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Turbo Slavery: Money, Debt And Reality

What will your kids choose to be? A slave? Or a slave owner?

"He who will not reason is a bigot; he who cannot is a fool; and he who dares not, is a slave."
— William Drumond

"And he who has no time -- I'm busy, shaddup, I'm BUSY -- to reason, is a wage slave."
— J. Walter Plinge

It was the honorable James Madison, father of the US Constitution and author of the Bill of Rights, who bragged that he could make $257 a year on every slave he owned while the upkeep costs were only $12 - 13 a year. Pretty impressive numbers. Modern corporate cowboys have a target to aim at.

In 1994 Allied-Signal's CEO paid himself 50 percent more than he paid his entire workforce of 3,810 Mexican maquiladora workers. I'd say he's got Madison beat by a million miles: better than slavery.

In the 27 June 2003 issue of the International Herald Tribune, a front page story was about an IRS study regarding the top 400 incomes in the year 2000. They earned 1.1 percent of all the money earned in the United States that year. More than double their 1992 record. So each of these people earned the equivalent of 700,000 others ... and we are not talking about Mexican laborers here.

Worse still, in the nine years of the IRS study, "...the incomes of the top 400 taxpayers rose at 15 times the rate of the bottom 90 percent of Americans... [whose] average incomes rose 17 percent ...[or 1.88 percent per year]" and this is getting to the heart of matters because inflation averages 2 to 3 percent per year. So the vast majority of Americans' wages are not even keeping abreast of inflation. Every year means a Wage Decrease.

What this means in broad terms is that every year the price of a house ("The American Dream") zooms further and further out of reach because as housing prices grow faster than inflation (6-9%). The Reaganesque phrase “Pull yourself up by your own bootstraps” is apt here. It suggests that people resolve their problems by resorting to an utterly futile activity. But this money system is designed like a game of musical chairs - at every round we have another loser whom we then must treat as a contemtible bit of scum. Until we are the loser.

No surprise then that Ward Morehouse at the Program On Corporations Law And Democracy ( wrote, "Home ownership rates in the US have not been rising for a quarter century [since 1976]. And in fact if you exclude mobile homes, home ownership rates have actually declined." (see the urls at the end for hundreds of such statistics)

You hear that? The American Dream has now become a mobile home. Every year: one step closer to homeless slavery. I have been telling my niece and nephew that they and their kids will have a choice: you can be a slave, or you can be a slave owner. There's not much in between. I don't think they heard a word I said ... or maybe they haven't had the time to think it through.

The thing is, on the face of it, there is some kind of error here. How is it possible that one guy can earn as much as 700,000 other guys and gals? That's like saying that one person grew more potatoes than the other 700,000. It's a mathematical impossibility. And what is this? “Bill Gates owns half the wealth in the US” ? What? Can Bill Gates take dictation? Can he type? I mean, we have people who can weld under water and people who can do magic tricks. What exactly can Bill do? Let's be serious, this is a guy that most of us wouldn't pay $3 an hour to wash our windows, and yet somebody is trying to create the mass illusion that he owns half the United States. Somebody has GOT to audit these books.

There are innumerable factors that got us to this point, but today I would like to focus on one of the least popular subjects....


How does money get into circulation? There, you see? I've lost 98 percent of readers already. Hey folks, this isn't about economics. It's only about where money comes from. This is the easy part. Isn't it incredible that, in the world's most devoutly capitalist country, the USA, fewer than one in ... oohhhh ... say, 700,000, can tell you where money comes from?

One of the most unintentionally hilarious websites I have seen is titled “How Currency Gets Into Circulation” by the New York Federal Reserve Board (Fed). Their answer is, “We print it.” The website is about how the Bureau of Engraving and Printing prints money. There is not the slightest hint of how money actually gets into circulation. (

The answer to that connundrum is that money is lent into existence. There is simply no other way to create money in our system today. Through a system dubbed "fractional reserve lending" (a cool name suggests legitimacy, right?) when you take out a "loan" your banker creates the money he gives to you. The banker is only required to have 10% of the amount of the "loan" (thus the "fraction" - 10%, is held in "reserve"), and if you put 20% down on a house, well then you have just made a very nice gift to someone in need, and you are borrowing your own money at an exhorbitant interest rate.

The origin of money is the barter system: using products as money. In the barter system “money” equaled wealth. Today money is 180 degrees the reverse: money is debt (more on that later). With the barter system both sides of the exchange benefitted from the trade. If they did not, the deal was off. Today the beneficiaries of money are anyone BUT the producers of goods. Today's economists argue that barter is “primitive” “archaic” and “imperfect.” I would argue that, sure, barter has its limitations but to the extent that it works, it works perfectly. It is uncomplicated, direct, immediate, whole, secure, egalitarian and flawless. It's is also inflation-proof, non-profit, interest-free and should be tax-free.

There are no middlemen, no bankers and no central bankers. No futures contracts, no hedge funds nor derivatives, and no worry about “Money Supply.” No bank mergers, no $45 million CEO bonuses, no overdrafts, no minimum balances, no bank runs, no frozen assets, no currency crashes, no robot phone machines to tell you, “if you would like to speak to a half-wit, please press twelve, and wait.” And, most importantly, no currency casino/exchange rates. I will not advocate a return to barter, but we should recognize that it is the only natural money system we have and if we want another money system, then it ought to emulate at least a few of the above beneficial aspects of barter. Just a couple - is that too much to ask?

If you have ever accepted an IOU, or written one, then you already have a basic understanding of modern money. In the third grade at recess, we used to trade baseball cards and marbles and chew bubble gum. If you had two packs of bubble gum and I had forgotten and left mine at home, I might write out an IOU - “IOU a pack of Double Bubble - Walt” and I'd pay you back tomorrow. And if Billy had some baseball cards you really really had to have, you might see if he'd accept my IOU in trade. Then you'd have seen first hand, what money really is, how it is created, and how it can circulate. That's the model the Fed use today. Or, more accurately, that's the model they claim to use.

By looking closely at the schoolyard model, you can learn a lot about how money should work. I'll list five of the principles below. The Fed guys don't care much for these IOU principles. They make great hoopla noises about the IOU model, but when push comes to shove, they will push and shove rather than talk reasonably and sensibly. They ignore the all rules except for #5 which they use to their great advantage.

1) In our schoolyard, the money was not issued by a bank or government.

The Political/Corporate/Banking sector (PCB) (sort of like Polychlorinated Biphenyls) has privatized and monopolized the creation of money. The Fed stance is: “Outa my way buddy, we'll handle this. Our system will work better, we will make it work better.” And by that they mean they will make their system work regardless of its effect on people. Then, as a first line of defense, they pack the media with specialists trained in a speech called “Gibberish” that was designed to induce a Pavlovian sleep response in the general public. If that sounds glib, you might want to read the chapter on “socialization” (a nice word for “brainwashing”) in Arjo Klamer and David Colander's extensively researched book “The Making of an Economist.”

Has someone confiscated or monopolized the peoples' right to create money? What do the economists say? Here's what Geoffrey Gardiner says. ( “Did the public adopt state money, or did the state adopt public money?” There is no need to answer that question because the two are not separate. The members of the ruling elite were also members of the public. Their attitudes cannot be divorced from one another. The state and the public are two concentric circles. I see no need to try to make a serious distinction.”

One is not likely to find much profound thought in economists' circles.

2) Anyone who can pay off his/her IOU - redeem it - is a good candidate for money creation; people who cannot produce, are people you would not accept an IOU from.

On an average day you can find a statement somewhere in the media that will sound something like this, “In the little town of Quedge, South Africa, 10,000 workers can now find a job because their new factory is the only source of money.” Wow -­­ talk about Slavery. Even most “primative” tribal societies knew that there can be no such thing as a lack of money. Did we lack money in the schoolyard, kids? Nooooo! But when money is confiscated by law and monopolized, this knowlege is lost in the name of “progress.” When you take money creation out of the public domain, this enormous power becomes concentrated in the hands of a few elite, who will eventually abuse that power.

One result is that the Fed uses interest rates in “the war against inflation.” High interest rates force wages of labor down and the lower the wages go the more profit there is for management and executives. The divide between the rich and poor is the direct result of Fed policy. This is not new, it began, curiously enough, just after the world went off the gold standard in 1971. Another result is that some areas, by design (like the South African town above), get no money and that's actually very profitable because it also forces wages down.

There have been throughout history, many varied money systems. Today there are local, or community currencies (CCs) based on the individual producer's ability to create money. They are being set up around the world to correct the present system, but they won't be much help if governments continue to stonewall with their manipulative currencies. see (

The critics from the Fed like to ask how a CC will handle international lending, mega-corporate industrial finance, and global trade. I have a couple answers:

1. Let's rephrase the question: “Can CCs destroy my community, my heritage, and my history; steal my land, my labor, and resources; destroy nature and poison the earth? Can they monopolize democracy, the legal system, and the media? Can they steal my independence while giving corporate “people” more rights than I have myself, while they bear none of the responsibilities and liablities that I do? Will a CC be so unstable that it requires the occasional war to sustain it? And will the CC system guarantee that its overseers and manipulators will live an unfettered life of luxury?” That's the real question.

2. Barter is simple. The IOU is simple. But when one attempts to create equitable state, national and international currencies, spanning hugely differing economies, the difficulties grow exponentially. There have been many people - today and in the past few centuries - who have had plenty of good ideas about how a money system might work while still maintaining some positive attributes. One thing is certain: an equitable solution cannot be found by a collection of lazy egocentric self-serving businessmen, bankers, and politicians - or economists in their employ - like those who designed the present system. The problem is technical and scientific and it requires the democratic independent pragmatim of technicians and scientists for a resolution.

3) There are two kinds of IOUs, each with unique properties:

(a) One backed by a commodity (something that exists - mine, a pack of bubble gum, was at home)
(b) One backed by some future situation (“When I get my driver's license I'll drive you to school every day”).

Notice that, when I pay off my IOU by giving Billy a pack of bubble gum, he then returns my IOU and I can tear it up. Then there is no more paper money in the system. And also note that when the US went off the international gold standard in 1971, that was the end of 3a.

This is perhaps the most criminal aspect of the corporate money system. ALL money today is lent into existence. In essence, it is simply invented, lent as debt-backed money (3b above) against some future productivity, and is the least stable, least trustworthy, and most manipulable of the two, especially if one is not averse to lying or fraud.

Worse still is the fact the money can be invented, but commodities cannot, yet money and commodities have equal footing in the eyes of “economists.” Actually money has advantages over commodities: it can grow spontaneously with interest. Commodities can't. The production of commodities takes time, energy and raw material; the production of today's money does not. Thus, the producders of goods cannot possibly compete with the producers of money. The big problem today is, when loans are paid off the money goes out of circulation. Without enough money in circulation people go bankrupt. Someone - a LOT of someones - must always be in debt for the system to continue.

The Fed solution to this is to lend yet more money. But what if people don't need or want to borrow more? That question has been addressed daily in the US business press for the past 3 years. Interest rates are at a 70 year low, trying to entice home buyers to borrow. But people are not “investing” a code word for borrowing. The Fed solution? Let government create money by going into debt. And the PCB's favorite way of spending that money is military spending: bombs and war are the most profitable. They could spend money on schools and roads, but, hey, where is the profit in that? Why settle for educated kids when you could have Central Asia.

What the PCBs are vehemently avoiding is any change that does not come from their own smokefilled back rooms. Why don't they make some changes? Because banks and businesses have huge investments in technology to track currency and financial papers and they make enormous profits from this casino, with essentially insider information. Half of General Electric's profits in 1998 came from currency trading. Even today when the economy is bottoming out - read the business pages - banks have profits zooming up 25 percent a year; brokerage houses, the same. They are comfortable with this system.

4) If I can convince Billy and others that humanity will be best served if my IOU remains in circulation, I can retire a very wealthy man. Think about it. The most counter-intuitive aspect of “money” today is that money represents debt. Look again at the schoolyard model. An IOU is debt, not wealth. I will agree wholeheartedly that this is confusing and takes a lot of getting used to, but a dollar bill represents someone's debt and it's proper place is redemption, not circulation. Nevertheless, people are inclined to look upon a dollar bill as wealth. And they will stash it away. The Fed boyz make great hay out of that illusion - mostly in the foreign trade arena. George Monbiot in London writes, “Almost 70% of the world's currency reserves - the money which nations use to finance international trade and protect themselves against financial speculators - takes the form of US dollars.” The world is flooded with US dollars in countries who have to hold dollars, interest free, in case someone needs them for foreign exchange. The Fed boyz are laughing their asses off.

But wait, there's more. William Greider, in an article titled “Who Governs Globalism” in The American Prospect, 1997, wrote, “Cumulatively, since 1980, Americans have bought $1.5 trillion more than they sold in their merchandise trade with foreign nations.” The debt is more like $3 trillion by now. Americans are writing checks but nobody's cashing them at the bank. Why? Because they think dollars are wealth. When the world cashes in their chips, the USS Dollar will sink like a rock. People will dream of the “good ole days” of true glorious southern slavery. (,3604,940757,00.html)

5) Any of our schoolyard IOUs will be near meaningless and worthless in another town, another state or another country.

Not many sane people would call my schoolyard IOU a “commodity” but the Fed does. Doing so allows them to permit currencies to be bought and sold at “market value.” But today's money gets its value the same way Enron stock does: information is released, and buyers and sellers make their judgements. The problem is that the information is controlled by those who will profit most by manipulating it.

6) If someone restricts the personal IOU they are essentially restricting free speech, free association and free trade. I am out of space here, but this is pretty dang obvious. This is a free speech issue at the very least.

So. What will your kids choose to be? A slave? Or a slave owner?

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© copyright 2003, J. Walter Plinge, France. Distribute freely if kept intact, including credits, and not for profit. For profit or print media use, please get permission from the author.

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