Frequent Economic Edge reader and poster, “Blonde Guest,” has taken the time and effort to parse through Freedom’s Vision and came up with a set of excellent questions. Indeed, when one is not familiar with the concepts it’s difficult to explain it to other people as it touches on a lot of issues, especially if you get to the depths where deeper knowledge is required. However, when explained in simple terms that people can understand, it is not complex and will actually produce a system that is far less complex than the current one.
With that I present the many questions that are embedded in Blonde Guest’s post and subsequently attempt to answer them in order below:
Good Morning Nate,
Many questions on Freedom's Vision. How do you sell that we are on the precipice of monumental change to the people? Just came from a dinner of Ivy league, Big Ten etc... educated women, and although most sense that something is not right, they cannot comprehend that the economy is in grave danger. These highly educated women admit they do not speak the language. I referred then to your site, and the rest of your blog list prior to our dinner and they frankly told me they could not comprehend 90%. When they do not comprehend it, they shut down and move on. We need to get this out in easily understood concepts and terms. If I cannot explain the basics in 15 minutes or less the audience shuts down. The attention span may increase as the economy gets worse and people are looking for answers. And no one will swarm (an active component) if they don't understand and buy into the vision.
Can you explain the bankruptcy component and how our foreign creditors are going to be satiated? Where does the money to return the past two years of income taxes come from? (One of my women said it sounds like the mythical Obama money) and how does the government continue functioning with no income? or pay off the interest on current debt? or current debt? More printing? I understand how paying off 2.6T in consumer debt would help the citizens and everyone loves free money, but what are the strings?
How is this clearing of Federal debt being paid off entirely during the transition period with old dollars/ new dollars not a national default?(sovereign debt crisis)? How is the rest of the world going to handle this reset? How do we deal with the unfunded mandates?
Is this vision based on Still's story of Gursey? We issue the money, extra money and tax (inflate) the money out of the system? We make a new financial infrastructure completely made with made up money and citizens take the hit of inflation equally? New leverage limits are put in place and something like Glass-Steagall is actually enforced. Rule of law is established, and enforced.
Sorry for all the questions, but I am just trying to get a handle on Freedom's Vision.
Good Morning Blonde,
Those are all great questions! It is my pleasure to answer them for you because it gives me another chance to say it in a different way and maybe that will help people understand.
Please keep Bill Still's quote in mind, "It's not WHAT backs our money, it's WHO controls the QUANTITY."
In regards to the need to “sell” that we are on the verge of monumental change… indeed, the events we have experienced lately have people “sensing that something is just not right.” They have seen the transition from millions to billions to trillions and no longer comprehend the figures. There are disconnects in the data and in the story line that contribute to that uneasiness. When I go to the barber, as I talk to the older generations, most are very angry and are aware that the path we are on is unsustainable. Even younger people know that they cannot count on SS or other forms of retirement to be there for them.
Yes, most people shut down and cannot handle going too deeply into the truth. I see it all the time, even my good friends who know cannot go far into the depths of conversation with me – it’s too much for them. It is possible to summarize in 15 minutes, just hit the highlights. No it’s not possible to explain in great detail in that amount of time, this is due to the complex nature of our current economy – Freedom’s Vision is actually much more simple with fewer moving parts. It’s transitioning from debt saturation and derivative entanglement that makes it seem difficult.
It is, however, a historic opportunity to use the deleveraging to make the transition to a non debt-backed money system on the federal level and to create a sustainable and recognizable system going forward. And we need to emphasize how Freedom’s Vision benefits the people, the states, businesses, banks, Federal Government programs, basically everyone but the current crop of casino managers.
This is exactly why our citizens need leadership and why they need an easy task to accomplish, one that makes them a part of the solution. They know that all is not well and that change is appropriate and thus I believe many will join into the SWARMS so that they feel empowered. Fortunately, they will be supporting a good cause with their best interests squarely in focus.
The TRUTH does not require a hard sell! There will be enough people who get it that the SWARM will be HUGE. Just imagine if “only” 10 or 20 thousand people all bombard a person’s office and points of contact in a day. They would literally be immobilized by legitimate requests from citizens to support change.
Regarding foreign creditors, they will be paid off in full during the transition period. Again, this would be inflationary as you are changing DEBT into money. That money then will go someplace into some other asset groups. That inflationary force is balanced by removing debt and derivatives (leverage) from the system. With firm but accommodating monetary controls, weighed against ALL asset classes, zero inflation is targeted, thus holding the value of the dollars that are paid back steady. Again, should you simply print dollars and pay back your debt it would be inflationary. The ability to take down leverage is what makes this a historic opportunity. The monetization already occurred when the debt and other leverage was created… this undoes it, and when done correctly will not change the overall quantity of money in the system.
The money to return the past two years of taxes is simply created without debt backing. Once again, should you do that and just send it out there devaluation of the money will ensue. However, by ensuring that the vast majority of that money is used to pay down debt, it will not be nearly as inflationary, it will be an act of deleveraging. Again, these inflationary forces will be offset by other deleveraging as well, there are historic amounts of it out there that need to be removed.
Who said the government would have no income? Freedom’s Vision does not touch the tax structure, although I’d love to. And for those who can really handle the truth, the government does not need to collect taxes at all. I’m not going to go there, our purpose is to keep the system as close as possible to what people currently recognize.
There will be no more current debt and thus no more interest payments in the Federal Government’s budget. Currently those payments go to PRIVATE banks and bankers, they are dollars that come from you to pay someone else for your own money system!
“Printing” will only happen once the system is in place when the IP determines that PRICES need it to maintain the zero price target. As the economy cycles, there will be times when adding quantity happens and there will be times when subtracting quantity happens (right now it is add only). This is a simple mechanism as prices reflect all the underlying forces when measured correctly. Instead of moving 14 different levers, the IP will only be moving one, and they will be keeping the money and our economy in the center of its operating envelope instead of trying to create never ending growth that must happen when debt backs our money.
I know that it sounds “magical” that the majority of the $2.6 trillion in consumer debt can just disappear. No magic trick is necessary. The truth is that much more than two years of taxes has been STOLEN from everyone. It has been funneled into the large banks to create their mythical profits and “assets.” This process will cleanse those assets back out of the banks via the bankruptcy process and they will be disposed of in accordance with the current rule of law as dictated by the bankruptcy process. A judge will evaluate each “asset” (debt) and decide if it is serviceable or not. If not, it is cleansed. This is what should have happened all along. The act of clearing out these debts will de-lever the banks and the entire system. This deleveraging allows the treasury to return money to the citizens to pay back their debt, money that rightly never should have been taken from them. This is simply undoing what’s been done and allows the people to pay down debt, and this in turn is virtuous because the deposits and paying down of the consumer credit will by itself greatly add to bank health. This in turn makes the people more solvent, the banks more solvent, and businesses more solvent. Again, it won’t be inflationary because debts will be repaid and leverage taken down. So, NO STRINGS, there is no reason not to support this.
It is NOT a national default… we will be paying back all creditors with sound dollars. It is a change to the way our money system works, but it is a sound change, unlike the change that created the current debt backed money system in the year 1913. Our money system has changed many times in our history. This will be a progression forward that will cure many of the faults of our previous dollar systems. If you wish to see national default, look no further than the current program of “Quantitative Easing.” This buying up of one’s own debts fools no one but ourselves. It is piecemeal default and it does nothing but damage the people and future generations of the United States.
This is going to create the most sound money system on the planet… there will be no debt at the Federal level. Interest rates will normalize and be driven by free market forces. The dollar will become much stronger against other currencies that are still backed by debt. It would behoove other countries to accomplish the same cleansing and transition at the same time. Should they fail to do so, they will wind up paying the price as all debt infested currencies should. They will be encouraged to make the transition and we recommend that the U.S. form transition teams to go to the other countries of the world to help them transition in a like manner.
Another ramification for other countries is that the special bankruptcy courts in the U.S. will be defaulting on a lot of debt and derivatives in the banking system. A lot of counterparties will be overseas. They will, of course, not be happy that defaults will ripple. Defaults of debt and derivatives in the current system is going to happen regardless! This is simply a controlled way of accomplishing the cleansing. Again, if other countries are running the same procedures at the same time then the transition for them will be much smoother as they will be clearing out unserviceable debt and derivatives on their end as well.
Unfunded liabilities instantly get better under the new system because zero percent price inflation is the target. Thus the payout assumptions no longer have exponential math behind them. This is addressed in the outline. A fund is also created to ensure solvency and to absorb future fluctuations in the country’s demographic composition.
Initially the monetary reform and the political reform work together. Those are the first goals. Then we go on to develop a “Future’s Vision” where we can talk about providing leadership for the economy and how to create jobs. While the general thinking is expressed in the third section of the outline, those ideas are somewhat similar to the story of how the Channel Island of Guernsey created money, spent it into existence to build public infrastructure, and then taxed the money back out of the system. What is suggested in Freedom’s vision would be different in that seed money would fund research and development, much like NASA has done in the past. This needs to be done to create the energy and infrastructure of the future and cannot be done by current corporations or the way our government works now. It would partner with and send the fruits of the research into private enterprise, again, nothing new, look at how NASA used to do research that benefited and created giant strides in aviation. We need to do the same thing for even more important future needs like energy. The seed money can be recaptured by sharing in the profits generated by the new technology world wide. Once the seed money is recovered, that money can then fund further research or be taken back out of the system. Again, overall price inflation is still being controlled in the background by the IP who is monitoring ALL asset category prices.
Again, there should not be overall inflation over time if this is implemented. There will be periods of mild inflation or deflation (as is normal in cyclical movement), but they will be corrected early and not allowed to compound upon themselves. Thus giant booms and busts will be avoided, but a healthy and robust economy will result, one that has the ability to absorb shocks and keep on going.
Yes, new limits resembling Glass-Steagall will be put in place and ENFORCED. The goal is to get the banks to a strict 10 to 1 reserve and cap it there. By restricting derivatives and other forms of modern leverage, we believe that this is achievable, especially when the special interest money can no longer be used to get involved in politics to make the rules go away, as has been the case! When leverage and effective reserve capability are allowed to get out of hand, that is one of the ways that inflation is created! The central bankers MUST create inflation or deflation results. This is because they are skimming interest and fees, constantly taking and taking money from the system. They have to continually make more money, this is one way they do it and why the quantity of money (debt) is currently out of control. Under Freedom’s Vision, those pressures either go away or are held steady.
No problem in answering your questions, that’s what needs to happen, they are all good and legitimate ones. Once you see the truth behind our money system and a clear path out of our problems, providing solid answers requires little effort. People need to realize that money is a creation of man and that certain men have set the system up to profit from the fruits of our citizen’s labor. This simply undoes much of that and returns the power of our money back to the people where it belongs. In doing so, we have tried to maintain a system that will be virtually indistinguishable from the way most people currently conduct their business.
While the underlying concepts are difficult to grasp, they are only difficult because of the distortions and opaqueness intentionally created by the men behind the curtain. Freedom’s Vision will bring checks and balances, transparency, and the rule of law back to where they belong.
Artwork by AZ Rainman