It's based on a decade of research by Zarlenga, who started working on the money problem in 1991 and eventually drew on some 800 monetary source books to develop his thesis. Intringuingly, the book was first published in German in 1999 (maybe he couldn't get a publisher to dare take him on?). But then the expanded English version was published in 2002 by the American Monetary Insitute that he had helped to set up in 1996.
I first heard about Zarlenga's book from reading Ellen Brown's superb "The Web of Debt" which mentioned it many times. Indeed, Zarlenga appears to have been one of the first in modern times to realize that the way the monetary system currently operates is essentially based on a series of misunderstandings about the true nature of money. These misunderstandings have been actively encouraged by the powerful leaders of the financial system who have managed to impose the current insane system in which private banks are able to create money out of thin air, lend it to governments, and charge us interest.
One of the most important misunderstandings is the believe that money should be considered as a commodity like gold - that there is somehow a fixed amount of it that just has to be shared out. Sure, you can effectively trade gold for most things, because it's valuable, but that is little more than a slightly more sophisticated form of bartering.
Real money is different. And, as Zarlenga notes, Aristotle got it right in the 4th Century BC. The Greek word for money was "NOMISMA" which refers to the fact that money attains its authority by law (or binding custom). Aristotle said:
"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 what it has the name nomisma - because it exists not by nature, but law (nomos) and it is in our power to change it and make it useless"Another common idea is the idea that all money is debt. Now it is true that when private banks have a virtual monopoly on creating the money supply, that money is associated with debt. But this is confusing credit and money - they don't have to be the same thing.
The critical point, and it is one that Zarlenga demonstrates beautifully, is that money can be created without debt by governments. He tracks the history of money with a lot of attention to the enormous success of the the Roman empire which was driven in considerable part by the decision to create large quantities of cheap copper and bronze coins that could be used to pay for government actions - paying soldiers, building roads, aqueducts and other buildings.There are also the cases of Colonial Script money used by the colonies, and perhaps the best example - Abraham Lincoln's creation of $450 million of Greenbacks completely debt free.
There are some real gems in the book. I particularly liked the speech given in 1942 by William Temple, the archbishop of Canterbury, who said:
"The banks should be limited in their lending power to the amount deposited by their clients, while the issue of newer credit should be the function of public authority".Spot on, Archbishop! Pressure from the Church was one of the reasons why the Bank of England was nationalized in 1946. Unfortunately, the insane fractional reserve banking mechanisms used by private banks was left in place.
I could go on - and maybe I will in later posts. The final point I want to mention today is that although the book came out 10 years ago, there is actually a quite substantial appendix that was added in 2010 that describes the American Monetary Institutes proposals for legislation that would fix the system - it would (1) incorporate the Federal Reserve into the US Treasury, (2) abolish the right of commercial banks to create money through fractional reserve lending, and (3) use government spending directly into the economy.
I was very pleased to hear that the proposal was actually proposed to Congress by Denis Kucinic on September 21st 2011 as HR 2990 "National Emergency Employment Defense Act of 2011". The text can be found on the AMI website here.
Congratulations to Denis Kucinic! Could he be the first elected politician who has seen the light? Hopefully there will be many more.