The Most Revolutionary Act

Diverse Ramblings of an American Refugee

Dr Stuart Jeanne Bramhall

Dr Stuart Jeanne Bramhall
New Plymouth, New Zealand
December 02
Retired psychiatrist, activist and author of 2 young adult novels - Battle for Tomorrow and A Rebel Comes of Age - and a free ebook 21st Century Revolution. My 2010 memoir The Most Revolutionary Act: Memoir of an American Refugee describes the circumstances that led me to leave the US in 2002. More information about my books (and me) at

NOVEMBER 4, 2012 7:35PM

The IMF Proposal to Strip Banks of Their Power

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Henry ford

In the October 21stGuardian, Ambrose Evans-Pritchard reports on a “revolutionary” paper by the International Monetary Fund (IMF) to end the current global monetary system, in which banks create money by issuing loans. The paper’s authors, Jaromir Benes and Michael Kumhof, propose to reinstate government-issued and controlled money (in the West this ended in 1666). They claim that this would instantaneously eliminate the multi-trillion public debt owed by the US and other industrialized countries, while simultaneously creating jobs, stabilizing boom and bust cycles, leveling income inequality and reducing the monopolistic control international bankers exert over the global economy.

In addition to assuming sovereign control over the money supply, national governments would also require banks to hold 100 percent reserves for the loans they initiate. This effectively terminates the ability of private banks to create money out of thin air, as well as massively reducing their political power. To quote Mayer Rothschild, founder of the Rothschild dynasty, “Give me control over a nation’s money, and I care not who makes its laws.”

The Historic Link Between Money Creation and Inequality

Entitled The Chicago Plan Revisited, the IMF paper revives a proposal first put forward by professors Henry Simons and Irving Fisher in 1936 during the Great Depression. Fisher, like many modern economic thinkers, was extremely concerned about the extreme concentration of wealth created by credit cycles.

In my opinion, the economic history Benes and Kumhof relate is the most interesting section of The Chicago Plan Revisited. They explode the myth that money developed to replace precious metals as a means of exchange. Anthropological studies show that “fiat” (fiat currency = currency de-linked from precious metals or other commodities) currencies are as old as civilization. The Spartans banned gold coins, replacing them with virtually worthless iron disks. The early Romans used bronze tablets. Their worth was entirely determined by law – a doctrine made explicit by Aristotle in Ethics – like today’s dollar, euro and pound.

Benes and Kumhof also trace the link between control of the money supply and wealth concentration to prehistoric times, where it was the basis of debt jubilees found in early Judaism and other ancient religions. They assert that the Athenian leader Solon implemented the first known Chicago Plan/New Deal in 599 BC to help farmers who were in debt to the oligarchs who minted the private coinage they used as currency. He cancelled debts, returned lands seized by creditors, set floor-prices for commodities (much like Franklin Roosevelt), and consciously flooded the money supply with state-issued “debt-free” coinage.

One hundred fifty years later, the Romans copied Solon’s reforms, setting up their own fiat money system under Lex Aternia in 454 BC.

During the Middle Ages and Renaissance, all currencies were publicly controlled (by kings and the Pope) until 1666, when Charles II transferred control of money creation to private banks with the English Free Coinage Act of 1666.

How the IMF Proposal Would Be Implemented

Under Benes and Kumhof’s proposal, the US treasury would issue sufficient currency to repurchase all outstanding sovereign debt from private banks and other parties. This buyback would make up a substantial portion of the reserves banks would be required to hold to generate new loans. They would build up the balance of their reserves by borrowing at low or negligible interest from the US and other government treasuries (as banks do now when they are “bailed out” by the Federal Reserve).

The growing movement to end debt-based money is still considered pretty radical, despite the grassroots “social credit” movement started by Ellen Brown, the late Richard Douthwaite and members of Positive Money and the New Economic Foundation more than a decade ago. For the Mainstream International Monetary Fund to take up the call is significant for two reasons:

1) It suggests that the global economic crisis is far more serious and intractable than our governments and the mainstream media are willing to let on, and

2) People in high places know damned well policy makers have run out of other options.

Read more here

For more background on how private banks issue and control the money we all require to live on, I highly recommend the films Money as Debt and 97% owned. Both are free downloads at and

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I see a wee problem with governments having control of money. Governments are made up of politicians. Politicians sell out to corporate and financial interests for both campaign funding and personal enrichment. Does that not put control right back in the same hands it's in now? Would we not have to change the whole electoral system to make that work?

Would we not be better off if the value of all money were labour based? One hour of labour being worth $X all over the world? Labour is, of course, what gives everything its true value. Something worth 10 "labour dollars," that is in short supply, can have its price inflated but let's not confuse price with value.

Just wondering........

Off to check out those links you provided.

Oops! That YouTube account (first one) has been terminated. Is that video available anywhere else?
The problem with most money is that when push comes to shove, it isn't worth the paper it's printed on. International economies are based on goods and services and currencies are nothing more than artificial contrivances used to place value on those goods and services. Some of the "most valuable" goods such as diamonds and precious metals have little or no practical use and are therefore without much value for example in places where wars and genocidal purges occur, gold and precious jewels have traditionally been exchanged for food and/or safe passage. If we really wanted to know what our money is really worth all we need do is chose one Friday next year when we all go to the bank and cash our paychecks. Imagine "the global economic crisis" that little demonstration would set off. R&R
This link seems to work, Sky:

Your argument seems a wee bit circular. The whole idea would be to reduce banks power by ending their ability to issue money. Once they no longer have control of our money, they cease to have any real political power. You should really read the IMF paper. The problem is as old as civilization - you end bankers' control of the political process by ending their ability to control money.

It sure seemed to work for North Dakota, the state with the only state-owned bank (though 20 states are trying to create them). Thanks to their bank, they were one of two states that didn't incur massive debt (cause they didn't have to pay off Wall Street) after the 2008 economic crisis. Check out Ellen Brown's article

You got it, jmac. Forget buying gold - it won't do a damned bit of good when the grocery shelves are empty.
so kings and priests never debased the currency? [insert sustained laughter here]
No, Al, I think you're missing the point. No one is making the claim that kings and priests never debased the currency. The point the IMF economists make is that extreme inequality, booms and busts and banker interference in political affairs are inevitable so long as private banks control our money supply. The important point for activists is that taking back control of our money will be as important to "the revolution" as taking back political power.
A. Funny quote from a guy involved in a failed coup to oust FDR, don'tcha think?

B. If there's one entity for which I have more contempt the multinational financial institutions, it's the IMF (I know you know, at the very least, what their involvement is in the dismantling of the Greek economy...and that's like the tip of the shit-berg). If the idea is coming from them, I'm gonna assume it's bad until someone can show me it's not.

C. As it turns out, for reasons more numerous than I truly want to explain, this is the most tremendously stupid idea ever conceived of in the history of modern economics, and it will achieve none of its stated goals (the mortgage doesn't go away because the make a new piece of paper to represent payment of that remains, and if the US government had enough funds to pay off all its foreign held debt, most of which is in US Treasury Bonds, don'tcha think it would have at least stopped borrowing by now, if not paid it off already, given what a hot-button issue this is by now?).

Without going into the particulars, this is the IMF divesting all interests in North America and shifting the wagers to Asia...and completely sinking the US economy (as if we're not doing a fine job of it on our own) in the process.

Seriously, you need to unlearn all the garbage you've learned about the monetary system. It's bunk, as is this horrible proposal.
@jmac - that is the beauty of money - it's worth what people think it's worth. It only becomes an issue when people no longer think it has value, just like your diamonds and gold...or salt...or beads and trinkets...

And, while any given bank probably couldn't exchange all their patrons weekly income for paper money, all are solvent enough to give those patrons something which would serve the same purpose as the cash, and for those banks unable to do this, the FDIC will happily step in and fill in any gaps within 48 hours.

100% reserves would eliminate the need for the FDIC, and it would be dissolved, which would be particularly funny the moment those reserve standards were relaxed (50% is the most any bank should be required to hold in reserve, and even that is a bit too high, probably) and one of the banks failed.

Well, Malcolm, as someone pointed out about 10 days, it's really striking that someone with the moniker MalcolmXY would take a conservative/neoliberal ideological position on something like this.

I gave up trying to have rational discussions with conservatives many years ago. Mainly because they set up a whole lot of groundless straw man arguments (about moving jobs to Asia, abolishing the FDIC, etc) for which they off no logical justification whatsoever. I have a lot better things to do with my time.

I am really skeptical if you have read the IMF paper (at the Chicago Plan Revisited link). If so, you don't seem to understand it or you wouldn't say "if the US government had enough funds to pay off all its foreign held debt, most of which is in US Treasury Bonds, don'tcha think it would have at least stopped borrowing by now, if not paid it off already, given what a hot-button issue this is by now?"

The gist of the proposal is to END government borrowing from private entities. At present private bankers create money out of thin air (when they generate loans). What the IMF economists propose is to allow the US government to create money instead. Allowing to do it only serves to worse wealth inequality.

If you are confused about this (and really want to understand how the British/US monetary system has operated since 1666), I suggest you watch one or both of the videos I recommend at the end of the post. Unfortunately what you refer to as "the garbage I learned about the monetary system" isn't a matter of opinion - it's historical fact.
A very wise man once told me, "Ideas are a dime a dozen. What we need is implementation." Something so vast would certainly need a lot of heavy lifting from all of the world's governments. However, the estimated $800 trillion in exotic derivatives and other funny money continues to grow exponentially.

With the EU still in a delicate state, an event from here could once again pose an existential threat to the world economy, and government bailouts would no doubt have to be many times larger than the previous bailouts in 2008 and beyond. Not only that, but without substantial changes in the structure and regulation of the monetary/financial system, there would be nothing to prevent an even greater crisis down the road.

Thus, the IMF plan should be welcomed as a fresh idea that needs study and consideration.
onl makes the real point here: offering suggestions for change is ok, so long as there is some prospect of execution. here, none.

significant change requires a shift of sovereignty. without revolution, even cosmetic change is unlikely. marx probably said that.

the imf is not an agent of change. although they would welcome a regular and submissive banking universe, they offer not the slightest plan to achieve this goal.
Dr. Bramhall,
Can you please edit the last sentence of the second last paragraph of your reply to Malcolm.

I have now watched both those videos and am much enlightened. I am stunned at two things: 1) How little I knew about the banking system; 2) How insane that whole system is.

How in the world has this come about?!

Have all governments been asleep at the switch? Have politicians been so corrupt as to know of this yet allow it to continue?

I cannot help but feel that my previous support for the idea of co-ops of all sorts, but especially labour/services co-ops could - as, at least one in the US is already doing - begin issuing scrip. I would hope that barter/scrip would eventually become so big and so powerful that the "made from debt" economy the banks have created would collapse.

Such a collapse - a disaster if it happens now - would be of little effect if we had a whole different alternate monetary system in place.

The circularity of my previous comment was its point!

Thank you so much for those links. I'll be viewing and re-viewing those videos until I can grasp their full meaning and begin to understand the implications of this info.

I didn't read the paper. If someone had told me that they put forth a paper on why it was a good idea to re-institute slavery, I wouldn't read that either. There is no possible good reason to re-institute the practice of slavery, so just like all the scientific journals bought and paid for by the oil industry have papers on why global warming is a myth, given the source of the position on global warming, I dismiss it on spec.

Now, since you didn't mention any sort of money standard in your synopsis (thankfully, since these are phenomenally bad ideas, and no government has ever stuck to them, especially in times of war, and the US is in a constant state of war), so I ask, what is the difference if the US Government creates the money or if the banks do?

I suppose in that moment, instead of issuing the money as debt, the government could spend it, but since that isn't being proposed, the money still becomes debt based. You say this yourself in the synopsis above.

At the onset, the government, per your synopsis, must issue enough money to cover all foreign debt. In fact, they must issue enough money to cover ALL debt for this to work, which means that they must issue enough US currency to cover all US currency in existence today.

The current M3 money supply is roughly equivalent to GDP, which is in the neighborhood of $15 trillion. US foreign debt, not part of the money supply because it is held in Treasury Bonds, is also roughly $15 trillion (give or take a trillion here or there, but with these numbers, who cares?).

So, under this proposal, the US Government must issue $30 trillion dollars on day one. Do you know what that will do to US currency on the world market? It will cut the value of it in half. That's after the world panic before this event occurs, when large holders of US dollars and US Treasury bonds begin dumping them in anticipation of their assets' values being cut in half.

Very soon after that happens, every nation will discontinue using the US dollar as the currency with which it buys and sells goods and services worldwide, which is a big part of what is holding the economy up even as shakily as it is currently.

This will plummet the US into a depression that makes the last 7 years look like the boom cycle of which you are so loathsome. Given that you now require banks to hold reserves at 100%, and also that the government will have just cut the value of the money in half, there will be precious few options available to use to try and pull the country out of this mess and it will most likely end up fracturing into regional confederacies (we got the nuclear subs in this one, so the rest of you better not fuck with us...).

I could go on, but yeah...I didn't read it. I didn't need to. (PS - sky is still blue as well...don't need a paper telling me it just changed to yellow)
How 'bout we just nationalize The FED and call it good? It's faster, easier (Congress could do it the moment their collective balls drop), it has a possibility of actually achieving some of the goals you have and it won't cause an economic meltdown in the Western Hemisphere.

Seriously, the next time you write anything about Greece, I'm gonna remind you that you wanted to follow an IMF-sponsored plan to switch around the world money supply.
The IMF is the only institution more insidious than private banks. They are actively trying to turn Greece into a feudal economy, and the used their power at the onset to install a puppet government that they control in order to institute their plan to turn the Greek people into serfs.

WTF are you doing endorsing any idea that comes from that evil fucking soutce?
The ONLY thing the IMF does is issue debt. It is their sole purpose for existing (who controls or audits them, by the way? and, their structure, i.e. a board of governors and a managing governor, look strikingly similar to the FED, no?).

The IMF, through The World Bank, is probably the largest financial institution in the world, and all they do is issue debt.

Given this, do you think they would want to make debt a smaller part of the world money supply, or a larger one?
Do I sound like a conservative now, or simply the only one of us who can recall how ridiculous it would be to move from a US based private bank for our money to a bank based nowhere (physically based in the US, in part, but that piece of their operations could be moved to a 747 that never touched the ground, should they choose to do so, and they got the money to do something as cartoonishly evil as that, if anyone does)?