November 12, 2012 By Joseph P. Farrell

In case you missed it, the IMF (International Monetary Fund), that wondrous shill of US foreign policy and financial imperialism, has a "new" plan that, on examination, is really a very old one:

IMF's epic plan to conjure away debt and dethrone bankers

Now, at one level, this would appear to be nothing but a scheme to return to the system as obtained originally in the thirteen American colonies, where each colony issued its own colonial paper scrip until the Bank of England stepped in and shut that down. So, on paper, the scheme looks good.

But let's stop and consider: do we really trust any large financial institution like the IMF to propose a solution? Additionally, would, say, an American return to such a system be a good thing, with an already out-of-control Federal government, one moreover thoroughly in the pocket of large corporations and financial institutions already? or would it be a recipe for even less responsiveness to the public and individual liberty?

I submit that it would most likely be the latter, and that while the idea of a government issued debt free money looks good on paper, we need to remind ourselves that, other than the thirteen American colonies, and a brief flirtation with it under Abraham Lincoln, the Chinese and Nazi Germany were the only other ones in modern history to try it, and they are not exactly exemplars of governments responsive to individual liberties nor the commonweal.  Indeed, it could be argued that America's descent into empire began with Lincoln's greenbacks.

But there are other weighty reasons to be wary of this scheme: debt-free government issued money is dependent upon a genuine honesty in the reporting of actual production, since such money is, ostensibly, a receipt on the goods and surpluses of the state, i.e., on its over-all productivity.  But in today's centralized mega-states, such as the USA or Russia or China, does anyone honestly trust the figures for productivity or job creation/loss coming out of official government bureaucracies? I submit, no, and again, because anyone tracking the figures of such agencies - particularly in Europe and the USA in recent history, will be all too familiar with the Soviet-style practice of fudging the books. Under the old Soviet Union, if a tractor factory was designed to produce 250 tractors a month, that was the officially recorded figure, even if it was only actually producing, say, fifty-seven.

And finally, we need to consider another possibility, as I averred in a recent video blog: suppose the banksters come along and offer to "reboot the system" with what amounts to an old Mesopotamian debt jubilee: suppose the price of receiving that largesse, the new "debt free" currency, was simply to accept a chip, or a "vaccination", or what have you. In that case, one would simply be trading one form of debt peonage, for another.

The idea needs to be debated, to be sure, but as I have also argued recently, it needs to be debated in conjunction with other movements in the world's financial system, the moves of the BRICS nations to increasing independence from the Western bankers, the need for competition in clearing both regionally and globally, and above all the absolute need for more locally responsive systems.

That said, we need to exercise due caution in this most recent move, for it does not portend any real connection to market reality.

See you on the flip side.