Friday, 07 October 2011

Ellen Brown and Matthew Yglesias Both Want Free Money

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Writing for the left-wing blog ThinkProgress, Matthew Yglesias noted his difficulty in coming up with a suitable slogan representing what the “Occupy Wall Street” demonstrators really wanted.

He explained:

My view is that the best demand of all … is “free money for the rest of us.” There are a lot of different specific ways this can be implemented, but the ... Powers That Be … have been willing to provide all manner of free money to players in the banking system. Debt cancellation is a form of free money for the indebted. But why give free money only to banks? And why give free money only to the indebted? Why not free money for everyone? “Everyone,” of course, includes the indebted. But it also includes ordinary people who didn’t happen to avail themselves of the credit binge. It’s an idea so good that it sounds almost silly.

"Everyone knows” that you can’t just hand out free money to everybody. Except actually you can … in the short term, free money for everyone impacts prices … [but] it would do so in a useful way. I don’t know what the best way to turn this into a slogan is, but the point is that if the different institutions that together constitute “the government” worked together, they could put more dollars into our hands. Creditors won’t like it because doing this will devalue their existing debt claims, but so what?

ThinkProgress is an offshoot of the Center for American Progress, founded in 2003 as a “left-leaning alternative” to think tanks such as the Heritage Foundation and the American Enterprise Institute, and so it’s appropriate that Yglesias sports a BA in philosophy from Harvard with a concentration in foolishness. But that foolishness isn’t restricted to ramblings about the Wall Street demonstrations. He sounds very much like Ellen Brown, author of Web of Debtwho has been embraced by many in the Tea Party who think her opposition to the Federal Reserve means she also has good ideas about how to abolish it. Last fall, Brown was engaged in the debate about the advantages of Quantitative Easing II (QE2) in stimulating the economy when she wrote,

QE2 is not a “helicopter drop” of money on the banks or on Main Street. It is the Fed funding the government virtually interest-free, allowing the government to do what it needs to do without driving up the interest bill on the federal debt…The Fed failed to revive the economy with QE1, but it could redeem itself with QE2…

According to Gary North, who has been following Brown’s exploits with great interest, having invested over 200 hours in examining and refuting her claims on his website, Brown is “a Keynesian, a mercantilist, and a left-wing Populist who promotes the construction of a Federal welfare state by means of fiat money [currency not backed by a precious commodity such as gold].” As proof, he offers this quote from page 458 of her Web of Debt. What she wants is

the availability of funds for a whole range of government services that have always been needed but could not be afforded under the "fractional reserve" system, including improved education, environmental cleanup and preservation, universal healthcare, restoration of infrastructure, independent medical research, and development of alternative energy sources.

In other words, Brown wants free money to fund all the government projects that aren’t being funded now for lack of money, but she doesn’t want to do it through the Federal Reserve. Instead she wants to nationalize the Fed and let Congress determine just how much money would be needed to pay for the government’s spending plans.  Those spending plans would necessarily involve a huge expansion of federal government welfare programs using fiat printing press money to pay for it. 

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