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Forum Post: An Alternative to the Banking System and the FED

Posted 3 years ago on Oct. 5, 2011, 4:44 p.m. EST by iseeamuse (155)
This content is user submitted and not an official statement

We live in a society that is striving to be democratic, yet our economic system is structured like a perverted feudal machine.

We need a system that is organic, and can adapt to major changes. We need a system where the decision making powers are shared equally by all.

Credit Unions and the Cooperative Enterprise model are by far a much better way toward achieving a democratic economy.

Money is a wonderful tool in the evolution of society, the issue is not that it exists, it's how it works. Right now the value of money is determined by a few aristocratic oligarchs. The FED is run by bankers. The banking system is structured on the corporate enterprise model where power is located and money is funneled to the top.

Replacing the FED with a FEDERAL CREDIT UNION AND MINT, where the banking system is structured on a cooperative model, and the powers of inflation and deflation are given to the members of the credit union (us the people) in a confederated vote.

There could be professional, local, state, and national credit union branches all buying into the currency powers through membership in the confederated cooperative.

Please ask for clarification if you do not understand.

66 Comments

66 Comments


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[-] 2 points by chigrl (94) 3 years ago

What is the difference between a credit union and a regular bank?

[-] 2 points by iseeamuse (155) 3 years ago

Most regular banks are based on the Corporate enterprise model: http://en.wikipedia.org/wiki/Corporation A credit union is based on the Cooperative enterprise model: http://en.wikipedia.org/wiki/Cooperative

The FED is an institution that is not a bank that is in control of how much money exists. It was created and is run by corporate bankers.

[-] 1 points by MattLHolck (16833) from San Diego, CA 3 years ago

Private banks create money all the time

for example

if I invest $5,000 in a bank,

they can loan that money out multiple times

as long as they are dealing with numbers and not hard currency.

It doesn't matter multiple people now owe the bank the $5000 dollars I put in

as long as I don't collect $5000

.

oy that story does not make sense to me

could some provide a better example ?

[-] 1 points by Reigne (175) 3 years ago

They do NOT loan out the funds you put into the bank. They CREATE $9 for each $1 - THAT (the $9) is what they loan out.

[-] 1 points by iseeamuse (155) 3 years ago

Yes, and the power to decide to lend it out is in the hands of the lenders (the board of the bank). What if the power to make loans was given to all the contributing members of the credit union you are requesting the loan from? If you are a business person, looking for overhead for your new business wouldn't it be convenient to have a credit union that is made of up other people in your business? Let the profession as a whole, or the community as a whole decide for itself how much it is worth?

[-] 1 points by LibertyFirst (325) 3 years ago

Unless they decide to give all the money to the popular kids. Human nature ruins the best laid plans.

[-] 1 points by iseeamuse (155) 3 years ago

Then at least there would be an immediate an localized way to handle a bad investment, instead of this global fiasco that we are now faced with where bad investments are masked, ignored or "too big to fail."

[-] 1 points by LibertyFirst (325) 3 years ago

I agree with you completely that as much governing as possible needs to be local. We just disagree about the type of system that would work.

How about we run with the local idea and get rid of Federal central planning and let the states and the communities within them chose which type of system would work best for them? Freedom of choice, local control.

[-] 1 points by eric1 (152) from Corona, CA 3 years ago

Good post. Part of the problem is that the Fed is NOT a part of federal government and is a private institution that has a symbiotic relationship with the federal government. The Constitution gives the federal government the power to issue currency, NOT a group of private bankers. In essence, our federal government has privatized a public function. I'm not a big fan of the Fed, but if there is to be ACCOUTABILITY, IN THE LEAST, it should be incorporated into the federal government officially so there can be some oversight( which probably wouldn't amount to much anyway).. I sincerely doubt this will ever happen though..

[-] 1 points by iseeamuse (155) 3 years ago

I am NOT advocating incorporating the powers of the FED into the Federal Government. I am saying there should be a separate confederated institution, not related to the government that is in control of the value of our money.

[-] 1 points by LibertyFirst (325) 3 years ago

All fiat money is subject to debasement and any institution given the power to control the value of money will abuse it.

"Give me control of a nation's money and I care not who makes her laws" ~Mayer Rothschild

[-] 0 points by Reigne (175) 3 years ago
  1. We are not a democracy, we have a Constitutional Republic.
  2. We don't need to "end the fed". We NEED the members of Congress to abide by their Oath & fulfill their DUTY of coining our money. Lawful money has no interest on it (like the FRN's), and is SOUND (backed by silver/gold).
[-] 2 points by iseeamuse (155) 3 years ago
  1. We only still have a constitutional republic because until now we haven't had the means to govern ourselves directly. We can democratize and confederate all of our institutions to better reflect what our predecessors envisioned.
  2. Agreed, sort of. The FED needs to be replaced, in conjunction with the creation of The Commons.
[-] 1 points by Reigne (175) 3 years ago

The FRB does NOT need to be replaced - Congress NEEDS to do their job and coin our money. Let the FRB stick around and watch us not use them anymore.

[-] 0 points by Reigne (175) 3 years ago

I'm not joining anything that "democratize" our guaranteed form of govt. Democracies do not work - they fail. In our constitutional republic 99% cannot take away the rights/property of 1% nor can 1% take away the rights/property of 99%. In a democracy that happens all of the time. Check out what happened to Romans - they were successful as a republic, then turned into a democracy and failed big time.

[-] 2 points by iseeamuse (155) 3 years ago

wow, are you sure you know what you're talking about? In the history I learned it went from being a republic to being a direct dictatorship, not a democracy.

[-] 0 points by antisocialist (30) from Rochester, NY 3 years ago

Agree on # 1 Disagree # 2. Get rid of the fed and go to a commodity based monetary system i.e., Gold Standard. The fed is the devil incarnate that distorts all that is good.

[-] 0 points by LibertyFirst (325) 3 years ago

Or, we could use a sound money system and not have inflation or deflation at all. The Fed needs to go, but we don't need to replace it with another too powerful centralized banking authority. Just let the Treasury issue money as the constitution dictates and eliminate fractional reserve banking.

[-] 1 points by iseeamuse (155) 3 years ago

What is the value of gold when everyone is starving? How much silver would you put down for a drop of water in a drought? A sound money system only works when the raw material has some real value. Precious metals are useless in an emergency and in the valuation of our advanced society.

[-] 0 points by LibertyFirst (325) 3 years ago

What is the value of a dollar bill? How many would you put down for water in a drought?

All money is a medium of exchange. Some mediums of exchange have intrinsic value; others do not. The difference is that when you use a monetary base that has intrinsic value you prevent any entity (such as a central bank or a government) from debasing your currency (causing it to lose value). In a sound money system, a finite resource is used either as money itself or to back the money.

As for precious metals not having any intrinsic value, 5,000 years of history would disagree with you. Fiat currencies have come and go (with great frequency) and are reduced to literal worthlessness. This can't happen to something with intrinsic value--it always has worth, and it can't be debased by printing more of it.

[-] 2 points by iseeamuse (155) 3 years ago

I would not agree that precious metals necessarily have intrinsic value to society as a whole. Do we want to be reduced to a people that is in love with shiny things?

[-] 1 points by LibertyFirst (325) 3 years ago

Do you agree that we need a medium of exchange? We need something that everyone accepts as having value to conduct transactions. Otherwise we would have to use a barter system, so I'm going to assume you are OK with a medium of exchange.
So the next question is, what gives that medium credibility? Well, everyone has to believe that they can always exchange those pieces of paper for something of value. How can that confidence be instilled? If I know, for example, that my government has 1 billion ounces of gold and that each dollar issued is worth 1/100th of an ounce AND that the government will not print any more money unless they acquire more gold to back it up, then I know that my paper money is representing true worth and I have confidence in it. I will accept dollars as payment from others, because I know that this piece of paper is backed by a finite resource and it's value cannot be diminished by simply printing more paper dollars.
Conversely, what we have today is a pure fiat system. There is nothing of value backing the dollar. It is simply a promise from the government that it has value--an IOU. And whenever the government wants more money, they just print it (via the Fed--see the Mandrake Mechanism). Under this type of system, money has no intrinsic value and is dependent on people's beliefs that the government will live up to it's obligation. Once that confidence falls, dollars are worth no more than the paper they are printed on. This happens all the time. Currency default is not rare. Every fiat currency in history has failed.
You could back the money with cows if you want--it doesn't have to be gold--but it does have to be something with intrinsic value if you want to prevent abuse by those who control the money supply.

[-] 1 points by iseeamuse (155) 3 years ago

What about backing our money with our trust? If the power of currency valuation is put in the hands of the professions and the communities via a cooperative of local and professional credit unions then the economy as a whole would reflect the sum total of the society's trust in the system. Rather than what your saying where one governmental institution that is not representational of the people makes money based on an indebted promise. Limiting the value of our money to one finite resource locks up the system and doesn't allow it to react to drastic changes.

[-] 1 points by LibertyFirst (325) 3 years ago

We shouldn't need ongoing currency valuation at all. That is part of the problem-manipulation of the money supply due to no stable backing of the currency is what leads to inflation and deflation and the false need to have some authority controlling these fluctuations.

Society's trust in the system needs to be based on something. And it's not just our society--we trade globally so the rest of the world needs to believe that we have the ability to make good on our dollar promises. The only reason we became the world's reserve currency is because we used to have a sound money system, and the world knew it could rely on US dollars because they were backed by gold. Ever since we removed that backing and went to a pure fiat system (first Bretton Woods, then Nixon), the dollar has been losing value as the government has indebted us more and more.

Limiting the value of money to a finite resource does not 'lock up the system'--at least it hasn't ever to date in any sound money system that has been used. I would like to elaborate on this for you, but it would help if I understood what you mean by lock up the system and not allowing it to react to drastic changes. Can you give me an example?

[-] 1 points by iseeamuse (155) 3 years ago

In a famine no one cares about gold when they need food. Whoever has the food will be able to charge whatever amount of gold they wanted, and the masses without gold might starve. Using a trust based currency would bring the society together in a growing valuation of itself. Separating the natural world and basic human needs from the economy into The Commons would answer for the provision of all

[-] 1 points by LibertyFirst (325) 3 years ago

In a famine, no one cares about a trust based currency either if there is no food to buy with it. Whoever has the food will be able to charge whatever amount of trust based currency they want for it. The masses without trust base currency would starve. Does that help you to see my point? There are two separate issues here: One is ensuring that people are not subject to famine. There are lots of possible answers to that. The other issue is what type of currency system is best.
Can you explain what you mean by separating the natural world and basic human needs form the economy into The Commons means, and how that would answer for the provision of all? (In re-reading that sentence, I think it may sound a bit snarky. That's not my intention--it's an honest question, so please forgive me if it's coming off as sarcastic).

[-] 1 points by iseeamuse (155) 3 years ago

Of course, no snark read. The issue is value. What do we value, how do we value it. To my understanding there are two forms of valuation: quantitative and qualitative. There are things in this world that have intrinsic value and should not be, and in truth cannot be quantifiable without some amount of exploitation. These things that have intrinsic value need to be taken out of the marketplace, and be relegated to the commons, that which cannot be commodified. In a just society, based on liberal and democratic principles the goal of the national system is one that promises Life, Choice, and Means pursue these just goals. Placing those intrinsic resources in a free, and protected commons would take them out of the marketplace and would make them accessible to all. The Commons would include the environment, (ecosystems, biodiversity, clean air, clean water, etc), a secure community, agriculture and food, education, transportation, and occupation opportunity (eg, work-placement opportunities for those who cannot find a place for their own potential. If you are bored, able bodied, with no interests, then the community can find work for you, where you choose to work is up to you, but the community should have the means to find you opportunity.)

[-] 1 points by LibertyFirst (325) 3 years ago

It sounds really nice, but who would pay for it? I'm not trying to be a jerk, but seriously, who provides say, the food? Someone has to do the work to grow the food. What if no one wants to? What if able bodied people chose not to contribute? What do you do with them?

One of the problems in the Soviet Union arose from the idea that the government would provide for everyone. Everyone would be given a job so they could contribute and the government would ensure everyone had food, an apartment etc. I'm simplifying this whole thing because there was corruption involved as well, but what happens is that people will contribute as little as possible. It's sad, perhaps, but it is just human nature. If I know that the government will provide a job for me then why to I need to apply myself at my work? If I get fired, the government will just get me a new job. In fact, why work at all if the government is still going to give me food and shelter? I might be motivated to work if I could earn more money and chose my own apartment and food I like better, but with government controlling wages that is not an option.

To keep this system running and ensure that the food is grown, the environment kept clean etc, you will have to use force. Without the incentive that someone can make their personal situation much better, it's the only other option you have. And with the application of that force, you now have a non-free, big-brother police state.

Your idea is beautiful, but it has been tried before (many times) and has failed. Humans are not yet evolved enough to make this work. If we were, it would happen all by itself without any need for planning.

It's not so much about finding the right system, it's about preventing the abuse of the system.

[-] 1 points by iseeamuse (155) 3 years ago

I'm not proposing government control of the system, in fact I would propose reduction of governmental powers, and movement toward localism. In reality I am proposing two economies: one based on the creation, sale and use of man-made commodities, including the crafts that produce and use them, and the other consisting of the commons and the people that work toward providing these common goods. The commons would handle the societal necessities, and those who work within the commons would be afforded a better standard of living. Those who do not work within the commons would need to provide recompense for their use of the common's resources (eg: a cooperative film/media company would buy into the currency through a professional credit union which would decide whether or not to invest in the venture. The credit union would be responsible for assessing the value of the venture, and determining how the venture, or profession as a whole would pay back the use of resources derived from the commons. So a new film company would receive its overhead based on a contractual obligation toward the commons to produce something in compensation for taking resources out of the commons, like some kind of public broadcasting.)

[-] 1 points by LibertyFirst (325) 3 years ago

I'm not trying to be obtuse, but how is this different than what we have now? Leaving corruption out of it for the moment, you are describing a system where people are free to choose to work for a collective benefit and reap the rewards thereof. I can do this now, either by joining a coop, or forming my own.
If I want a loan for a venture, I need to find a lender who thinks what I propose is a good idea and put the money up. I can do that now, either through a bank, credit union, or private capital.
If I don't work in the commons, how will you make me provide recompense for what I use? What if I don't use anything? What if I want to grow my own food? Am I not allowed?

[-] 1 points by iseeamuse (155) 3 years ago

The difference is where the power is located, and in the fact that there is no separation between what is a commodity and what is a natural right. We as a species now have to make that distinction in order to be responsible for our place on this Earth. This proposal would make that distinction and encourage a devolution of powers toward the localities so that they can be better able to handle their own unique problems.

[-] 1 points by LibertyFirst (325) 3 years ago

Again, I'm all for local control. I don't see why we need a system for that. If we're going to dictate how localities manage their business, then it's not really local control is it?

[-] 1 points by iseeamuse (155) 3 years ago

The idea isn't to dictate the localities, the idea is to establish infrastructure so the control lies with and remains in the hands of the localities. This is primarily not a governmental issue, but an issue of economics and social paradigms.

[-] 1 points by LibertyFirst (325) 3 years ago

I'm sorry but I don't follow. If I want to have a 'professional credit union' now, and operate it the way you describe, I can get together with some other people like-minded and set one up. I may have trouble dealing with the mountains of federal regulations currently in place that favor the large banks, but that's the only obstacle I need removed in order to set up my credit union. What infrastructure do I need?

[-] 1 points by iseeamuse (155) 3 years ago

The power of the valuation of our currency needs to be democratized. The substantiation of value should lie in the hands of the public not in the hands of a relative few band board members. There shouldn't be the amount of red tape that exists to set up a credit union, either.

[-] 1 points by LibertyFirst (325) 3 years ago

So you propose a fiat currency system, where the value of money is simply declared (by fiat, hence the name). How is the public 'substantiating' the value?

How about if we just agree to use something everyone agrees has value as a means of exchange. Like maybe gold or silver? Then we can determine amongst ourselves the value AND use our currency in the global marketplace, where these means of exchange are already accepted. We don't even need to agree on the value. My ounce of silver is worth whatever you are willing to give me for it. Stores could do the same thing. They could just post whatever amount of gold or silver they are willing to accept in exchange for a particular good. If one store makes their price too high, then another store will set a lower price and people will buy from them instead. Farmers could also do this--everyone with something to trade could do this. This will help to control prices. I can't think of a more free, democratic system for valuing money than letting each person decide for him or herself how much money they will accept in exchange for their goods or labor.

[-] 1 points by iseeamuse (155) 3 years ago

Because you are still devaluing the intrinsic nature of that resource. If all the gold is held up in reserve, what do goldsmiths use for their work? And I'm still having trouble seeing everyone agree that precious metals will have the absolute value of our money.

[-] 1 points by LibertyFirst (325) 3 years ago

You don't need to hold anything in reserve--you can trade it directly. But that's beside the point. You can hold some in reserve and use representative currency--as long as it is backed by those reserves. It doesn't mean you leave none for the goldsmiths. There is no requirement to have all of the existing resource in reserve for it to back a currency. Gold makes a good choice because it has been considered a store of value for over 5,000 years by humans across the entire world. It has always retained it's value. It's portable, it doesn't deteriorate and you can't make more, so it can't be printed up. You can mine more, but it's difficult, time consuming and there isn't that much of it. These characteristics ensure it's continued value. But if you prefer something else, that's fine too. You can back the currency with anything that can't easily be replicated and that people agree has value.

Your comment that you don't think everyone will agree that precious metals will have the absolute value of our money-----well, I'm not sure what you mean by the absolute value of our money, but gold has a very long history of being used as money globally. The longest, in fact. Even today, you can purchase things with gold on a global basis. It is already agreed to be valuable by pretty much everyone. You may think it is silly to prize a shiny metal, but most of the population of the earth sees it as such. I don't think that's going to change any time soon.

[-] 0 points by HankRearden (476) 3 years ago

Doesn't work.

If money doesn't have cost, it cannot function as a store of value. Paper money destroys every society it is tried in. Not just the economy. SOCIETY. Starting from the Roman Empire.

[-] 1 points by iseeamuse (155) 3 years ago

The money will have cost. This system would best work after all the democratic needs are met: a free and healthy commons (the environment, clean air, clean water, food, shelter, community, healthcare, education, transportation, occupational opportunity), and a governmental system where the people are properly represented. Money is our direct vote on what exists in the world. The Commons should already exist for all, after that we would use money to support the rest. The value of money would be determined by the people as a whole through this cooperative credit system.

[-] 1 points by HankRearden (476) 3 years ago

Well, you're jumping ahead there, but anyway, just how was it you were going to convince me to build this commons for everyone else?

[-] 1 points by iseeamuse (155) 3 years ago

How else are we going to achieve a society that devoted to life, liberty, and the pursuit of happiness for all without a protected commons?

[-] 1 points by HankRearden (476) 3 years ago

You didn't answer the question.

[-] 1 points by iseeamuse (155) 3 years ago

Do you want to be convinced?

[-] 1 points by HankRearden (476) 3 years ago

You intended some other means?

[-] 1 points by iseeamuse (155) 3 years ago

Are you intentionally being contrary or do you actually disagree with the creation of the Commons?

[-] 1 points by HankRearden (476) 3 years ago

I disagree with the creation of anything through compulsion. You can't make me do it.

[-] 1 points by iseeamuse (155) 3 years ago

There is no point in talking values and societal goals with someone who doesn't want to participate in the society, or will not allow themselves to see the personal benefits that come with working cooperatively.

[-] 1 points by HankRearden (476) 3 years ago

And that's when the guns come out. That's what I wanted you to admit.

[-] 1 points by iseeamuse (155) 3 years ago

It's not really an admission, it's open truth. There cannot be change unless it is desired (through convincing) or forced. The hope is that people get beyond the illusion of their ideologies and see past the rhetoric to the truth in the common good.

[-] 1 points by HankRearden (476) 3 years ago

It's going to be a tough sell.

You might have better luck convincing people of a course that leads to their own good. They worry about things like providing for their children and stuff like that.

[-] 1 points by iseeamuse (155) 3 years ago

With a Commons everyone is already provided for. There is enough here for all of us to live comfortably. We have the knowledge and the means to create a society without an upper middle or lower class. Everything beyond the Commons is elective and opportunity for entrepreneurship.

[-] 1 points by HankRearden (476) 3 years ago

I have the skills necessary to build it.

How are you going to convince me to build it?

What are the 'means' you speak of? A gun to my ribs?

[-] 1 points by iseeamuse (155) 3 years ago

No, we don't need guns, we need the motivation of the coming mass extinction and largest resource scarcity human society has ever seen. If the possible end to all life on earth isn't enough to get people to want to work together, then I don't know what is.

[-] 1 points by HankRearden (476) 3 years ago

Well if they all see a common goal as being in their own best interest, they will work together on it. Look what built the greatest country in the history of humankind.

We've been threatened with resource scarcity, and population bombs, and a coming ice age, and global warming, and nuclear winter, since before I was born. These are fear-based memes promoted in the hope that they will become dominant social themes, and always they have the singular goal of getting you to give up your rights and prosperity in order that the government can save you. These are no more real than the imaginary idea that the government could avert any such disaster. And they never happen.

Fear, ignorance, and force. The main tools of the elite. Once we know, they don't scare us any more. And once they don't scare us any more, it becomes very dangerous to enslave us directly.

[-] 1 points by iseeamuse (155) 3 years ago

If you think the global climate change, mass extinction, and the loss of bio-diversity are some kind of corporate fear tactic, then I gotta hand it to you for being so unaware of the actuality of the situation. These things are real, are observable and are already in motion. I would rather work toward working within the economy of our natural world, than to be constantly working against it, fearing the constant threat of real global eco-disaster. Besides, what if it really is true? I'm not interested in taking that chance.

[-] 1 points by HankRearden (476) 3 years ago

OK, don't take that chance, but you don't get to take over all economic activity in the world in order to try to prevent it.

It's going to take a lot of resources to control the output of the thermonuclear reaction that heats our world.

[-] 1 points by iseeamuse (155) 3 years ago

Why only thermonuclear reactions? If we can have the ability to invest in new ventures directly, and diversify our chances against such a threat, then why not change an economy that in the long run won't work for anyone because there won't be anyone left.

[-] 1 points by HankRearden (476) 3 years ago

I was referring to the sun.

[-] 1 points by iseeamuse (155) 3 years ago

Oh sorry. The point of the commons is to account for the things that humankind cannot quantify, or control. The point is not to control the Sun, but to protect and account for its uses.

[-] 1 points by HankRearden (476) 3 years ago

The sun controls the temperature of the earth.

If you let someone get between you and your access to a free market in energy, you will suffer.

[-] 1 points by iseeamuse (155) 3 years ago

The hopeful idea is that everyone would be contributing to the energy market from their own homes eventually, thus reducing the status of energy from commodity to common good.

[-] 1 points by HankRearden (476) 3 years ago

Well invent it, you'll become rich. I work with energy, and have been following all the developments. When you look at the history of man, trying to survive on meager low-density energy, you can see what a boon to humankind inexpensive energy is. But mother nature doesn't give it up easily. And economy of scale unfortunately counts for a lot. Still, pitch in, give it a try. You'll be very rich very quickly.

[-] 1 points by iseeamuse (155) 3 years ago

The point is not to get rich, the point is to sustain our race, and promote the inclusion of our species into the natural order. We have been working so hard as a species to separate ourselves from nature all the while neglecting the fact that we are part of nature, not above it. There is more to life than being rich, and rich in what? I would rather be intrinsically rich than financially rich.

[-] 1 points by HankRearden (476) 3 years ago

Come up here to the north woods and commune with nature in the wintertime. After an hour or so, I'll invite you to come inside by the heater, after you've had enough.