Bill Still: Ron Paul is ABSOLUTELY WRONG!

Bill Still appeared on the Keiser Report 9/20/11

Danny Panzella
TruthSquad.TV
9/20/11

Economic historian Bill Still author and filmmaker of  the acclaimed Money Masters series appeared on the Keiser Report with Max Keiser this week discussing Ron Paul, fractional reserve banking and a gold standard.

Still is the author of the new book “Monetary Reform Act” which can be read here, is pushing for two basic reforms. The first is debt free, government issued money. The second is to eliminate banks ability to lend money they don’t have in the form of fractional reserve lending.

These two relatively simple steps, which Congress has the power to enact, would extinguish the national debt, without inflation or deflation, and end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking). Paying off the national debt would wipe out the $400+ billion annual interest payments and thereby balance the budget. This Act would stabilize the economy and end the boom-bust economic cycles caused by fractional reserve banking.

From Bill Still’s website:

This proposed law would require banks to increase their reserves on deposits from the current 10%, to 100%, over a one-year period. This would abolish fractional reserve banking (i.e., money creation by private banks) which depends upon fractional (i.e., partial) reserve lending. To provide the funds for this reserve increase, the US Treasury Department would be authorized to issue new United States Notes (and/or US Note accounts) sufficient in quantity to pay off the entire national debt (and replace all Federal Reserve Notes).

The funds required to pay off the national debt are always closely equivalent to the amount of money the banks have created by engaging in fractional lending because the Fed creates 10% of the money the government needs to finance deficit spending (and uses that newly created money to buy US bonds on the open market), then the banks create the other 90% as loans (as is explained on our FAQ page). Thus the national debt closely tracks the combined total of US Treasury debt held by the Fed (10%) and the amount of money created by private banks (90%).

Because this two-part action (increasing bank reserves to 100% and paying off the entire national debt) adds no net increase to the money supply (the two actions cancel each other in net effect on the money supply), it would cause neither inflation nor deflation, but would result in monetary stability and the end of the boom-bust pattern of US economic activity caused by our current, inherently unstable system.

Thus our entire national debt would be extinguished – thereby dramatically reducing or entirely eliminating the US budget deficit and the need for taxes to pay the $400+ billion interest per year on the national debt – and our economic system would be stabilized, while ending the terrible injustice of private banks being allowed to create over 90% of our money as loans on which they charge us interest. Wealth would cease to be concentrated in fewer and fewer hands as a result of private bank money creation. Thereafter, apart from a regular 3% annual increase (roughly matching population growth), only Congress would have the power to authorize changes in the US money supply – for public use -not private banks increasing only private bankers’ wealth.

Bill went on to say, “this is not a new concept, I’m just trying to re-popularize it.”

This does not conflict with Ron Paul’s plan detailed in his book End the Fed
where he describes allowing competing currencies to put fiat currency and the central banking/fractional reserve system out of business. According to Ron Paul the introduction of silver and gold backed currencies would be transitional, a placebo to get the economy off of the fractional reserve heroin.

Max and Bill went on to discuss the usual justification for fractional reserve banking which is the money multiplyer effect which causes velocity that grows the GDP. Still says the problem is that banks can lend 10-12 times the money they have according to the law if they are following the rules.

In congressional hearings during the 2008 financial debacle it was revealed that JP Morgan and Citibank were leveraged 52-1, Fannie and Freddie were leveraged 72-1 and Goldman Sachs was leveraged at a whopping 333-1!

The Federal Reserve which allegedly regulates the banking system is calling for an end to reserve requirements. No that is NOT a “conspiracy theory,” it says so on its own website:

“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.”

“333-1 isnt sufficient for these banks, only infinity will do. We have reached for the first time in history debt saturation.” said Still.

The problem with the federal reserve is that it is NOT part of the government. The Federal Reserve Bank is a group of private banks by their own admission, although the Federal Reserve Board IS a federal agency tasked with regulating the banks. The Fed is a captive of the big banks because the board is stacked with banking executives who fill the positions before returning to Wall St to cash in on their regulatory decisions (or lack thereof.) Its a revolving backdoor system of corruption.

Bill went on to say that “All of our money worldwide we are renting our money, with the exception of coins.” and  ”I am not interested in nationalizing banking, I am however interested in nationalizing currency.”

Even the reintroduction of Glass-Steagle regulations and splitting up the commercial and investment banks would not solve the problem. The banks would still be creating 100% of the money supply and renting it to governments and people, according to Still.

“Its not what backs the money that is important, its who controls the quantity  money. Even if  gold did control the quantity of the currency, Gold wont control the quantity under a system of fractional reserve. A fractional reserve Gold standard wont solve the problem. The people no longer control the money power, so politicians are subjects of the banker class.”