Sustainable Government – Banking For a “New” New Deal

“This isn’t about big government or small government. It’s about building a smarter government that focuses on what works.” Barack Obama, November 26, 2008

As our 44th President prepares to enter the Oval Office, bank lending has seized up, some of the nation’s largest banks are on life support, and the big three automakers are bankrupt. Housing continues to crash, and so does the economy.

Little wonder that Obama is being compared to Franklin D. Roosevelt, who entered the White House in similar financial straits in 1932. Even before taking office, Obama has started his version of the “fireside chats” (updated from radio to online video) given by Roosevelt nearly weekly to reassure the public. He said on November 22 that he plans to create 2.5 million new jobs by 2011 and kick-start the economy by building roads and bridges, modernizing schools, and creating technology and infrastructure for renewable energy. These are excellent ideas, but what will they be funded with-more government debt?

Obama has pledged to honor the commitments of the outgoing administration to rescue financial markets, on the theory that if we don’t, our credit system could freeze up completely. But as noted by Barry Ritholtz in a December 2 article, the bailout has already cost more than the New Deal, the Marshall Plan, the Louisiana Purchase, the moonshot, the savings and loan bailout, the Korean War, the Iraq war, the Vietnam war, and NASA’s lifetime budget combined. [1] Increasing the debt burden could break the back of the taxpayers and plunge the nation itself into bankruptcy.

How can the new President resolve these enormous funding challenges? Thomas Jefferson realized two centuries ago that there is a way to finance government without taxes or debt. Unfortunately, he came to that realization only after he had left the White House, and he was unable to put it into action. With any luck, Obama will discover this funding solution early in his upcoming term, before the country is declared bankrupt and abandoned by its creditors.


Jefferson realized too late that the Founding Fathers had been misled. He wrote to Treasury Secretary Gallatin in 1815:

“The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment.”

He wrote to John Eppes in 1813:

“Although we have so foolishly allowed the field of circulating medium to be filched from us by private individuals, I think we may recover it … The states should be asked to transfer the right of issuing paper money to Congress, in perpetuity.”

It had long been held to be the sovereign right of governments to create the national money supply, something the colonies had done successfully for a hundred years before the Revolution. So why did the new government hand over the money-creating power to private bankers merely “pretending to have money”? Why are we still, 200 years later, groveling before private banks that are admittedly bankrupt themselves? The answer may simply be that, then as now, legislators along with most other people have not understood how money creation works. Only about 3% of the U.S. money supply now consists of “hard” currency-coins (issued by the government) and dollar bills (issued by the private Federal Reserve and lent to the government). All of the rest exists merely on computer screens or in paper accounts, and this money is all created by banks when they make loans. Contrary to popular belief, banks do not lend their own money or their depositors’ money. They merely “monetize” the borrower’s promise to repay. Many creditable authorities have attested to this fact. Here are a few:

“[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”

- Robert B. Anderson, Secretary of the Treasury under President Eisenhower

“Banks create money. That is what they are for… The manufacturing process to make money consists of making an entry in a book. That is all… Each and every time a Bank makes a loan… new Bank credit is created-brand new money.”

- Graham Towers, Governor of the Bank of Canada from 1935 to 1955

“Of course, [banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise [by the same amount].”

- The Chicago Federal Reserve, Modern Money Mechanics (last updated 1992)

Not only are banks merely pretending to have the money they lend to us, but today they are shamelessly demanding that we bail them out of their own imprudent gambling debts so they can continue to lend us money they don’t have. According to the Comptroller of the Currency, the books of U.S. banks now carry over $180 trillion in a form of speculative wager known as derivatives. Particularly at issue today are betting arrangements called credit default swaps (CDS), which have been sold by banks as insurance against loan defaults. The problem is that CDS are just private bets, and there is no insurance commissioner insuring that the “protection sellers” have the money to pay the “protection buyers” if they lose. As loans have gone into default, the elaborate gambling scheme built on them has teetered near collapse, threatening to take the banking system down with it. Now the players are demanding that the government underwrite their bets with taxpayer funds, on the theory that if the banking system collapses the public will have no credit and no money. That is the theory, but it misconstrues the nature of money and credit. If a private bank can create money simply by writing credit into a deposit account, so can the federal government. The Constitution says “Congress shall have the power to coin money,” and that is all it says about who has the power to create money. It does not say Congress can delegate to private banks the right to create 97% of the national money supply in the form of loans. Nothing backs our money except “the full faith and credit of the United States.” The government could and should have its own system of public banks with the authority to issue the credit of the nation directly.


Accumulating a network of publicly-owned banks would be a simple matter today. As banks became insolvent, instead of trying to bail them out, the government could just put them into bankruptcy and take them over. Insolvent banks are dealt with by the FDIC, which is authorized to proceed in one of three ways. It can order a payout, in which the bank is liquidated and ceases to exist. It can arrange for a purchase and assumption, in which another bank buys the failed bank and assumes its liabilities. Or it can take the bridge bank option, in which the FDIC replaces the board of directors and provides the capital to get it running again in exchange for an equity stake in the bank. An “equity stake” means an ownership interest: the bank’s stock becomes the property of the government.[2] Nationalization is an option routinely pursued in Europe for bankrupt banks. As William Engdahl observed in a September 30 article, citing economist Nouriel Roubini for authority:

“[I]n almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990′s, nationalize the troubled banks [and] take over their management and assets … In the Swedish case, the Government held the assets, mostly real estate, for several years until the economy again improved at which point they could sell them onto the market … In the Swedish case the end cost to taxpayers was estimated to have been almost nil. The state never did as Paulson proposed, to buy the toxic waste of the banks, leaving them to get off free from their follies of securitization and speculation abuses.” [3]

As in any corporate acquisition, business in the banks nationalized by the government could carry on as before. Not much would need to change beyond the names on the stock certificates. The banks would just be under new management. They could advance loans as accounting entries, just as they do now. The difference would be that interest on advances of credit, rather than going into private vaults for private profit, would go into the coffers of the government. The “full faith and credit of the United States” would become an asset of the United States. Instead of paying half a trillion dollars annually in interest, the U.S. could be receiving interest on its credit, replacing or eliminating the need to tax its citizens.


There are three ways government could fund itself without either going into debt to private lenders or taxing the people: (1) the federal government could set up its own federally-owned lending facility; (2) the states could set up state-owned lending facilities; or (3) the federal government could issue currency directly, to be spent into the economy on public projects. Viable precedent exists for each of these alternatives:

1. The Federal Bank Option

The federal government could issue credit through its own lending facility, leveraging “reserves” into many times their face value in loans just as banks do now. Franklin Roosevelt funded his New Deal through the Reconstruction Finance Corporation (RFC), a government-owned lending institution. However, the RFC borrowed the money before lending it. A debt-free alternative would be for a government-owned bank to issue the money simply as “credit,” without having to borrow it first. This was done by the state-owned central banks of Australia and New Zealand in the 1930s, allowing them to avoid the worldwide depression of that era. In the informative booklet “Modern Money Mechanics,” the Chicago Federal Reserve confirms that under the fractional reserve system in use today, one dollar in reserves is routinely fanned by private banks into ten dollars in new loans. Following that accepted protocol, the government could fan the $700 billion already earmarked to unfreeze credit markets into $7 trillion in low-interest loans.

Apparently, that is how Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are planning to generate the $7 trillion they say they are now prepared to advance to rescue the financial system: they will just leverage the $700 billion bailout money through the banking system into $7 trillion in new loans. [4] But the Federal Reserve is a privately-owned banking corporation, and the recipients of its largesse have not been revealed. [5] The $700 billion in seed money belongs to the taxpayers. The taxpayers should be getting the benefit of it, not a propped-up private banking system that uses taxpayer money for the “reserves” to create ten times that sum in “credit” that is then lent back to the taxpayers at interest.

Seven trillion dollars in government-issued credit could furnish all the money needed to fund Obama’s New Deal with a few trillion to spare. Among other worthy recipients of this low-interest credit would be state and local governments. Many state and municipal governments are going bankrupt through no fault of their own, just because interest rates shot up when the monoline insurers lost their triple-A ratings gambling in the derivatives market.

2. The State Bank Option

While states are waiting for the federal government to step in, they could charter their own state-owned banks that issue low-interest credit on the fractional reserve model. Article I, Section 10, of the Constitution says that states shall not “emit bills of credit,” which has been interpreted to mean they cannot issue their own paper currency. But there is no rule against a state owning or chartering a bank that issues ten times its deposit base in loans, using standard fractional reserve principles.

Precedent for this approach is found in the Bank of North Dakota (BND), the nation’s only state-owned bank. BND was formed in 1919 to encourage and promote agriculture, commerce and industry in North Dakota. Its primary deposit base is the State of North Dakota, and state law requires that all state funds and funds of state institutions be deposited with the bank. The bank’s earnings belong to the state, and their use is at the discretion of the state legislature. As an agent of the state, BND can make subsidized loans to spur economic and agricultural development, and it is more lenient than other banks in pressing foreclosures. Under a program called Ag PACE (Agriculture Partnership in Assisting Community Expansion), the interest on loans made by BND and local lenders may be reduced to as low as 1 percent. [6] North Dakota remains fiscally sound at a time when other state governments swim in red ink, and its educational system is particularly strong. While disruptions in capital markets have hampered student loan operations elsewhere, BND continues to operate a robust student loan business and is one of the nation’s leading banks in the number of student loans issued. [7] North Dakota’s fiscal track record is particularly impressive considering that its economy consists largely of isolated farms in an inhospitable climate. Ready low-interest credit from its own state-owned bank may help explain this unusual success.

3. Government-issued Currency

A third option for creating a self-sustaining government would be for Congress to simply create the money it needs on a printing press or with accounting entries, then spend this money directly into the economy. The usual objection to that alternative is that it would be highly inflationary, but if the money were spent on productive endeavors that increased the supply of goods and services-public transportation, low-cost housing, alternative energy development and the like-supply and demand would rise together and price inflation would not result. The American colonial governments issued their own money all through the eighteenth century. According to Benjamin Franklin, it was this original funding scheme that was responsible for the remarkable abundance in the colonies at a time when England was suffering the depression conditions of the Industrial Revolution. After the American Revolution, private bankers got control of the money supply, but Abraham Lincoln followed the colonial model and authorized government-issued Greenbacks during the Civil War. Not only did this allow the North to win the war without plunging it into debt to the bankers, but it funded a period of unprecedented expansion and productivity for the country.

Obama would do well to consider these funding solutions for his “smarter” government. He has been quick to assemble his advisers and form policy, but a fast start down the wrong road could do more harm than good. The bailout scheme of the current administration is serving merely to keep a failed banking system alive by draining assets away from the productive economy. The conventional wisdom is that we must continue down the path we are on, because the alternative means frightening, radical change. Financing a new New Deal without putting the country further into insolvency, however, would not be a radical departure from tradition but would represent a return to our roots, to the uniquely American monetary policy advocated by our venerable forebears Benjamin Franklin, Thomas Jefferson and Abraham Lincoln.

1. Barry Ritholtz, “Bailout Costs More than Marshall Plan, Louisiana Purchase, Moonshot, S & L Bailout, Korean War, New Deal, Iraq War, Vietnam War,” Global Research (December 2, 2008).

2. G. Edward Griffin, The Creature from Jekyll Island (Westlake Village, California: American Media, 1998), pages 63, 65.

3. “William Engdahl, “Financial Tsunami: The End of the World as We Knew It,” Global Research (September 30, 2008).

4. Mark Pittman, Bob Ivry, “U.S. Pledges $7.7 Trillion to Ease Frozen Credit,” Bloomberg (November 25, 2008).

5. Mark Pittman, et al., “Fed Denies Transparency Aim in Refusal to Disclose,” Bloomberg (November 10, 2008).

6. “The Bank of North Dakota,” New Rules Project (2007).

7. Richard Sisson, et al., The American Midwest: An Interpretive Encyclopedia (2007), page 41; Liz Wheeler, “Bank of North Dakota Keeps Student Loan Funds Flowing,” Northwestern Financial Review (September 15, 2008).

Splash Out On Spectacular Holidays to Las Vegas

For your next group holidays, there is no better way to celebrate than throwing the party to end all parties in Sin City itself! Perfect for celebrating birthdays, stag do’s and hen parties, Las Vegas is the place to party like a rock star while creating memories that last a life time. With its iconic casinos, ultra-trendy clubs and lounges where you can drink at all hours, there’s something to see and do 24 hours a day.

There are dozens of stage shows in Las Vegas on any given night. From cabaret, to circus’, to concerts – you can find something that will suit everyone in Las Vegas. Free shows about town include Circus Circus, and the Sirens of Ti – a once family-oriented pirate show that has evolved into an entertaining showgirl experience. Be aware that some shows can be very expensive so look for online deals on tickets before you go to save a bundle. Many shows have special deals for group bookings, so look out for these.

There are plenty of nightclubs to enjoy in Vegas. Make it a spectacular experience and splash out on a table complete with flowing champagne. Voo-Doo Lounge is one of the best clubs in Vegas, sitting at the top of the Rio. If you’re looking for an after hours bar, visit Drais – a stag party favourite. It is in the lower portion of the Barbary coast, and doesn’t open until 2 am. Other recommended spots include Cleopatra’s Barge at Caesar’s palace (a real floating barge), the Freakin’ Frog (large beer selection and live music), and Nine Fine Irishmen – built in Ireland and shipped to Las Vegas – how’s that for decadence?

Everybody knows that Vegas is full of casinos, so why not get ahead of the game? Several hotels now offer gambling lessons to increase your chance of winning. These hour-long classes provide excellent holiday deals for big groups. Once the card skills have been honed, visitors are spoiled for choice when it comes to gambling. In Las Vegas, you can even gamble at the supermarket. Don’t forget that free drinks are offered to all players in most casinos, which is definitely a bonus given the steep prices in many casinos.

Annual Forecast & Feng Shui Remedies for 2007 : Yin Red Fire Pig Year – Rooster Sign (Chinese Zodiac

The Chinese Zodiac Astrology is ancient, interesting, accurate and loved by millions across the world. The Chinese Zodiac is based on cyclic concept of time : a cycle of 12 years, repeated again and again. The 12 Years are associated with 12 Celestial Animals : Rat (or Mouse on Mongoose), Ox (or Buffalo or Bull or Cow), Tiger, Rabbit (or Hare or Cat), Dragon, Snake (or Serpent), Horse, Goat (or Sheep or Ram), Monkey, Rooster (or Hen or Cock or Chicken or Phoenix), Dog and Pig (or Boar or Hog). The animal names occasionally differ with the Oriental Country they originate. The Chinese Yearly Horoscopes are basically built around these 12 Animal Signs.

Your Chinese Astrological Zodiac Animal Sign is directly based on the Chinese Lunar Year of Birth that you were born. The Chinese New Year is mobile and could start anywhere between 21st January and 20th February, depending upon the year. If your Date of Birth falls into any of the following Chinese Lunar Years, then, because you are born in the Year of the Rooster (or Hen or Cock or Chicken or Phoenix), you are symbolically identified by your Celestial Animal, the “Rooster (or Hen or Cock or Chicken or Phoenix)” :

From 22 Jan 1909 to 09 Feb 1910

From 08 Feb 1921 to 27 Jan 1922

From 26 Jan 1933 to 13 Feb 1934

From 13 Feb 1945 to 01 Feb 1946

From 31 Jan 1957 to 17 Feb 1958

From 17 Feb 1969 to 05 Feb 1970

From 05 Feb 1981 to 24 Jan 1982

From 23 Jan 1993 to 09 Feb 1994

From 09 Feb 2005 to 28 Jan 2006

In Chinese Hsia Calender, 2007 is the 4704th year and significantly, is also the fourth year of the New Feng Shui Land Luck Cyclic Period 8. The forthcoming new Chinese Lunar Year is from 18th February 2007 to 6th February 2008. The next Chinese New Year, the Yang Earth Rat will begin on 7th February 2008.

Enjoy the Annual Forecasts and learn about the suggested Feng Shui & Crystal Remedies that you may need for the coming “New Lunar Year 2007 : Ding Hai, the Year of the Yin Red Fire Pig” :

CAREER An year of recovery. While 2007 will be better than 2006, you still have many obstacles in your path. You lack enthusiasm, will not feel like working hard and would slack off frequently. If you stay disillusioned with last year and the current lack of progress, you will fail. Pull yourself together, seek advice and help from your boss, mentor or parents to regain your status. Take the initiatives boldly, be tolerant with colleagues, follow your benefactor’s suggestions, pursue your path with determination and you will see your luck evolving slowly but steadily. Competition and work pressure will pile up, but proceed as planned with total focus and concentration. Your personal skills and strengths will be put to test in hostile environments. There will be last minute hitches. Some of you will even expand business and venture abroad too. Voluntary changes will open up more doors. If self-employed, think of diversifying. If you are employee, consider career switch or job change or internal departmental transfer. But promotions could bring more severe responsibilities. Do not get into arguments or disputes in the office. Avoid confrontation with your enemies and ignore rumours. Display the statue of the Mentor Kuan Kung in the North West for protection and timely guidance. A good year to expand your social networking and add to your many friends. If you are in the creative industries like drawing, painting, dance, arts, poetry, professional writing, etc., you will do better than others. In 2007, you are being “eyed” by certain shady, scheming characters – display the icon or genuine photo of the White Tiger, for your personal safety.

MONEY A strangled inflow of money is further depleted by unexpected and unwanted expenses. Do not make impulsive and large purchases. Be prudent and plan an advanced budget to get you through these testing times. Do not indulge in shortcuts to earn quick money – you will end up in legal problems. Invest more on Health Insurance Policies. Stay away from speculative schemes and gambling – you hardly have any windfall luck this year. Be careful when signing documents and do not act as guarantor for anybody. Keep a set of Dragon & Phoenix Coins along with a set of “Four Guardian Kings” Coins with your main cash.

HEALTH Worries will spoil your mental health. Relax, unwind and meditate. Seek medical help immediately if you get any of these problems : microbic and viral infections, respiratory problems, persistent cough, sinus, aching body or spinal discomfort. An elderly family member might pass away. If you were born in 1969, have a thorough eye checkup. If you were born in 1945, you may have to undergo surgery this year. If you are a female born in 1969 or a female born in 1981, you could face gynaecological problems. If you were born in February, you are prone to injuries in the limbs, tendons and bones.

LOVE Not a good year to marry. Singles should extend their courtship period patiently through to next year. Married Roosters, while being alert, should also continue to trust their spouse and ignore the gossips. Resist the temptation of unfaithfulness. If your personality is challenged by your life partner, assert your independence without domination. To avoid pessimism and depression from disrupting marital harmony, consider shifting your home or devote fully to raising a new garden. Place a pair of Pink Mandarin Ducks in the South West of your bedroom.

STUDIES Total focus and sustained efforts are needed to make even the modest progress. Do not resort to short-cuts or cheating during exams : you will end up disgracing yourself and face stiff penalties. Wear an Amethyst Crystal Pendant around your neck.

Birthstone : Topaz Good Relationships with : Ox, Snake and Dragon, for 2007 Conflicts with : Rabbit, Dog and Rooster, for 2007 Polarity Force : More Yang Lucky Numbers : 1, 5, 6, 12, 15, 16, 24 and 51 Zodiac Protector : Bu Dong Ming Wang or Ahalanatha Vidyaraja (Sanskrit)


The above analysis has suggested some remedies/cures for reducing the impact of negative energy and has recommended certain enhancers for increasing and improving upon the beneficial energy of the year. For the remedies/enhancers to be effective, they should be cleansed, energised, blessed and programmed not only for the particular individual/family but also for the specific purpose/problem. They should also be placed in the indicated location, to derive the maximum benefit. Any or all of these remedies can be reused for the forthcoming new years, but they may have to be repositioned according to the specific new year.