BREAKING: Discover How A Slacker Makes $100,000 A Year!

WEBMASTERS! Get Your Website To The Top Of Google

WHAT BANKS, ACADEMICS, THE MEDIA AND POLITICIANS DON’T TELL YOU ABOUT MONEY

Wednesday, November 19th, 2008

The privilege of creating and issuing money is not only the supreme prerogative of government, but is the government’s greatest creative opportunity. By the adoption of these principles, the taxpayers will be saved immense sums of interest. — Abraham Lincoln

Most of what follows is the work of the extraordinary and admirable Stephen Zarlenga of the American Monetary Institute. We have taken excerpts from various of his writings - including a 2003 speech to US Treasury staff - and blended it into one piece. Also included is an article we ran 1994 by Bob Blain and an excerpt from Sam Smith’s Great American Political Repair Manual, published by WW Norton in 1997.

Some history

Stephen Zarlenga, American Monetary Institute - The money system is society’s greatest dispenser of justice or injustice. A good one functions fairly, helping create values for life. A bad, unjust one obstructs the creation of values; gives special privileges to some and disadvantage to others causing unfair concentrations of wealth and power; leading to social strife and eventually warfare and a thousand unforeseen bad consequences - physical and spiritual. . .

One reason economists have failed mankind so badly is their poor methodology - an over-reliance on theoretical reasoning. Alexander Del Mar the world’s greatest monetary historian noted: “As a rule economists. . . don’t take the trouble to study the history of money; it is much easier to imagine it and to deduce the principles of this imaginary knowledge.”. . .

In England the struggle became the goldsmiths vs the monarchy representing society. Later it was the Bank of England vs. society. Until then England’s money power was in the monarch’s hands. But from that point, Bank of England credits would be substituted in place of public money. This promoted a confusion between credit and money to this day. But they are different things. Credit depends on the creditor remaining solvent. Real money does not promise to pay something else. Money is on a higher order than credit.

Those behind the Bank of England obscured the real source of the bank’s power - its legal privilege. Its notes were accepted in payments to the government. Recovering the science of money for the private profit of a small group produced harmful results: 120 years of continuous warfare spawned an unpayable national debt leading to excessive taxation leading to horrors like the Irish potato famine.

Before then, when a nation’s money system was used for taxation, the revenue generally aided the society. But the Bank of England concentrated society’s resources in the wrong hands, crippling the possibility for government to function properly, leading to a growing contempt of government.

Today it’s still the bankers versus the society. At base, the battle remains private money vs. public money. The outcome determines whether the money system operates to serve the few in control, or the whole society. . .

Mankind can live under various forms of government from dictatorship to republic, but the best systems are those in harmony with human nature. Likewise many things can be made into money, but the best will be the ones in harmony with the nature of money.

Remember: don’t confuse money with tangible wealth. Yes, commodities can be improperly monetized by law. The result will make the money system hostage to the commodities situation; hostage to the people, companies, countries that control the commodity. Ultimately it removes the monetary power from society and places it into the hands of the wealthy.

And don’t confuse money with credit - either private or public credit. Yes private credits can be improperly monetized by law. But that gives great privilege to those whose credits have been monetized, to the detriment of the whole society. The money system then becomes an engine of injustice - as it is now. . .

How private central banking started in America

First Step: Our Constitutional Convention, considered two grand themes on humanity: First whether mankind could be self-governing. This American experiment is still in doubt because the Convention mishandled the other grand theme over the nature of money.

They met from May to September 1787 but the money subject didn’t came up til August 16. Jefferson and Paine weren’t there. Franklin was too old to speak.

A curious book on money appeared, written anonymously by Calvinist clergyman John Witherspoon. The book attacked government money and promoted Adam Smith’s primitive view that only gold and silver are money. . . .

The power for government to create money, long considered a necessary part of sovereignty was already in the articles of Confederation, but the Federalists fought to exclude this crucial power from the new government, arguing that it could not be trusted with it. Some of them intended to get hold of the power privately as had been done in England.

The supreme importance of understanding the nature of money now becomes evident: For if money obtains its value from “intrinsic” qualities, it could be viewed more as a creature of merchants and bankers than of governments.

But if money’s essence is an abstract social institution obtaining value through law, then its a creature of government and the Constitution had better deal with it adequately. Describing how a uniform currency is to be provided, controlled and kept reasonably stable, in a just manner. The Constitutional Convention faltered on this crucial question.

The delegates accepted Smith’s primitive concept of money and didn’t firmly place the money power into government’s hands, leaving it ambiguous.

But the power would still exist. What I’m suggesting is that human affairs require government to have four branches, not three; the fourth branch to administer the money power.

The Constitution left the money power up for grabs. Alexander Hamilton wasted no time in grabbing.

Second Step: The Constitution went into effect in late 1789. Hamilton’s first move as Secretary of the Treasury, was to assume $15 million of the state debts. . . an extremely unpopular act. Why?

The worthless debt was held by the revolutionary soldiers, farmers, manufacturers and merchants who furnished its supplies. As Congress secretly passed the bill behind closed doors, the country was overrun by speculators, buying up the certificates for pennies on the dollar.

Third step: Next Hamilton and associates, having kept the monetary power out of government, moved to assume it themselves. . .

Hamilton’s Federalists quickly put through legislation chartering the First Bank of The United States, as a privately owned central bank on the Bank of England model. The Bank would be issuing paper notes not really backed by metal, but pretending to be redeemable in coinage, on the one condition that not a lot of people asked for redemption. They never had enough coinage.

Thus the real question was whether it would be private banks or the government that would issue paper money. Will the immense power and profit of issuing currency go to the benefit of the whole nation, or to the private bankers? That’s always been the real monetary question in America.

Gold and silver served as a smoke-screen. What the bankers counted on were the legal considerations of the money. They knew that all that was needed to give their paper notes value, was for the government to accept them in payment for taxes. That, and not issuing too excessive a quantity. Under those conditions, the paper notes they printed out of thin air, would be a claim on any wealth existing in the society.

Just where did the money for first bank of the U.S. came from? . . . The $10 million subscription for the banks’ shares, was oversubscribed within two hours. Only 1/10 of it was ever paid in gold. The rest was accepted in the form of bonds - the government bonds that Hamilton had turned from pennies on the dollar to full value. The money for the private bank actually came from the American people.

Thanks to Jefferson’s efforts, the bank was liquidated in 1811. Three quarters of it was found to be owned by English and Dutch.

AMI’s proposed reforms

- Nationalize the Federal Reserve System. Reconstitute it in the US Treasury, to evolve into a fourth branch of government. Only the government would create money.

- Remove the privilege which banks presently have to create money. This is done through an elegant and gentle process which automatically turns all the previously issued bank credit into real American money. 100% reserves are reached not by calling in loans but by increasing reserves. This would be neither inflationary or deflationary.

- Institute programs for automatic, constitutionally determined government money creation, starting with the $2 trillion which the civil engineers need to bring our infrastructure up to acceptable levels. From there we go forward carefully determining how to best run the monetary system. . .

What difference would reconstituting the money power in government make? Government money goes into infrastructure; better life; better jobs; education, safer roads, cleaner water; better health care; social security, etc. Society is empowered by being able to direct the money power to solve pressing problems rather than into useless speculation. We no longer have to say we can’t afford it, when so many people and resources are unemployed!.

These three reforms can be closer than we think; and in a crisis situation if only 5% of the citizenry has an awareness of the societal/legal nature of money, they could be enacted.

The need for monetary reform

The power to create money is an awesome power - at times stronger than the executive, legislative or judicial powers combined. It’s like having a “magic checkbook,” where checks can’t bounce. When controlled privately it can be used to gain riches, but more importantly it determines the direction of our society by deciding where the money goes - what gets funded and what does not. Will it be used to build and repair vital infrastructure such as levees to protect major cities? Or will it go into warfare or real estate loans, creating asset price inflation - the real estate bubble.

Thus the money issuing power should never be alienated from democratically elected government and placed ambiguously into private hands as it is in America in the Federal Reserve system today.

Indeed most people would be surprised to learn that the bulk of our money supply is not created by our government, but by private banks when they make loans. Most of our money is issued as interest-bearing debt.

We are borrowing this money system from private banks when instead we should own the system, not rent it. Our government has the sovereign power to issue money (Art.1, Sect.8) and spend it into circulation to promote the general welfare through the creation and repair of infrastructure, including human infrastructure - health and education - rather than misusing the money system for speculation as banking has historically done. Our lawmakers must now reclaim that power. . .

Unhappily, mankind’s experience with private money creation has undeniably been a long history of fraud, mismanagement and even villainy. Banking abuses are pervasive and self-evident. Major companies focus on misusing the money system instead of production. For example, in June 2005, Citibank and Merrill Lynch paid over $1.2 Billion to Enron pensioners to settle fraud charges.

Private money creation through fractional reserve banking fosters an unprecedented concentration of wealth which destroys the democratic process and ultimately promotes imperialism. Less than 1% of the population claims ownership of almost 50% of the wealth, but vital infrastructure is ignored. The American Society of Civil Engineers gives a D grade to our infrastructure and estimates that $1.6 trillion is needed to bring it to acceptable levels.

That fact alone shows the world’s dominant money system to be a major failure crying for reform.

Infrastructure repair would provide quality employment throughout the nation. There is a pretense that government must either borrow or tax to get the money for such projects. But the government can directly create the money needed and spend it into circulation for such projects, without inflationary results.

The false specter of inflation is usually raised against suggestions that our government fulfill its responsibility to furnish the nation’s money supply. But that is a knee jerk reaction - the result of decades, even centuries of propaganda against government. When one actually examines the monetary record, it becomes clear that government has a superior record issuing and controlling money than the private issuers have. Inflation is avoided because real material wealth has been created in the process.

From Stephen Zarlenga’s 2003 speech at the U.S. Treasury

Perhaps the chief failure of economics is its inability, from Adam Smith to the present, to define or discover a concept of money consistent with logic and history. Economists rarely define money, assuming an understanding of it. It’s still being argued whether the nature of money is a concrete power, embodied in a commodity like gold; or whether it’s a credit/debit issued by private banks. Does its value come from the material of which it’s made? Or is it, as we have concluded, an abstract social power - an institution of the law, having value because its accepted in exchanges due to the sponsorship of government? The correct answer leads to conclusions on the proper monetary role of government; whether the power to create and control money should be lodged, as at present in a somewhat ambiguous private issuer - the Federal Reserve System and its member banks - or should be wholly reconstituted within government. An accurate concept of money will light the way to solving the present fiscal crisis.

We have two basic approaches to understanding money: A theoretical method based on logic; and an empirical approach based on experience or history. Practitioners of the two methods arrive at very different conclusions. Theoreticians usually support private commodity money and private credit money. Historians normally want a much larger role for government.

Let’s start with Aristotle who gave the culmination of Greek thought and experiment on money around 330 BC: “All goods must therefore be measured by some one thing. . . now this unit is in truth, demand, which holds all things together. . . but money has become by convention a sort of representative of demand; and this is why it has the name nomisma - because it exists not by nature, but by law (which in Greek was nomos) and it is in our power to change it and make it useless.” So Aristotle calls money a creature of the law. Not a commodity from nature but an abstract social institution. Its essence is not tangible wealth in itself, but a power to obtain wealth.

Plato agreed with Aristotle and advocated fiat money for his Republic: “The law enjoins that no private individual shall possess or hoard gold or silver bullion, but have money only fit for domestic use. . . . wherefore our citizens should have a money current among themselves but not acceptable to the rest of mankind. . . ” And: “Then they will need a market place, and a money-token for purposes of exchange.”

So both Aristotle and Plato noted the paramount principle - that the nature of money is a fiat of the law, an invention or creation of mankind. This principle, part of a lost science of money, must now be relearned in the Third Millennium in order to achieve the monetary reforms needed to move back from the brink of nuclear disaster, to move away from a future dominated by fraud and ugliness, toward a world of justice and beauty.

This “private vs. public” battle for the control of the money power is part of a great ongoing social battle recurring throughout history to this day. This factor shapes the most important outcomes determining how well a money system works. A good system functions fairly; helping the society create values for living. A bad one obstructs the creation of values; places special privileges in the hands of some to the disadvantage of others, and promotes unfair concentrations of wealth and power, and disharmony and social strife.

Now it may be surprising, but the historical record actually shows that publicly controlled systems function much better than private ones. Furthermore, it shows that the concept of money - how money is defined - usually determines whether the system will be publicly or privately controlled. . .

Our American experience contains many of the best case studies for understanding money. We have been a great monetary laboratory - every conceivable solution was tried at some time, and we’ve been a paper money nation from colonial days. Our development was inseparable from it - without it there’d be no United States.

English and Dutch laws forbade sending coinage to the colonies, placing them in continual distress. The intent was to extract raw materials, not for the colonists to trade with each other. An early form of globalization. The colonies had to devise monetary innovations.

In the period 1632 - 92, seventeen different commodities were monetized by law at specified prices. It didn’t work - everyone wanted to pay with the least desirable commodity, in the worst condition. . .

Private land banks were set up but were shunned by the colonists, who considered money a prerogative of government, as it was in England until 1694.

Then in 1690, four years before the Bank of England, Massachusetts embarked on a radical course and issued paper bills of credit, spending them into circulation. Rather than a promise to pay anything, they were a promise to receive them back for all payments to the commonwealth. The colony thrived. Other colonies copied them and infrastructure arose.

In 1723 Pennsylvania’s system loaned the bills into circulation, charging interest on them and using it to pay colonial expenses. Ben Franklin wrote:

“Experience, more prevalent than all the logic in the World, has fully convinced us all, that paper money has been, and is now of the greatest advantages to the country.” . . .

Some long lost principles of the science of money quickly resurfaced:

- Money need not have intrinsic value; its nature is more of an abstract legal power than a commodity.

- Accepting the government paper back in taxes was the key feature needed to give it circulating value.

- The quantity of money in circulation had to be regulated to maintain its value.

- They observed that paper money helped build real infrastructure.

- Most importantly, the colonies did not issue more money than their legislatures authorized. They have an outstanding record issuing currency. Of over a hundred colonial issues I found only one case of fraud. In Virginia, a Mr. Robertson who was supposed to be burning the old notes as new ones were printed, was giving them to friends instead.

But in the battle for monetary dominance, the colonial monetary experience has been miscast as irresponsible inflation money. This was the result of 18th century Boston’s medical Dr. William Douglas’ inaccurate writings. The error was corrected by Alexander Del Mar in 1900 in The History of Money in America, but was ignored. It was authoritatively cleared up again by Professor Leslie Brock in 1976 and again ignored. Many economists, and especially the libertarians, still haven’t got the message that colonial government paper money was crucial in building the colonies.

In 1764, England’s Lords of Trade and Plantations prohibited all colonial legal tender issues, and that became the underlying cause of the American Revolution, not some tax on tea.

The continental currency became the lifeblood of the revolution. $200 million was authorized and $200 million issued. The currency functioned well. In late 1776 the notes were only at a 5% discount against coinage, when General Howe took over New York City and made it a center for British counterfeiting. The Brits counterfeited billions; newspaper ads openly offered the forgeries. . . In March 1778 after 3 years of war, it was $2.01 Continental for $1 of coinage.

The continentals carried us over 5 1/2 years of Revolution to within 6 months of its final victory. Thomas Paine wrote: “Every stone in the Bridge, that has carried us over, seems to have a claim upon our esteem. But this was a corner stone, and its usefulness cannot be forgotten.”

Our constitutional convention considered two grand themes of humanity: First whether mankind could be self-governing or had to be ruled by authority. Often referred to as the American experiment. We are still learning the outcome, and one of the reasons it’s still in doubt is because of the way the convention mishandled the other grand theme - the nature of money. By the time of the convention, the great benefits of the continentals was nearly ignored; along with much of the rest of our hard won monetary experiences. Some wanted to emphasize that the continentals became worthless and rejected the idea of paper money altogether.

They ignored that paper money was crucial in giving us a nation; that abstract money requires an advanced legal system in place; that the normal method of assuring its acceptability is to allow the taxes to be paid in it. . .

The convention met from May to September 1787 but the money subject didn’t come up until August 16. Remember, Jefferson and Paine were not there. Franklin was too old to speak.

A curious book on money appeared just then, written anonymously by Calvinist Minister John Witherspoon, - the only clergyman signer of the declaration of Independence. The book attacked government money and promoted Adam Smith’s view that only gold and silver are money. . .

The power for government to properly create money, long considered as a necessary part of sovereignty, was contained in five magic words - to emit bills of credit. This provision was already in the Articles of Confederation, but the Federalists - the merchant/commercial interest, largely responsible for calling the Constitutional Convention in order to strengthen the national government, fought to exclude this monetary power from the new government, arguing that it could not be trusted with it. Some of them intended to get hold of the power privately as had been done in England.

The supreme importance of the concept of money now becomes evident: For if money is primarily a commodity, convenient for making trades, which obtains its value out of “intrinsic” qualities, then it could be viewed more as a creature of merchants and bankers than of governments.

But if the true nature of money is an abstract social institution embodied in law - obtaining its value largely through legal sanctions, then its more a creature of governments, and the Constitution had better deal with it adequately - describing how a uniform currency is to be provided, controlled and kept reasonably stable, in a just manner. It was on this crucial question that the Constitutional Convention faltered.

The delegates accepted Adam Smith’s primitive commodity definition of money as gold and silver and didn’t firmly place the monetary power into government, leaving it ambiguous. Later they’d argue over what they had done. But the power would still exist, since it is as important as the legislative, judicial and executive powers.

I am suggesting that the nature of human affairs requires government to have four branches, not three; the fourth branch to embody and administer the monetary power.

The Constitution trusted the people with the political power; but didn’t firmly place the monetary power in their government. This (along with slavery) is the original sin of American politics. As a result the power was left up for grabs. Alexander Hamilton wasted no time in “grabbing.”

The Constitution went into effect in late 1789; Van Buren described Hamilton’s first move as Secretary of the Treasury, in 1790: “Hamilton assumed some $15 million of the state debts. . . an act. . . neither asked nor desired by the states, unconstitutional and inexpedient. . . ”

What was so bad about it? “A large proportion of the domestic debt (was held by) the soldiers who fought our battles, and the farmers, manufacturers and merchants who furnished supplies for their support. . . .When it became known to members of Congress, which sat behind closed doors, that the bill would pass. . . every part of the country was overrun by speculators, by horse, and boat, buying up large portions of the certificates for (pennies on the dollar).” Madison, attempted to have the law pay speculators less than the original holders, but was voted down.

Next Hamilton and associates, having kept the monetary power out of government hands, moved to assume it themselves. The Bank of North America was the only bank in the US, formed in Pennsylvania on Tom Paine’s initiative to assist the revolution. Arguing that it was only a state bank, Hamilton suggested it come forward if it wanted to alter itself for the national purpose. Curiously, the bank took no steps toward this obvious increase in profit and power.

Hamilton’s Federalists quickly put through legislation to charter the First Bank of The United States, as a privately owned central bank on the Bank of England model. The Bank would be issuing paper notes not really backed by metal, but pretending to be redeemable in coinage, on the one condition that not a lot of people asked for redemption. They really did not have the coinage. The bank would do what they had blocked the government from doing. Print paper money.

While gold and silver served as a smoke-screen what the bankers really counted on, were the legal considerations of the money. They knew that all that was needed to give their paper notes value, was for the government to accept them in payment for taxes. That, and not issuing too excessive a quantity of them. Under those conditions, the paper notes they printed out of thin air, would be a claim on any wealth existing in the society.

And we see why the Bank of North America was not put forward for this purpose: the U.S. government had owned 60% of it. . . . The government would only own 20% of the new bank.

Just where did the money for first Bank of the U.S. came from? The $10 million share subscription for the banks shares, was oversubscribed within 2 hours. Less than 1/10 of it was ever paid in gold. The rest of the payment was accepted in the form of bonds - the very government bonds that Hamilton had turned from pennies on the dollar to full value. So you see where the money for the bank actually came from - from the American people. That’s how private central banking started in America.

Thanks in large part to Jefferson’s efforts, the bank was liquidated in 1811. Three quarters of it was found to be owned by Europeans - English and Dutch.

The 2nd Bank of the U.S. - the bank from hell - operated illegally from inception, accepting IOU’s instead of the required gold in payment for its shares. So again the banker’s gold “requirement” turned out to be a masquerade.

This private central bank immediately embarked on a wild monetary expansion. Beginning operations in April 1817, by July it had 19 branch offices and had created $52 million in loans on its books and an additional 9 million in circulating currency, based on gold and silver coin reserves of only $2.5 million. This tremendous expansion caused a wild speculative boom. Then in August 1818, the bank turned abruptly and began an insane contraction, causing the panic of 1819. It cut its outstanding loans and advances from a high of $52 million, down to $12 million in I819. Its circulating notes dropped from $10 million to $3.5 million in 1820. A massive wave of bankruptcies swept the nation.

The subsequent history of this bank and its fight to the death with President Jackson reads like a financial soap opera. The story of various state chartered banks is similar.

Meanwhile the US government acted responsibly In the aftermath of liquidation of the first and second bank; US Treasury notes were substituted in place of banknotes. About $65 million were authorized and only $37 million actually issued. The U.S. Treasury spent them into circulation. Initially they were all large denomination, paid interest; were redeemable in gold and required formalities to transfer. By 1815 they became bearer certificates with no redemption date, paid no interest and were in smaller denominations. Thus they were nearly a true money form. The fact is that the US government has always acted responsibly in creating money. Not so the private banks.

Greenbacks were on balance our best money system to date Thanks to 100 years of misreporting, the image of the greenbacks coming down to us is as inflated or worthless paper money. In fact, $450 million were authorized and $450 million were printed. Counterfeiters couldn’t duplicate the Greenbacks. Every Greenback was eventually exchangeable one for one with gold coin.

But greenbacks were not promises to pay money later - they were the money. Since they were not borrowed, they did not give rise to interest payments and did not add to any national debt. The U.S. Treasury printed them and spent them into circulation.

Economists usually harp on the Greenbacks dropping to 36 cents in gold, and they leave it at that. While that happened, its highly misleading. . .

What did happen was that in June 1864, Congress limited the amount of Greenbacks to $450 million.

There was inflation, but remember 13% of the population was fighting a terrible war. 625,000 died. Greenbacks performed well despite being spent on destruction. They were also being abused by the bankers. For every greenback created by Congress, the banking system created $1.49 in bank notes.

What if instead of being spent on destruction, they went into building infrastructure, and canals and roads? Spending such money on infrastructure need not be inflationary. For example the Erie Canal lowered freight prices from $114 a ton down to $9 a ton.

The great lesson of greenbacks is that in times of crisis - and other times too - our nation has power to do what is financially necessary, through our government. We don’t have to beg or borrow money from the wealthy and, create an astronomical national debt. We don’t have to tax the middle class into oblivion, or cancel necessary programs. We can carefully use the nations’ sovereign money power far more than we presently have been allowed to realize.

At the time of the greenbacks there were those who fully understood. Senator Howe said: “We must rely mainly upon a paper circulation; and . . . that the paper, whoever issues it, must be irredeemable. All paper currencies have been and ever will be irredeemable. It is a pleasant fiction to call them redeemable. . . I would not expose that fiction only that the great emergency which is upon us seems to me to render it more than usually proper that the nation should begin to speak the truth to itself; to have done with shams, and to deal with realities.”

The struggle between private versus public control of money continued throughout the 19th century. The greenbacks continued to constitute about a third of our money supply. Generally the private money power dominated. But in periods when the government exercised control, an excellent record was established- superior to that of private control. The bankers continued their pretense that gold was the basis of the system, and even the Federal Reserve in 1913 appeared to be a gold-based system. But immediately upon inception, we were pushed into warfare. Within 20 years Americas farms, cities, exchanges and money system were all wrecked, ending in the great depression. It was again left to our government to rescue the nation.

It’s forgotten today, but the Thomas Amendment passed with legislation in 1933, gave the President the power to create $3 billion in greenbacks if the banking system didn’t co-operate. . .

The de-funding of government at the local, state and federal levels, arises out of this disease of attacking government as the enemy.

This attack on government starts with Adam Smith. His purpose in smearing the English government was to keep the monetary power in the hands of the privately owned Bank of England. . .

To summarize the argument: The nature of the money power is societally derived, not one originating in the activities of private corporations. Because of its great importance to all, control over the process belongs under public authority. Both logic and history show that its not safe to delegate this power, and certainly not acceptable to allow its usurpation.

The current bailout

The demand for immediate action to avoid a meltdown is misplaced. Immediate and wrong action will accelerate the meltdown. There is only one thing Congress can do to inspire confidence and avoid a meltdown - that is to take deliberate and careful and good workable action to help resolve the crisis. In other words to fulfill its congressional duty to America. . .

Getting it right means requiring several conditions to protect the American people from the gang that’s been financially raping the nation; that gave us the unnecessary Iraqi war. It means facing the facts on where the banking crisis is and how it got there. It means examining the monetary and economic reforms of the Federal Reserve System that will assure that such thievery or foolishness won’t happen again; and taking back from those who improperly benefited from the tragedy and prosecuting them.

At the heart of the problem is that our money system has been privatized. Naturally it’s being run for the benefit of the “privates” in control, with minimal concern for the public interest. . .

Rather than borrowing the $700 billion being demanded, and ending up paying back about 3 times that amount after interest charges, The US government could issue the money the same way the banks do, instead of borrowing it from them. But while the banks issue credit that substitutes for money, the U.S. would issue actual money. Our government has the power to create the money, in an account, or by simply printing it as greenbacks.

There would not be inflationary effects, because it was already believed that those moneys existed in the form of the real estate values and loans. In effect this would stop a deflation which would follow from writing down those assets and loans to their present market values. Some conditions would be needed to assure that the banking system did not use those greenback dollars for further credit creation, as that would be inflationary. In essence the greenbacks would not be “re-discountable” by the banking system to create more loans, but would be legal tender for all debts public and private. . .

What the administrations proposal is doing is almost identical to what Keynes did during the Great Depression. He insisted that the bailout be in terms of government going into more debt to the banking system, whereas the Chicago Plan by the greatest economists in the nation at that time, was promoting the government to create money (greenback equivalents) instead of debt. . .

Keynes won the argument but his program did not work and it was only WW2 and [with] wartime employment, creating tanks to be blown up, airplanes to be shot out of the sky, and ships to be sunk, that Americans went back to work and we worked our way out of the depression, and into more debt. That’s where this proposal leads. Keynes answer was that “in the long run we are all dead,” but not our posterity. Based on what happened following his program before, our descendants, and society that survives become enslaved.

Unless monetary reform is in the mix now, it could take a tremendous worsening of the situation to come up again soon. One articulate friend, George Romero, summed it up for me: “The private sector has failed. The public sector is expected to rescue them, and it will. Therefore the public sector should be in control of the money system to benefit the country.”

The Chicago Plan of the 1930s

Henry Simons from the University of Chicago created the proposal and prominent economists from other universities joined him in what became known as the “Chicago Plan.”Economists like Paul Douglas of the U of C.; Frank Graham and Charles Whittlesley of Princeton; Irving Fisher of Yale; Earl Hamilton of Duke; and Willford King of NYU, to name a few. One version was sent to all the academic economists – about a thousand total. Of those responding, 235 from 157 universities agreed with the proposal; another 40 approved it with reservations and only 45 disapproved. So the plan had broad professional support. Variants of the Chicago Plan usually started by condemning the banking structure as foolish and harmful: “If the purpose of money and credit were to discourage the exchange of goods and services, to destroy periodically the wealth produced, to frustrate and trip those who save, our present monetary system (does that) most effectively!”

They dispensed with the gold standard as not a real standard, because the value of gold had changed violently up and down against commodities. From 1914 to 1917 wholesale prices rose 65% and, then increased another 55% to May 1920, So Gold coins lost over 75 % of their value against wholesale prices in the Fed’s first six years. Then by June 1921wholesale prices fell 56% against gold. “Hard money” advocates who believe that gold money has been stable should study these facts. One version of the plan quoted Roosevelt’s referring to gold as an “old fetish of so-called international bankers.”

The main features of the Chicago Plan were:

- Only the government would create money. The Federal Reserve banks would be nationalized, but not the individual member banks. The power to create money was to be removed from private banks by abolishing fractional reserves – the mechanism through which the banking system creates money. So the plan called for 100% reserves on checking accounts which simply meant banks would be warehousing and transferring the money and charging fees for their services.

- The Plan separated the loan-making function, which can belong in private banks, from the money-creation function, which belongs in government. Lending was still to be a private banking function, but by lending deposited long-term savings money, not created credits. In this way they’d restrict an unstable practice known as borrowing short and lending long – making long term loans with short term deposits.

- The proposal recognized the distinction between money and credit, which had been confused through fractional reserves and what was called the “real bills doctrine.” The confusion was seen as one of the causes of the depression, because when businesses reduced their borrowings on commercial bills which occurs during any downturn, parts of the money supply had been automatically liquidated. The Chicago Plan saw the instability of this – that it aggravates a downturn.

Simon made this grand observation: “The mistake. . . lies in fearing money and trusting debt. Money itself is highly amenable to democratic, legislative control, for no community wants a markedly appreciating or depreciating currency. . . but money is not easily manageable alongside a mass of private debt and private near-moneys. . . or alongside a mountain of public debt.”

Some variations of the plan had the U.S. government lending banks all or part of newly printed cash needed to achieve 100% reserves. This was a crucial part of the plan, because depositors were going to the banks and withdrawing their accounts, deflating the system.

This loaning of reserves feature also elegantly converted all the previously monetized bank credits into real US money on which the banks paid interest to our government. It post facto made them intermediaries, earning some reasonable spread for their loaning work.

Paul Douglas wrote: “This proposal will of course be opposed by the bankers from whom it takes the lucrative privilege of creating purchasing power. It would however insure the safety of deposits, give large revenues to the government, provide complete social control over monetary matters and prevent abnormal fluctuations in the capital market. At the same time it would permit the allocation of productive resources. . . to remain primarily in private hands. All in all it seems the most promising program for the reform of our monetary and credit system. . . ”

Marinner Eccles, who became Fed Chairman under Roosevelt, testified that the best course would be for the government to nationalize the Federal Reserve banks.

Congressman Jerry Voorhis made the case for hundred percent reserves and putting money into circulation by paying pensions and disabled persons. As late as 1945 Voorhis introduced legislation for a U.S. Monetary Authority as our sole creator of money.

Maurice Allais, the great French economist, backed the plan and published a book on it in 1948.

Irving Fisher of Yale, wrote on it extensively and popularly well into the 1940s. . .

There was no understanding or support for the proposal among the electorate. Only Irving Fisher seems to have understood the necessity for popularizing the matter.

Simons himself got cold feet and shied away from promoting the plan, desiring to remain on a level of professorial discussion. He even threw a wet towel on Fisher who was promoting the reform suggesting that Fisher avoid popularizing the idea!

The Plan was mishandled politically. . . The last attempt at 100% reserves was when Senator Nye of North Dakota tried to place it in part of the administration’s 1935 banking reform legislation, but his amendment was defeated.

The FDR administration had its own banking reform bill and remained ambiguous on the Chicago Plan, never commenting on it even though the political climate and professional support for the plan was sufficient to get it passed, had they made some effort. Instead his Treasury Secretary Morganthau was trying to make minor adjustments without fundamentally challenging the banking system. . .

Can we learn from what John Maynard Keynes was doing during all this? He was squarely behind the bankers and against such real reform. Yet he knew that he had to break out of orthodox economics or the whole system was in danger of being overturned. Keynesianism was a way to allow banks not government to keep control over the money-creation process, and while the more narrow minded economists fought Roosevelt’s attempts to create money and jobs as inflationary, during the nations worst deflation, Keynes knew better.

The New York Times in December 1933. . . got Keynes to write an open letter to Roosevelt, which they published. Keynes wisely advised Roosevelt that “Only the expenditures of public authority” could turn the tide of depression. . .

However, Keynes inappropriately warned Roosevelt not to create the money for this, but only to borrow it, and wrongly advised him that there was already enough money in circulation, and that: “increasing the quantity of money. . . is like trying to get fat by buying a larger belt.”

Keynes was therefore not “revolutionary” except in relation to the utter backwardness of the financial establishment. He didn’t come close to a real solution, but essentially protected his class. The real question has always been whether the nation’s money should be created under law, by government, or under the private caprice of bankers.

DEALING WITH THE NATIONAL DEBT

Bob Blain, Progressive Review, 1994 - From 1790 to 1993, taxpayers were charged $3.2 trillion in interest on federal debt. . . . The original debt at 5.53 percent interest compounded for 204 years equals $4.4 trillion. The present federal debt is arguably the original debt enlarged by 204 years of compounding interest.

According to the Federal Reserve Bulletin, the total money supply (currency, travelers checks, demand deposits, and savings accounts) in the U.S. economy in March 1993 was $4 trillion. The total debt of the federal government, state and local governments, corporations, farmers, home buyers, and consumers was in excess of $15 trillion. If the total money supply is $4 trillion, where is the other $11 trillion of borrowed money?

Here is another curious fact. We have been told for years that government borrowing to cover hundreds of billions of dollars of deficits would drive interest rates through the roof. Instead, interest rates have fallen dramatically. In March, 1993 they were between 4.9 and 2.2 percent, far below what they were in the early 1980s when federal debt was a small fraction of what it is now.

The explanation for these anomalies is that the missing money never existed. We never borrowed it, in the normal sense that it was turned over to us and spent. Most debt is not the result of people borrowing money; it is the result of people not being able to repay what they owed at some earlier time. Instead of declaring them bankrupt, creditors just add more to their debt.

The federal government has been adding interest to its debt for 204 years. James Jackson, Congressman from Georgia, predicted that this would happen in a speech he made to the First Congress on February 9, 1790. Jackson warned that passing Alexander Hamilton’s plan to base the country’s money supply on the existing federal debt of $75 million would “settle upon our posterity a burden which they can neither bear nor relieve themselves from.” He predicted: “In the course of a single century it would be multiplied to an extent we dare not think of,” He clearly saw that Hamilton’s plan would put in place an exponential process of debt growth. To support his warning he cited the experience of Florence, Genoa, Venice, Spain, France, and England.

Hamilton’s plan was for Congress to commit the country to pay interest on the debt until the debt was paid. In the meantime the debt certificates would circulate as money. He argued that this would turn a $75 million debt into a $75 million money supply. The problem was that interest payments would have come out of the money supply. This would reduce the quantity of money that remained in circulation — and cause recession — until new loans returned the interest money back into circulation. The history of federal government finance shows such periodic swings between debt reduction and recession to debt increase and recovery.

The power to deal with this problem that Congress has neglected all these years is the power “to coin money and regulate the value thereof.” It has overused its power “to borrow money on the credit of the United States.” According to the Federal Reserve, 98 percent of the U.S. money supply is borrowed. Only 2 percent is coined.

The First Congress set the wrong precedent. It should have created $75 million in money and paid off the debt. With a population of 4 million people and an economy starved for a medium of exchange, that would have increased the money supply by $18.75 per person.

Why did the First Congress borrow instead of coin money? Newspapers at the time accused members of Congress of acting to serve their own interests. They sent agents into the countryside to buy up debt certificates that the general public thought were worthless. They then passed the Funding Act knowing that it would give themselves and their heirs a source of income that would grow exponentially with the debt. For every debtor there is a creditor. What is a $4 trillion debt for debtors is $4 trillion in claims for creditors.

To get out of this trap Congress has a range of options:

First, it could stop paying interest on the debt. Interest is the fuel that is exploding the debt. Cut off the fuel; stop the explosion. Since 1790 over $3 trillion in interest has been added to the original $75 million. Cutting interest would immediately cut the annual deficit by about $300 billion. Experience shows that all other conventional actions, no matter how painful, do no more than slow slightly the rate of debt growth. Then Congress could begin the process of paying off the debt.

A political problem with stopping the payment of interest is that people with money control politics. And many of them would have their interest income stopped. Insurance companies and pension funds are invested in federal debt and foreign holders would also be upset. Economically, however, we cannot continue to add compounding interest to existing debt. The biggest debtor is not the federal government. It is business corporations. It is impossible for them to increase the physical production of goods and services in order to keep up with exponential debt growth that is limited by nothing but arithmetic. Unlike the debt, the physical economy has limits.

The question holders of federal debt must ask themselves is this: Do we want to insist on more interest that will add debt to existing debt until the only option is debt repudiation and we lose everything? Or are we willing to stop where we are while we may still be able to recover our original investment plus a reasonable profit?

A second option is for Congress to create the money necessary to fund public works. As a sovereign government, Congress’ power is unique. It can create money debt-free and interest-free. Congress needs to stop thinking of itself as the same as other organizations that must take money in before they can spend it. Money does not grow on trees. It must be created. The only choice is whether to have it created as loans at interest from private banks or to have it created by Congress debt-free and interest-free.

How can Congress create money without causing inflation? Congress must regulate its value. The power to create money includes this regulatory power.

A good way for Congress to regulate the value of money is by funding projects at the current national price level. The current national price level can be calculated by dividing the most recent gross domestic product by the number of hours of work that produced it. For example, in 1991 the total gross domestic product was $5.6 trillion. The employed labor force produced it with 237 billion hours of work. So the GDP was produced at the rate of $23.95 per hour of work. By now the price level per hour is probably $25.00. So let Congress fund projects at $25 per hour. How this amount is allocated among labor, land, and capital can be negotiated.

How much money should Congress create? How about enough to reach full employment? We have about 9.5 million people actively looking for work. That includes a million managers and professionals; two and a quarter million technical, sales, and clerical people; a million and a quarter precision production, craft and repair people; over two million operators, fabricators and laborers; and 305,000 framers, foresters and fishermen. That’s a skilled labor force as big as many nations — all now idle. Employed at an average $25 per hour, ($50,000 per year), they would add $475 billion to the nation’s gross domestic product and reduce spending for unemployment compensation. The pie would grow as unemployment went down. Congress could start by creating, say, $50 billion, or $200 per person, in debt-free interest-free money, then fund $50 billion worth of works projects, monitor the results, and make adjustments as needed. Meanwhile the Fed could raise bank reserve rates, not interest rates, to make checking accounts more secure.

A third more conservative option is being proposed by an organization called Sovereignty, which believes that a country that borrows money loses its sovereignty to its creditors. Their proposal is intended to restore U.S. sovereignty by reducing our dependence on borrowed money.

The Guernsey experience. . .

Guernsey is an island state located among the British Channel Islands about 75 miles south of Great Britain. In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey’s debt was 19,000 pounds. The island’s annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment.

Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island’s money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation.

In 1990 there was $13 million in interest-free state issued notes. A visitor to the island that year later wrote:

“I returned from Guernsey last weekend. It is a fascinating little island. There are about 60,000 permanent residents on the island. The average family owns 3.3 cars, their unemployment rate is zero and their standard of living is very high. There is no public debt. There is a surplus of public funds which earn interest. The Guernsey Treasury increased the Ml of the island by 40 percent in the last three-year period, and this increase did not do anything to inflation. The price for a gallon of gasoline in England translates to about $5US whereas, the price in Guernsey is about $2US. Contrary to the teachings of current economics in all higher institutions, inflation is not related to the volume of money but rather to the size of the commercial debt.”

Sovereignty proposes that Congress create money and lend it interest-free on a per capita formula to tax-supported bodies for capital projects and to convert existing debt to non-interest-bearing debt. Since first proposed in January 1989, the Sovereignty loan plan has been endorsed by over 1,814 city, town, and county governments and school boards, as well as by the U.S. conference of Mayors, the Michigan state legislature and the Community Bankers Association of Illinois, which represents 515 banks.

As loans, the money would be repaid, so money injected into communities would fund projects, then be removed. Of the three methods for putting money into circulation available to Congress, giving, paying, and lending, lending is the most cautious.

Benjamin Franklin attributed the economic success of the colonies to their creation of all the money they needed. He said that the root cause of the Revolution was the act of Parliament that prohibited the colonies from continuing to issue their own money. The moneylenders of England thought it more profitable that the colonies borrow their money.

We hear from Washington that we need to sacrifice to bring the deficits under control — cut consumption, save, and invest. When that slows the economy, we will be told to spend more to stimulate the economy. We have heard it all before. Neither method works. We need debt-free interest-free money to fund the work that needs to be done. It’s not sacrifice we need; it’s productive employment. Let Congress use its unique power to coin money and regulate its value to fund that employment.

Money is no more than an accounting device, a system of notes certifying that the bearer has done a share of the work and deserves a share of the wealth. Money’s backing is the goods and services produced by the labor force. By creating money Congress can activate the idle productive power of our people. And what they produce will add real wealth to the U.S. Treasury and add nothing to the federal debt.

Sam Smith’s Great American Political Repair Manual, 1997 - A report of Guernsey’s States Office in June 1946 notes that island leaders frequently commented that these public works could not have been carried out without the issues, that they had been accomplished without interest costs, and that as a result “the influx of visitors was increased, commerce was stimulated, and the prosperity of the Island vastly improved.” By 1943, nearly a half million pounds worth of notes belonged to the public and was so valued that much of it was being hoarded in people’s homes, awaiting the island’s liberation from the Germans. About the same time that Guernsey started to fix its sea walls the town of Glasgow, Scotland, borrowed 60,000 pounds to build a fruit market. The Guernsey sea walls were repaid in ten years, the fruit market loan took 139. In the first part of the the 20th century, Glasgow paid over a quarter million pounds in interest alone on this ancient project.

How did Guernsey avoid the fiscal disaster that conventional economics prescribed for it? First and foremost by understanding that when you build roads or sea walls or colleges or houses, you are not reducing your society’s wealth. In fact, if you do it right, you are creating something that will add to its wealth. The money that was created was simply backed by public works rather than gold or “full faith and credit.” It was, in fact, based on something more solid than the dollar bills in our wallets today. In contrast, tacking on an interest charge to public works — as we do in the US — creates no new wealth, but merely transfers claims on existing wealth from debtors to creditors.

Have Your Say: WHAT BANKS, ACADEMICS, THE MEDIA AND POLITICIANS DON’T TELL YOU ABOUT MONEY
Please read our posting guidelines before posting.
Alternatively you can discuss this report in our forum .

Supercomputers Break Petaflop Barrier, Transforming Science

Wednesday, November 19th, 2008

By Betsy Mason |

A new crop of supercomputers is breaking down the petaflop speed barrier, pushing high-performance computing into a new realm that could change science more profoundly than at any time since Galileo, leading researchers say.

When the Top 500 list of the world’s fastest supercomputers was announced at the international supercomputing conference in Austin, Texas, on Monday, IBM had barely managed to cling to the top spot, fending off a challenge from Cray. But both competitors broke petaflop speeds, performing 1.105 and 1.059 quadrillion floating-point calculations per second, the first two computers to do so.

These computers aren’t just faster than those they pushed further down the list, they will enable a new class of science that wasn’t possible before. As recently described in Wired magazine, these massive number crunchers will push simulation to the forefront of science.

Scientists will be able to run new and vastly more accurate models of complex phenomena: Climate models will have dramatically higher resolution and accuracy, new materials for efficient energy transmission will be developed and simulations of scramjet engines will reach a new level of complexity.

“The scientific method has changed for the first time since Galileo invented the telescope (in 1609),” said computer scientist Mark Seager of Lawrence Livermore National Laboratory.

Supercomputing has made huge advances over the last decade or so, gradually packing on the ability to handle more and more data points in increasingly complex ways. It has enabled scientists to test theories, design experiments and predict outcomes as never before. But now, the new class of petaflop-scale machines is poised to bring about major qualitative changes in the way science is done.

“The new capability allows you to do fundamentally new physics and tackle new problems,” said Thomas Zacharia, who heads up computer science at Oak Ridge National Laboratory in Tennessee, home of the second place Cray XT5 Jaguar supercomputer. “And it will accelerate the transition from basic research to applied technology.”

Have Your Say: Supercomputers Break Petaflop Barrier, Transforming Science
Please read our posting guidelines before posting.
Alternatively you can discuss this report in our forum .

Extrajudicial Assassinations As Official Israeli Policy

Wednesday, November 19th, 2008

By Stephen Lendman |

Extra-judicial killings are indefensible, morally abhorrent, and illegal under international laws and norms. Article 23b of the 1907 Hague Regulations prohibits “assassination, proscription, or outlawry of an enemy, or putting a price upon an enemy’s head, as well as offering a reward for any enemy ‘dead or alive.’ ”

Article 3 of the Universal Declaration of Human Rights (UDHR) states that “Everyone has the right to life, liberty and security of person.” UDHR also recognizes the “inherent dignity (and the) equal and inalienable rights of all members of the human family.”

So do “just war” principles that rule out gratuitous violence, assassinations, especially if premeditated, war against civilians, and so on, despite the difficulties of distinguishing between combatants, those who’ve laid down their arms, and the innocent in times of war - let alone dealing with “terrorism” or what one analyst calls the “twilight zone between war and peace.” Others say it’s justifiable resistance or “blowback” in response to state-sponsored violence and other crimes of war and against humanity.

In 1980, the Sixth United Nations Congress on the Prevention of Crime and the Treatment of Offenders condemned “the practice of killing and executing political opponents or suspected offenders carried out by armed forces, law enforcement or other governmental agencies or by paramilitary or political groups” acting with the support of official forces or agencies.

The General Assembly also acted in response to arbitrary executions and politically motivated killings. On December 15, 1980, it adopted resolution 35/172 in which it urged member states to abide by the provisions of Articles 6, 14 and 15 of the International Covenant on Civil and Political rights that cover the right to life and various safeguards guaranteeing fair and impartial judicial proceedings.

The first principle of the 1989 UN Principles on the Effective Prevention and Investigation of Extra-legal, Arbitrary and Summary Executions states:

“Governments shall prohibit by law all extra-legal, arbitrary and summary executions and shall ensure that any such executions are recognized as offences under their criminal laws, and are punishable by appropriate penalties which take into account the seriousness of such offenses. Exceptional circumstances, including a state of war or threat of war, internal political instability or any other public emergency may not be invoked as a justification of such executions. (They) shall not be carried out under any circumstances including, but not limited to, situations of internal armed conflict, excessive or illegal use of force by a public official or other person acting in an official capacity or by a person acting at the instigation, or with the consent or acquiescence of such person, and situations in which deaths occur in custody. This prohibition shall prevail over decrees issued by governmental authority.”

These articles and provisions apply to occupied civilian populations, and the Fourth Geneva Convention and its Article 3 affords ones (like the Palestinians) under foreign occupation special protection. It covers all actions related to “Violence to life and person, Murder of all kinds, mutilation, cruel treatment and torture.” In addition, “The passing of sentences and the carrying out of executions without previous judgment pronounced by a regularly constituted court, affording all the judicial guarantees….recognized as indispensable by civilized peoples.”

Its Article 32 states: “the High Contracting Parties specifically agree that each of them is prohibited from taking any measure of such a character as to cause the physical suffering or extermination of protected persons in their hands. This prohibition applies not only to murder, torture, corporal punishment, mutilation and medical or scientific experiments not necessitated by the medical treatment of a protected person, but also to any other measures of brutality whether applied by civilian or military agents.”

Its Article 85 refers to “Grave Breaches” and defines them as “Acts committed willfully and causing death or serious injury to body or health….making the civilian population or individual civilians the object of attack (or)launching an indiscriminate attack affecting the civilian population or civilian objects….”

The 2002 International Criminal Court’s Rome Statute also defines these grave violations as war crimes that include (in its Article 8):

– “Grave” Geneva Convention breaches;

– “Willing killing….”

– “Intentionally launching an attack” knowing it will “cause incidental loss of life….”

– “Killing or wounding” combatants who’ve laid down their arms;

– extrajudicial killings; and

– “Killing or wounding treacherously a combatant adversary….”

In 1982, the UN established the Special Rapporteur on extrajudicial, summary or arbitrary executions. It was one of several mandates to address disappearances, torture, assassinations and many other human rights abuses and violations of international law.

Philip Alston currently holds the post to investigate extrajudicial killings, hold governments responsible for committing them, failing to prevent them, or for not responding when they’re carried out by others. In May 2008, he issued the latest report of his “principle activities” in 2007 through the first three months of 2008. As of March 2008, he requested permission from 32 countries and Occupied Palestine to visit. In spite of “proceed(ing) with plans for a visit,” Israel “so far failed to respond affirmatively.” The Palestinian Authority (PA) “issued an invitation.”

The US Position On Extrajudicial Killings

In 1976, President Gerald Ford signed Executive Order (EO) 11905 banning the practice against foreign leaders in peacetime and by implication against others. Yet Reagan’s Defense Secretary, Caspar Weinberger, argued that only “murder by treacherous means” is forbidden so assassinations are acceptable as long as they’re unrelated to “treachery.”

George Bush then swept aside subtleties, reversed Ford’s EO, and authorized the CIA to assassinate Osama bin Laden, his supporters, and publicly stated that bin Laden “was wanted, dead or alive.” His Defense Secretary, Donald Rumsfeld, concurred and called killing “terrorists” an act of “self-defense.”

In June 2008, Philip Alston visited the US. He met with federal and state officials, judges and civil society groups in New York, Washington, Alabama and Texas. He also conducted a fact-finding tour of US prison and detention facilities and presented his findings at a June 30 press conference. He sharply criticized the Bush administration, the country’s flawed judicial system, and continued rule of law violations. He cited:

– racism in the application of the death penalty;

– the lack of transparency in Guantanamo prisoner deaths;

– a lack of information about Iraq and Afghanistan civilian deaths; the unwillingness of Department of Defense officials and others to cooperate; his concern about serious human rights violations as well; and

– the refusal of the US Justice Department to prosecute mercenary contractors (like Blackwater Worldwide) who commit unlawful killings. Or the US military.

Israeli Extrajudicial Killings

Throughout its history, Israel willfully and systematically committed premeditated extrajudicial killings of Palestinians and other Arabs as official state policy - carried out with explicit high-level political, judicial and military authorization and allegedly in “self-defense” against individuals threatening Israeli security. Government officials even admit that certain persons are targeted, and Dan Haluts, former Israeli Army Chief of Staff, once told the Washington Post (in August 2006) that “Targeted killing is the most important method in the fight against ‘terrorism.’ ” In other words, premeditated murder is acceptable as long as it’s properly classified.

In May 2007 on Israeli Army Radio, Binyamin Ben-Eliezer, former Infrastructure Minister, defended the practice and said: “We decided to carry out more physical liquidation operations against (Palestinian) ‘terrorists”….I think this will eliminate the damage caused to Israeli territory due to the launching of Palestinian rockets.”

Almost never do Israeli government or military officials show evidence that targeted individuals acted violently or threatened Jewish citizens. Simply calling them “terrorists” is justification enough - to kill them extrajudicially, with no recourse to due process or respect for international law that bans the practice for any reason.

“My crime was to protest Israeli assassinations”

On January 5, 2007, the London Guardian headlined that comment in reporting on Jewish activist Tali Fahima’s first interview following her release from Israeli incarceration. Sitting with her arms handcuffed to a chair’s legs 16 hours a day, her captors said they wanted to teach her to be a “good Jew.” She was imprisoned for 30 months for traveling to the West Bank, “meeting an enemy agent and translating a simple army document.”

She explained and said her crimes were for refusing to work with Shin Bet (Israel’s secret service), going to see the Palestinians, then protesting the Israeli assassinations policy. She was kept in isolation for nine months. Finally, at the urging of her lawyer, she struck a plea bargain for a shorter sentence, and ended up being “unbowed” by her experience. She learned how Sin Bet “terroriz(es)” people, both Palestinians and Jews. “About the nature of the government, how they do not want us to see what is going on in our name.”

On August 8, 2004, she was arrested and placed under administrative detention in September. In December, she was charged with “assistance to the enemy at time of war.” It was trumped up and false. In January 2005, the Tel Aviv district court ruled that she should be placed under house arrest during her trial. Jerusalem’s high court overruled it on the grounds that she “identifie(d) with an ideological goal.” In December 2005, she pled guilty under her plea bargain to meeting and aiding an enemy agent and entering Palestinian territory. In January 2006, she was released.

She felt compelled to make regular Jenin visits. Talk to hundreds of people, including Palestinian resisters, and for the first time heard their point of view and how hard things are under occupation. For showing compassion and disagreeing with Israeli policies, she was imprisoned for nearly 30 months on false charges. Not even Jews are safe from harsh state retribution against anyone showing defiance or daring to resist injustice.

The Palestinian Centre for Human Rights Documentation of Israeli Targeted Assassinations

The (1995 established) Palestinian Centre for Human Rights (PCHR) functions independently in Gaza and enjoys “Consultative Status” with the UN’s Economic and Social Council (ECOSOC). It’s also an affiliate of the International Commission of Jurists-Geneva, the International Federation for Human Rights (FIDH) in Paris, the Euro-Mediterranean Human Rights Network in Copenhagen, the Arab Organization for Human Rights in Cairo, and the International Legal Assistance Corsortium (ILAC) in Stockholm.

Palestinian lawyers and human rights activists established it to:

– “protect human rights and promote the rule of law;”

– create, develop and promote a democratic culture in Palestinian society; and

– work for Palestinian self-determination and independence “in accordance with international law and UN resolutions.”

PCHR issues documents, fact sheets, and reports like its quarterly accounts of Israeli extrajudicial executions in the Occupied Palestinian Territories (OPT). Its latest one is from April through June, and a more comprehensive one covered August 2006 through its latest June 2008 data.

PCHR states: It’s “investigated and documented these (killings) in depth (and) concluded that the IOF (Israeli Occupation Forces) have consistently acted with utter disregard for the lives of (mostly innocent) Palestinian civilians in the OPT, and that IOF have continued to carry out state sanctioned extra-judicial executions, (in violation of) international human rights law….in the overwhelming majority of cases….suspects could have been arrested, but no efforts were made….and they were instead extra-judicially executed” - according to official state policy.

The Human Toll

Since the second Intifada’s September 2000 inception through June 30, 2008, and excluding all other Palestinian killings, the IOF carried out 755 OPT executions. Victims included 521 extrajudicially targeted and 233 bystanders, including 71 children and 20 women. In Gaza, 405 were killed. Another 350 in the West Bank. The methods used included:

– F-16, unmanned drone, and attack helicopter-launched air-to-surface missiles; tank shelling; missile launchers and gunboats;

– Israeli military undercover units disguised as Palestinians; first established during the first (1987 - 1993) Intifada; they became more active during the second one; could easily have arrested suspects but instead killed them at short range; and

– IOF targeted house ambushes in the West Bank.

Most often, civilians are attacked in their homes, vehicles, on streets and at workplaces. Sometimes entire families are killed, including children, women, the elderly, and infirm, and a July 2002 incident was typical. It targeted Salah Shehada, an Ezzedeen Al-Qassam Brigades (the Hamas armed wing) leader.

The IOF knew he was with his wife and children. That they lived in a densely populated residential area, and former Israeli Army Chief of Staff, Moshe Ya’alon, admitted that he knew Shehada’s wife and daughter “were close to him during the implementation of the assassination….and there was no way out of conducting the operation despite their presence.” An Israeli F-16 bombed his home, and completely destroyed it. Two neighboring ones also and damaged 32 others.

The toll was horrific - 77 injured civilians; 16 others killed, including Shehada, his wife, daughter, assistant, eight children, (one a two-month old baby), and two elderly men and two women. It was an indefensible criminal act of wanton murder.

In May 2007, an air-to-surface missile targeted the Al-Hayia family at his eastern Gaza meeting hall. It scored a direct hit. Killed were seven members of his family, another Palestinian and the object of the attack - Sameh Saleh Farawana, a Hamas activist. In addition, three others were wounded.

In July 2006, air-to-surface missiles destroyed Dr. Nabil Abdol Latif Abu Selmeya’s home in Gaza City’s Al-Sheikh Radwan district. He, his wife, and seven children were killed. In addition, 34 bystanders were injured, including 5 children and six women. At least 15 neighboring homes were also damaged in an operation Israelis said targeted Mohammed Al-Deif, Hamas’ armed wing leader and apparently Israel’s most wanted man.

In January 2008, an air-to-surface missile struck a civilian vehicle carrying three members of the Al-Yazji family killing Mohammed Al-Yazji, his five-year old son, and his 40-year old brother. Three bystanders were also injured. IOF sources later admitted the attack was in error and was meant for another vehicle carrying Palestinian resistance activists.

In August 2007, a Gaza operation near the Rafah International Crossing Point killed two civilians, injured 12 others and slightly wounded three targeted activists who escaped. Moments later, another vehicle was struck nearby killing the driver, a civilian bystander, and wounding 12 others, including a child.

In November 2006 in eastern Gaza, a vehicle was struck carrying Bassel Sha’aban Ubeid, an Ezzedeen Al-Qassam Brigades member. He and a colleague were killed. In addition, five Amen family members were injured, including two children.

Throughout the reporting period, there were many more killings in Gaza and the West Bank. In November 2006, four Jenin civilians. In February 2007, three others in Jenin. In March 2008, four Bethlehem civilians. Many others throughout the Territories in Ramallah, Nablus, Rafah, Khan Younis, Tul Karim, north, central and southern Gaza, and elsewhere - against activists, resisters, civilians, women and children for the crime of being Palestinians wanting self-determination, freedom, and respect for their rights under international law. For their part, Israelis, with world support and complicity, continue denying it to them repressively and illegally.

Extrajudicial Executions in the Latest Reporting Period - April - June 2008

During the period, the IOF conducted eight OPT assassinations killing a total of 16 people, including two civilian bystanders. Two operations were carried out in the West Bank. Six others in Gaza.

On April 14, an air-to-surface missile killed Ibrahim Mohanned Abu ‘Olba, the National Resistance Brigades’ (the Democratic Front for the Liberation of Palestine’s armed wing) leader in northern Gaza. Two civilians were also injured, including a 15-year old boy. In addition, a number of nearby houses were damaged.

On April 15, an air-to-surface missile killed Abdullah Mohammed al-Ghassain, an al-Quds Brigades’ (the Islamic Jihad’s armed wing) activist in northern Gaza. Three others were also injured.

On April 17, the IOF besieged a building in Qabatya village, southeast of Jenin in the northern West Bank. They opened fire at a civilian car, ordered people out of the building, and fired shells and demolished it with a bulldozer. Two dead Palestinians were found inside.

On April 20, an air-to-surface missile killed Nour al-Dibari in Gaza. A second missile targeted a number of Palestinians who just left a grocery shop. Its owner was seriously injured as well as his son. At least one other Palestinian was hurt as well.

On June 29, the IOF entered Tubas in the northern West Bank and set a cemetery ambush for a group of Palestinian children there throwing stones and Molotov cocktails at military vehicles. They opened fire and killed one 16-year old from multiple gunshots to the chest and abdomen.

PCHR “asserts that the Government of Israel continues to act recklessly, and with utter disregard for the human rights of the Palestinian people, including (their) right to life” and safety. Israel also fails “to meet its obligations under human rights law, including the Fourth Geneva Convention.” An Israeli government representative wasn’t available for comment.

Have Your Say: Extrajudicial Assassinations As Official Israeli Policy
Please read our posting guidelines before posting.
Alternatively you can discuss this report in our forum .

Ending Poverty: Moving Beyond More Aid and Fair Trade

Wednesday, November 19th, 2008

By Davinder Kaur |

As the United Nations seeks increased financial assistance from donor countries to help meet the flagging Millennium Development Goals (MDGs), the inadequacy of international aid and fairer trade agreements has never been so clear. In 2007 alone, aid to developing countries fell by 8.4%, leaving huge challenges ahead to meet the Gleneagles G-8 target of doubling aid to Africa by 2010. In July, the Doha round of trade talks collapsed again for the third time as developing countries refused to bow down to US pressure allowing increased access to their markets. These factors, alongside the rise in hunger as a result of the food crisis and the worsening global financial crisis, underline the low global priority given by rich nations to the world’s poor.

Pledges and promises of aid to eradicate poverty made by rich nations over the past four decades have resulted in few changes for the Global South. If genuinely concerned with poverty reduction, all OECD member states would have long ago reached the 0.7% target for aid, pledged via the United Nations in 1970. Thirty-eight years later, not a single G8 country has met this target. Any reasons or excuses are rendered largely irrelevant when considering that it took a matter of days for Western governments to find an estimated three trillion dollars to bailout banks caught in the financial crisis. The Jubilee Debt Campaign estimates that less than a quarter of this amount is needed to wipe the debts of the poorest 100 countries - simply to allow them to meet their people’s most basic needs.

At a time when the rise in food prices has caused an additional 105 million people to join the ranks of the hungry, the impact of the economic crisis is likely to see the needs of the developing countries further sidelined as Western governments rush to divert money to contain the problem.

Systemic Failures

As these crises worsen, the global trading system continues to do more harm than good. Import surges of heavily subsidized goods flood the markets of poor countries, wreaking havoc on domestic producers and driving many out of business and into poverty. Additionally, rich nations consistently force developing countries to lower their tariffs while refusing to do so themselves, thereby denying poor farmers the right to protect their livelihoods. The situation is further exacerbated when considering that two-thirds of developing countries are now net food importers. The WTO and the international trading system that it promotes has served to strengthen the status quo, keeping those at the top of the ladder in place while kicking away the ladder from those at the bottom.

Even if the targets for aid and trade were met in the near future, the underlying problems of how trade and aid are administered would continue. Aid would still leave developing countries in a state of dependence upon rich nations and continue to come with conditions attached forcing them to open up their markets to foreign goods and services. Furthermore, aid used by poor countries to pay their external debts would detract them from providing the most basic needs for their citizens. On a broader level, the unaccountable and undemocratic ways in which the World Bank, the IMF and the WTO function would not be addressed, much less resolved, while the enormous influence of corporate lobbying groups would persist.

Calling for better trade rules and more aid to reduce poverty and growing inequality is not enough to achieve real change. The neoliberal ideologies of economic growth are enshrined in the very institutions that are designed to help developing countries prosper. A belief in the free market, deregulation, privatization and corporate globalization is the basis upon which these institutions operate. We have seen in recent weeks how unsustainable the current economic system is and how liable it is of causing a financial tsunami upon the lives of people everywhere.

The biggest financial crisis since the 1930s is not taking place in a vacuum - its roots are based in the neoliberal ideologies stemming from the Washington Consensus dating back to the 1980s. Only a few weeks ago, it seemed we had reached a stage where the conceptual apparatus of neoliberalism had become “so embedded in common sense as to be taken for granted and not open to question.” Since then, the world’s most profitable banks have been part-nationalized, a worldwide recession is looming and a global crisis in confidence in the current economic model has become the norm.

Recent events have demonstrated that to continue working within the confines of the global economic framework may result in slight changes for a small proportion of the world’s poor, but will not be significant enough to achieve targets such as the UN’s Millennium Development Goal of halving hunger by 2015. This goal, which is already insufficient, was made further unattainable since the World Bank revised the international poverty line from $1.08 to $1.25 per day, effectively plunging a further 430 million people into extreme poverty overnight.

Securing Basic Human Needs

The current economic system, based on ever-increasing economic growth as the overarching solution to fighting poverty, is both ineffective and unsustainable. The key to tackling poverty and inequality must come from a change in principles and priorities from which practical steps can be taken to put long-term structures in place. One such solution would be to define and redistribute essential resources in order to immediately secure basic human needs. The universal right to a life of dignity and survival has long been enshrined in article 25 of the 1948 UN Declaration of Human Rights which states that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, medical care and necessary social services.”

There is no reason why 967 million people should go to bed hungry every day. The problem is not defined by a scarcity of food, but by the insufficient access to resources for millions of the world’s poor who lack the necessary purchasing power to survive. The ‘trickle-down theory’ of economic growth, or the political promise that wealth accumulated by the rich would eventually permeate down through society, has proven to be grossly insufficient in dealing with the urgent demand for basic and essential needs.

To immediately reduce inequality and end extreme poverty, a new international mechanism is required which can facilitate a greater economic sharing of essential resources. The most critical of these are land, basic agricultural produce, water, energy and essential medicines, which together need to be defined, withdrawn and protected from international markets and no longer traded by multinational corporations. A similar initiative was supported by over 100 civil society organizations at the recent WTO talks. Bolivia, Cuba, Venezuela and Nicaragua presented a proposal to remove healthcare, education, water, telecommunications and energy from the WTO “on the basis that these essential public services are human rights which governments have an obligation to provide, and should not be treated as tradable commodities.”

Although the UN is in need of considerable reform, it should play a lead role in redistributing essential resources. It is the only international body with the experience, expertise and financial resources to initiate and coordinate such a crucial program. A new body within the UN needs to be responsible for a short-term emergency relief program to address the urgent needs of the 50,000 people who die each day from poverty, of which 30,000 are children. Simultaneously, a long-term program could begin to coordinate securing the wider basic needs of the global public.

A genuine change in principles and a renewed sense of commitment is urgently needed to tackle extreme poverty and inequality. A global undertaking of this scale would not come without further challenges and complexities, but it would lead to rapid and progressive change as low-income countries lift themselves out of poverty without permanently relying on financial hand-outs. Campaigning for the redistribution of essential resources, rather than just more aid or fairer trade, is the first vital step to securing the basic needs of the world community.

Have Your Say: Ending Poverty: Moving Beyond More Aid and Fair Trade
Please read our posting guidelines before posting.
Alternatively you can discuss this report in our forum .

Did U.S. push detention of American without charges?

Wednesday, November 19th, 2008

By Jonathan S. Landay |

WASHINGTON — An American Muslim subjected to several years of intense FBI scrutiny and questioning about links to terrorism has been held without charges, access to a lawyer or contact with his family for nearly three months by the security services of the United Arab Emirates.

The case of Naji Hamdan, coupled with FBI interrogations of an American citizen secretly detained without charges in East Africa, raises the question of whether the Bush administration has asked other nations to hold Americans suspected of terrorism links whom U.S. officials lack the evidence to charge.

That allegation is central to a lawsuit that the American Civil Liberties Union was planning to file Tuesday in federal court in Washington against President Bush, Attorney General Michael Mukasey and FBI Director Robert Mueller.

“If the U.S. government is responsible for this detention and we believe it is, this is clearly illegal because our government can’t contract away the Constitution by enlisting the aid of other governments that do not adhere to the Constitution’s requirements,” said Ahilan Arulanantham of the ACLU’s southern California office.

The lawsuit, to be brought on behalf of Hamdan’s wife and brother, demands that the U.S. government extend to Hamdan his constitutional guarantee against illegal detention by asking the UAE to release him.

“The most elemental legal principles by which we govern ourselves cannot countenance the lawless detention of a United States citizen at the behest of his own government,” said a draft of the lawsuit provided to McClatchy by the ACLU.

A spokesman for the FBI’s Los Angeles office, Alonzo Hill, referred all inquiries about Hamdan, a former resident of the city’s Hawthorne neighborhood, to FBI headquarters in Washington, saying, “This is a counter-terrorism case.”

FBI headquarters disputed the allegation that it had asked the UAE to arrest Hamdan but acknowledged that it routinely interviews detainees held in foreign jails.

“The FBI does not ask foreign nations to detain U.S. citizens on our behalf in order to circumvent their rights,” said Special Agent Richard Kolko, a spokesman. “In terrorism matters, we routinely work with foreign counterparts and in some cases, with the permission of the host government, FBI Agents have been permitted to interview people who may possess relevant information.”

A State Department spokesman said the department had been aware of Hamdan’s detention and that a U.S. consular officer visited him nearly two months after he was arrested.

The UAE Embassy said in an e-mail to McClatchy that all questions should be directed to the police in Abu Dhabi, the UAE sheikhdom where Hamdan is being held, because the case “is related to a police/security matter, which involves a private U.S. citizen.”

Abu Dhabi, one of seven oil-rich sheikdoms, has cooperated closely with the Bush administration in cracking down against Islamist extremists following the 9/11 attacks.

Hamdan is a 42-year-old naturalized U.S. citizen who immigrated to California from Lebanon in the early 1980s to attend university on a scholarship, worked as an aircraft technician and then opened a used auto parts business in Hawthorne, where he served on the board of a local mosque.

Hamdan’s interaction with the FBI began in 1999, when agents visited him at his Hawthorne home and asked if he knew Osama bin Laden. The incident was recounted in a Los Angeles Times article on aggressive tactics used in FBI terrorism investigations.

Hamdan’s wife, Mona Mallouk, and brother, Hossam Hemdan, insisted that he’s never had any terrorism involvement or been charged with any crime despite the longtime FBI scrutiny.

“Naji hates war. He hates what happened on September 11. He hates terrorism,” Mona Hamdan said in a telephone interview from Beirut, Lebanon, where she and her children are living.

Hamdan moved to Abu Dhabi in 2006 and set up a business of importing used cars doing car repairs, but then moved his family to Beirut and traveled between the two countries.

In August, he was questioned at the U.S. embassy in Abu Dhabi by two FBI agents who flew out from Los Angeles. Several weeks later, UAE officials detained him, Mallouk and Hossam Hemdan said.

Hemdan, who owns automobile emissions testing stations in Los Angeles, said he arranged for Hamdan to meet the agents at the FBI’s request.

“He (Hamdan) said ‘That’s fine, I’ll see them,’” Hemdan recalled, adding that his brother later declined to discuss the meeting, except to say that “the agents know all this stuff about me and you and other people.”

“I believe they are intercepting my phone calls and emails,” Hemdan said of the FBI.

On Aug. 28, UAE security officers took Hamdan away as he, his wife and three children ate lunch in their Abu Dhabi apartment on the pretext of bringing him to a police station to sign papers related to a car accident, Mallouk said.

She said that when her husband failed to return, she began a fruitless search for him at police stations.

“I called the U.S. embassy . . . the next day. I was crying. They didn’t seem to care,” she related. “They said they would call back in an hour, but they didn’t call me back for six or seven days.”

The consular officer who telephoned confirmed that the embassy was aware of Hamdan arrest the day it occurred, said Mallouk, who hasn’t spoken to her husband since he made a brief call to her shortly after his arrest.

The case finds echoes in the secret detention in Kenya last year of Amir Mohammad Meshal, a New Jersey resident who was arrested fleeing the U.S.-backed Ethiopian invasion of Somalia.

Meshal, who had spent time in Somalia with suspected Islamic extremists, was interrogated by FBI agents in Nairobi, secretly flown back into Somalia, turned over to Ethiopian intelligence officers and then flown to the Ethiopian capital of Addis Ababa, where he was imprisoned three months before being released without charges.

“I think you see a trend that reflects illegal detentions going underground or off the books, where the United States . . . out-sources detentions to other governments,” said Jonathan Hafetz, an ACLU attorney who’s involved in the Meshal and Hamdan cases.

Hemdan said the FBI visited his brother, himself and other Muslims in Hawthorne after the Sept. 11 attacks, showing them pictures of the hijackers and asking if they knew them. Agents called on Hamdan once at home and twice at his business, he said.

The brothers’ names were placed on watch lists at airports and they would be pulled aside and interrogated about ties to terrorist groups every time they entered or left the U.S., Hemdan said.

In 2006, Hamdan and his wife moved to the UAE. She said Hamdan was frustrated over the FBI’s scrutiny, and both were concerned about drugs and other problems at high school their eldest son was due to attend.

At Los Angeles International Airport, they and their luggage were rigorously searched and they were subjected to lengthy questioning that made them miss their flight, according to Mallouk.

In the UAE, Hamdan set up a used car and auto repair business. But he decided to move the family to Beirut because they have close relatives there and the UAE was too hot, she explained.

Last year, during a visit to Hawthorne, Hamdan came under intense FBI surveillance, according to Hemdan, with agents watching the brothers’ businesses, tailing them in automobiles and questioning their friends.

“Where ever he went, they chased him, government vehicles with black windows,” said Hemdan. “From my perspective, they wanted him to see them. They’d drive over the (lane) dividers and over curbs. They wanted to be seen so he gets scared and leaves. It’s like ‘You are not welcomed here.’”

“I told him to go to the Federal Building (in Los Angeles) and talk to the FBI. I gave him the number and he called and left a message, but they didn’t call him back,” he continued.

Earlier this year, Lebanese security officers detained Hamdan at Beirut airport as he prepared to board a flight to the UAE after visiting his family. They later ransacked the family’s house and confiscated two computers, a video game, papers and photos, Mallouk said.

Her husband was “slapped” while being interrogated for four days, during which he was accused alternatively of being an al Qaida member or working for Israeli or U.S. intelligence, she said. Khalid, 16, was also questioned for three hours.

Hamdan was released without charges.

Have Your Say: Did U.S. push detention of American without charges?
Please read our posting guidelines before posting.
Alternatively you can discuss this report in our forum .

Related News

• Unpaid tax ‘to be taken from banks’
• Bet your bottom dollar tensions will follow
• The Shrinking Influence of the US Federal Reserve
• Does the US fund energy projects in Iran?
• Banks guilty as charged

This entry was posted on Wednesday, November 19th, 2008 at 8:20 pm and is filed under Contributions & Guests . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.