sheer volume of dollars flowing overseas. Then too, some exchanges (market) are traded in US Dollars, oil springs to mind. The international oil market is cleared with US Dollars. With a significant portion of the US Money Supply tied up in the international oil market, we have another break on inflation.

 

 

So let’s take the twit’s logic and stop the flow of money abroad. That means we will enter an inflationary cycle. America will be awash in money, as the twit calls it, coming home. The domestic value of the US Dollar will plummet (and so will the value of the dollar in financial markets).

 

 

At the same time the twit’s tariffs will kick in and the price of goods Americans, individuals and firms, will increase by at least the value of the tariffs (not to mention the inflationary impact of the flush of dollars driving all prices up, remember, inflation?). Americans will be able to afford less of the goods they have been purchasing. When prices go up, standards of living go down and Americans can not afford the domestic products the tariffs are supposed to generate.

 

 

Obviously there is more. But this is enough for today.

 

Basic Income 11/14/17

Eddy Wilco1, a friend, sent me a link to an article on the BBC website: http://www.bbc.com/news/business-41655859 .  The article is by Tim Harford and titled Do welfare states boost economic growth, or stunt it?  It is well worth the read.  Essentially it ties universal basic income into the pattern of social welfare started by Otto Bismarck in the 1880s as a defense against Marxism.  As you know, my approach to basic income is to Democratize Money: https://www.amazon.com/dp/B0756RQRPG unlike the “universal;” no questions asked theme of universal basic income, I tied my plan for funding citizens with a basic income to citizenship and performing normal citizen duties such as voting and performing jury duty.  While Tim Harford ends by saying a universal basic income would cost a lot of money, my approach finesses that by changing how we create new money.  None-the-less the Harford article is well researched, well written and does not miss the point.  If only he had read my eBook.

One very important conclusion Tim Harford draws and one I want to emphasize isWelfare states don’t make the pie bigger or smaller. But they do change the size of each individual slice. And that helps to keep a lid on inequality.”

Respectfully, T. Edward Westen

1Eddy Winco is also my supplier of the soap his wife makes: http://winkos.co.uk/english/I have returned to daily saving with soap in a mug thanks to his wife’s soap making skills.

 

 

Democratize Money to Provide a Basic Income for All

basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” (http://basicincome.org/basic-income/ )

The ongoing discussion about Basic Income out in the ether takes place under several names: Basic Income, Guaranteed Annual Income, Citizen’s Dividend to name the most obvious. If one googles any of these terms one will get a plethora of hits. Two websites that are particularly rich in information are http://basicincome.org/ and http://www.universalincome.org/ . I have read some of what is out there; and, what I have read lays out reasonable arguments for providing all a basic income. What seems to be the issue that holds it up from becoming reality is the question of how to pay for it. I have stayed back from that discussion up to now. However, democratizing money, as described in this blog beginning with the first of the 27 blogs to precede this entry is a viable way to pay for or fund a universal basic income, at least in the United States of America. The only catch is that democratizing money requires citizens to vote, serve on juries and perform normal citizen duties. So, it has a condition.

We, America and the world economy, is approaching a point where the current economic growth (expansion or period of a bull market, the terms are not quite equivalent but close enough) will come to an end. All growth cycles do. Economic growth cycles end partially because of the way money is created. We create money by putting new money in the hands of those who already have money or have a sufficient probability of having income over a period of time to pay off a loan. You see, money in the US is created by debt. Every dollar in every wallet, bank account or piggy bank was created by debt instruments. For a full treatment, you will find Banking and Currency Texts, or the other entries in this blog detail how money in the US is created by debt instruments. Or google it.

The role money creation plays in the ending of a growing economy is that for any reason whatsoever investors, entrepreneurs, consumers, bankers and even my grandmother decide that the economy is weak, over heated, or the like. When that happens, people stop borrowing money. When borrowing stops, currency creation stops. Recall the end of the Bush administration when the economy came to a stop, the Bush Administration pumped money into banks (they practically forced financial institutions to take money to invest). Unfortunately, the financial intuitions did not invest (loan). No new debt means there is no new money.

The slow down of borrowing will happen, it always does. The last slowdown caused a lot of pain for the average citizen and practically nothing but a decline in the rate at which those with money increased their money supply—only a slowdown for the wealthy.

Historically, the rich have convinced us that money into their hands creates jobs and thus results in income for all. Its name is “trickle down economics.” Pay attention here, “trickle” is exactly what happens, if you and I are lucky. Unfortunately, they are largely wrong. This is not an effective way to stimulate economy—a rising tide does not rise boats that are not seaworthy (the poor drown instead of getting richer).

Historically consumer spending is responsible for over 70% of economic acclivity in American. So, I would argue that the way to stimulate an economy that is not creating enough money through borrowing is to put money in the hands of where it will do the most good—in the hands of citizens and not just the wealthy.

I would argue a citizen who is one part of the sovereign deserves an equal shot at full participation in the economy along with every other citizen who is a sovereign. Democratizing money provides that and pays for itself. BBesides democratizing money is the only way of paying for a periodic cash payment . . . delivered to all on an individual basis, without means-test or work requirement.” that does not take money from one person to pay another.  https://democratizemoney.wordpress.com/2016/05/01/one-reason-private-money-should-be-excluded-from-politics/ 

 

 

 

 

 

Introduction: Hey, That Worked

At this late date, this post is an introduction to the articles in this blog: democratizemoney.wordpress

Introduction:  Hey, That Worked

By T. Edward Westen, 2017

(My apologies to all the Economists I malign and misrepresent)

We live in the age of belief.  Entire structures are supported by millions of people believing in those structures.  Without enumerating those structures and embarrassing a lot of well entrenched shaman, I will illustrate what I mean by choosing the most arcane and esoteric of all the structures supported only by belief and only potentially expose one group of shaman—the economy and economists.

Before I start, we need to be on the same page about what a shaman is.  So let’s go to an authoritative source- https://www.merriam-webster.com/dictionary/shaman The authoritative source gives this: Definition of shaman for English Language Learners

  • : someone who is believed in some cultures to be able to use magic to cure people who are sick, to control future events, etc.

Now, clearly economists would object on the basis of “we don’t pretend to cure people.”  However, if we expand the notion of people to collections of people, economists do deal with curing economies (or at least attempting to cure sick economies).  And their objection continues “and we don’t use magic.”  It seems to me the phrase “voodoo economics” from a bygone era would suggest someone once thought they used magic.  However, more to the point, real magic uses unfathomable (not to be understood) words and a lot of waving of hands to work. Have you ever listened to an economist?  Question, if you tied an economist’s hands to the arms of a chair could he or she still be able to talk?  Now if the magic is only illusionary, then the economist fits the bill again—distract folks with numbers and tell an incomprehensible story about them while you pull stings behind the scenes to raise of lower this or that rate and make the patient, er, economy better.  But finally, we get to the real substance of the economic shamans’ tool kit.  Predicting the future to control the present.  “If we increase interest rates now, we will keep a lid on inflation in the future.”  Notice the sleight of hand with words.  They tell you what to do to make a specific outcome in the future happen.  But what they are really doing is getting some to change present behavior with the promise of something better in the future.  Do their predictions come to be?  I leave that to you.  However, we believe in economics.  One last parting shot at the economist’s ability to solve problems.  Ask and economist “If you were stranded on a deserted island in the middle of an ocean, how would you get back to civilization?”  9 times out of 9, the answer will be “Assume a boat.”  Yet, we still believe.

To be fair, the economists are trying to make sense of human activity both individual and collective human activity.  So, since they have tackled a job of understanding more difficult than rocket science (where everything works or goes boom) we really shouldn’t pick on them.  However, the economist’s activities in making sense out of what we humans do in exchanges of goods and services, hoarding and other similar things, tends to perpetuate what we have done in the past.  This is not always a problem until one understands that what we have done in the past in exchanging goods and services has been to, for example, invent money.  Now once out of the box, money takes on the quality of “say that is a neat trick—I give you money and you give me a good or service and I don’t have to give you a good or service in return.” “HEY, THAT WORKED.”   That morphs into “I want to give you fewer monies for that same good or service the next time.”  But, for that to happen, there has to be less money available the nest time so it has higher relative value to the goods or services exchanged for it.  “Yup,” the economist says, “now you are getting into the nitty gritty of what we do.  We figured out that stuff about relative value.”  No, you sold us a belief in relative value.  It turns out money had more value not only when it is more scarce, it has value when one increases the supply of it.  “Wrong,” the economist says, “When the supply of money increases inflation kicks off.”  OK, then why did the economy not blast into hyperinflation when you guys increased the money supply, without printing more bills, I might add, with Quantitative Easing? “Oh, that is easy to explain,” the economist will reply waving his or her hands about.  I am still waiting for that explanation.  But essentially “HEY, THAT WORKED.” 

What really happens is someone tries something, to whit the King of Lydia, had some electrum stamped with his portrait on discs of it and someone said, “HEY, THAT WORKED.”  So, that King and others kept on stamping out coins until coinage was believed by everyone.  Everyone believed gold and silver coins, although silver and copper were poor seconds to gold, was the only way to go.  But gold coins had a problem.  They are heavy.  If you wanted to have a good night out on the town, you could carry enough gold coins to pull it off (unless you got mugged.  Then the thief would be slowed down by the weight, but I digress and that is another, and probably more interesting story).  But if you wanted to buy a boat load of olives from “Oliviania,” you had to have a wheelbarrow or perhaps a donkey or camel to carry them.  One day, a fellow dropped a wheelbarrow full of gold off at his local gold smith and the smith game him a receipt.  As he was walking along feeling foolish pushing an empty wheelbarrow he went past a stall with the tastiest spice he had ever encountered. The stall had a barrel of it.  He enquired and found it was for the amount of gold he had just dropped off at the gold smith.  Holding his receipt up, he told the spice seller “I’ll just take my wheel barrow back to the goldsmith and get the gold.”  The spice seller stopped him. “Say, can anyone turn that in for gold?”  The fellow with the empty wheelbarrow said, “Sure.”  The exchange was made—a barrel of the tastiest spice in the world (and the rest of us have been trying to figure out which one it was ever since) for a gold receipt.  Someone said “HEY, THAT WORKED.” And goldsmiths instantly (OK, maybe a bit slower) became bankers.

Moving around all that gold gets expensive.  So, someone thought to leave it wherever it was stored and just put property tags on it: “France,” “USA” and the like. And, “HEY, THAT WORKED.”  However, people wanted gold in bad times. That posed the problem for the US depository.  If people cashed in their gold certificates for gold, the depository would not have enough gold to cover international transactions.  So, the Congress made owing gold illegal, except as jewelry and collectibles.  The US government called in all the gold.  So domestically, the US was off redeeming the then modern equivalents of former goldsmith receipts for gold.  “HEY, THAT WORKED.”  Then Nixon stopped redeeming foreign government obligations in gold.  “HEY, THAT WORKED.”  Currently the Federal Reserve creates money by purchasing debt, mostly US Treasuries on the secondary market.  “HEY, THAT WORKED.”  To be fair fractional reserves (having actually been invented by those early goldsmiths) has been around a long time.  Indeed, banks use it to create temporary money.  However, the Fed’s open market operations take it to a new level by purchasing securities on the open market with money the Fed orders printed or by making entries on their books against which banks can draw.  “HEY, THAT WORKED.”  Indeed, all monetary authorities around the world produce (create) money this selfsame way.  “HEY, THAT WORKED.” That left only fiat currency as money.  Fiat currency is money because the government says it is.  Read a dollar bill or any bill: $5. $10, $20, $50, and $100.  They all have the same statement: “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE.”  “HEY, THAT WORKED.”

From the King of Lydia having some electrum discs stamped with his portrait  to the  printing “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE.” Each transition  probably involved a line of thinking something this:  if it works this way now, wouldn’t it be better if . . .  None of those logical transitions had a theoretical base such as exist in physics, chemistry or the other hard sciences.  All those transitions had was someone trying a change based upon “if it works this way, and it seems to, why wouldn’t if work if we changed this just a tad bit to make it easier.   Sure, there were issues of control and who benefits along the way, but largely the changes were pragmatic to solve one kind of problem or another with making transactions with money. Just think how much gold Spain would not have lost, if the films are correct, to pirates or ship wrecks if they could have left it in a depository in South America and simply moved passion tags around when needed.  But, sadly for Spain, that change had not been made in the 16th Century.

So, what will be the next change.  I propose that the next change be to democratize money creation.  Presently new money is supplied to the economy through a limited number of “dealers” and financial institutions who sell debt instruments to the Federal Reserve.  Those dealers then buy other debt instruments resulting in some of that money financing of buildings, factories, inventories and thing that generate economic activity.  Eventually some of the new dollars end up in paychecks and get spent by consumers who are workers.  One would not be far off by asserting that new money goes to people who already have money.  Indeed, one would not be far off by asserting that is the same issued that William Jennings Bryan addressed in his 1896 Cross of Gold speech is present today—conflict between the rich and the rest of us (I read somewhere that tight money is good for the rich, but I can neither confirm nor make sense of that.  Regardless the rich seem to be for tight money and the rest of us for a more generous supply). Since the current money creation system is money in at the top of the economic pyramid with some making it down to some of the rest of us, it could be characterized as a trickle-down money creation system.

Arguments for the trickle-down money creation system are: investments in factories create jobs, whne workers have those jobs they spend money causing economic growth.  An interesting fact is that 70% of economic activity in the United States of America is attributed to consumers.  Now think, if 70% of the economy is due to consumer spending why do we spend so much effort to put money in the top that only trickles down and not all of it gets to consumers to spend?  Consumer spending varies wildly due to things like consumer worries about the future, the economy, and sick family members.  When consumers feel relatively confident about “stuff” they spend. When they feel uncomfortable the don’t spend.  They also don’t spend when they don’t have money.  So, if we give new money, regular as clock work, to consumers, they will have a basis for feeling rather comfortable about the future of the economy, their security and being able to care for their sick relatives.

So, if the economy works as well as it does putting money in where less than 30% of economic activity takes place (at the top of the economic pyramid), just think how much more stable it will be if we put it in where 70% of economic activity in the economy takes place.  Not only that, think how much more secure people will be.  This plan, will not increase taxes, will not increase entitlements, will not pit one segment of society against another it will be almost as if “all people are created equal.”

Now it is time to name a name and fairly assign blame for what comes next.   I, T. Edward Westen, (AKA Theodore Edward Westen, but no one ever called me Theodore, so Ed stuck and I became T. Edward as a result)  wrote this.