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(NaturalNews) Fundamentally, only the national government of a country should create money. It should be created by the national government and paid into circulation in the first instance through government expenditures. As the science and technology of a people advance, so does their ability to produce the necessities and luxuries of life; therefore, they are capable of producing more crops, houses, clothing, etc. As production increases, more money is necessary to distribute all the goods produced among the people of a nation.
If the money system of our nation was directed by people of conscience and character, they would carefully monitor the growth of wealth production, and as it increased, they would increase the quantity of money by spending new money into existence in payment for some governmental activity. The amount of government spending that could be met by creating new money rather than through taxation would be small if the price level, i.e., the value of money, were kept invariant. New money could only be issued as physical production increased; otherwise, the purchasing power of all existing money would be diluted. For a nation, money is simply a medium of exchange, not a source of wealth.
The objective of a monetary system that is operated honestly and scientifically is to keep the flow of money adequate to permit the distribution of all goods produced by the nation. If money is placed into circulation out of proportion to the goods produced, prices will rise and the purchasing power of money will be decreased. If the supply of money is too restricted then goods cannot be distributed and sold. This will result in excessive inventory, which in turn will result in reduced production, in businesses closing down, and in people being put out of work. The goal of an honest money system is neither to create too much or too little money, but to keep it in proper balance with production to allow for the distribution of all goods.
Before money creation was privatized by banking corporations, anyone who created money and spent or lent it was guilty of counterfeiting. What counterfeiters are really doing is stealing from every single other person in the nation. By creating money a counterfeiter not only obtains purchasing power for himself, but also dilutes the purchasing power of the money possessed by everyone else. Stated differently, a counterfeiter is increasing the quantity of money without any regard to the production level of the nation. By increasing the volume of money in the nation the counterfeiter raises the price level in the nation, i.e., the prices everyone must pay for goods. This of course means that the purchasing power of everyone else has been reduced for the benefit of the counterfeiter. When caught, counterfeiters were punished very severely, as counterfeiting is theft from every person who has any money, and that is a serious offense. Of course, when banks create money out of nothing on a scale unreachable for an individual counterfeiter, namely billions and trillions, then counterfeiting becomes a respected business and is not punished by the government.
Nobel laureate, Frederick Soddy, spent years researching the causes of economic crises and how the prosperity of a nation could be increased. In his book Wealth, Virtual Wealth, and Debt he came to the conclusion that: "With adequate knowledge of the physical realities that dominate the economic affairs of peoples, the road is clear for unlimited progress and the attainment of universal peace and prosperity. The evils in the past that have paralyzed the very heart of nations lie patent and beyond concealment."
The evil Soddy speaks of are the private money system which has usurped the national money system and caused the nation to sink into indebtedness and recession. The road "for unlimited progress" he speaks of is the fruit of science and technology, which we are frustrated from fully grasping by the private money system.
Bibliography
National Economy: The Way to Abundance, Arian Forrest Nevin, 2008.
Wealth, Virtual Wealth, and Debt: The Solution of the Economic Paradox, Frederick Soddy, 1926.
Money Creators, Gertrude Coogan, 1935.
About the authorArian Forrest Nevin, J.D. is the author of National Economy: The Way to Abundance. National Economy presents an immediate solution the worldwide economic crisis. National Economy is the study of how a nation, rather than an individual, can be made wealthy. It explains how all manufacturing that has moved to other countries and all jobs that have been outsourced can be returned to America, how real wages can be dramatically increased, and how, at the same time, the people can have more leisure.
His website is http://www.nationaleconomy.net
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