In 1933, several college professors at the University of Chicago sent a memo to the chairman of the Federal Farm Board. They proposed full-reserve banking (FRB) for the U.S. monetary system. Under this plan, the U.S. dollar would be backed by government debt, rather than loans issued by banks to businesses and individuals. (as now, wherein Treasury Bonds are sold into the market with interest paid to the borrowers – commercial banks and the Federal Reserve – and the proceeds used to finance government spending). This idea was called “The Chicago Plan”.
The Chicago Plan
As Dan Denning, Co-author of The Bill Bonner Letter writes:
It wouldn’t nationalize the U.S. banking system. But it would nationalize the nation’s money supply. Under this kind of system, banks could no longer “create” money by lending it into existence. Money creation would be the exclusive territory of the government of the United States. In this system, the key government agencies could not create money through new lending. They would do so through new spending (on priorities determined by elected politicians).
Their thinking was to eliminate “fractional reserve banking” – wherein a bank loans out $10 for each dollar they hold in reserve – which, according to the Chicago professors, leads to boom and bust credit cycles. The Chicago Plan would transfer lending to the government…and lead (inevitably?) to unlimited monetary creation.
Two years ago, Marvin Goodfriend delivered a position paper at the Federal Reserve’s annual retreat, stating in part that,
The most straightforward way to unencumber interest policy completely at the zero bound is to abolish paper currency. In principle, abolishing paper currency would be effective, would not need new technology, and would not need institutional modifications. However the public would be deprived of the widely used bundle of services that paper currency uniquely provides…Hence the public is likely to resist the abolition of paper currency, at least until mobile access to bank deposits becomes cheaper and more affordable.
The ironically-named, Goodfriend – currently a nominee to the Federal Reserve Board of Governors – had an additional idea for those who might want to keep some measure of privacy and ability to decide what, when and where (and indeed if – as in savings) they might want to utilize their paper holdings. On the way to abolishing cash completely, he proposed placing a metal tracking strip in all U.S. paper money. Each time a unit was returned to a bank, the money would be taxed at a pre-determined rate. In his proposal he stated,
The magnetic strip could visibly record when a bill was last withdrawn from the banking system. A carry tax could be deducted from each bill upon deposit according to how long the bill was in circulation.
The result of such a “plan” for the nation’s citizens?
- Complete loss of financial privacy.
- No longer being able to decide how, when, where or even if you want to spend.
- Complete loss of financial freedom and (what’s left of) overall privacy.
- A cavernous widening of the existing gulf between government and the governed.
Is privacy still important?
In a book being published by segments in the public space on https://www.bitcoin.com/
Wendy McElroy posted an essay titled “Privacy Is the Virtue That Sparked the American Revolution.” In a powerful statement, she ties together the concept that even in – perhaps especially because of – the age of digital revolution, privacy is as important today as it has ever been. She says:
Government wants people to believe that privacy is the antechamber of crime, a refuge for miscreants, and a danger to the innocent. The opposite is true. Privacy is a virtue upon which due process, freedom, and personal lives are built. Privacy is at the core of what it means to be human, because the essence of privacy is the individual mind as it assesses and experiences life.
The surest protection of privacy is to do exactly what government fears. Assert it; celebrate it; understand its pivotal importance to freedom. Do not respond to the spine-chilling demand — “Your papers!”
Would you rather be Reactive…or Proactive?
One who is reactive, waits until the curtain has fallen on what was, and then bemoans when options have already vanished. The proactive individual or group understands that while the exact future is unknowable, certain likely trends can be anticipated ahead of time. And in addition, that there is sometimes more risk in not taking action than in doing so.
Proactively then, what are some options for a portion of one’s assets? All of which, it must be stated, that while having certain advantages and disadvantages, also advance the idea of holding onto an important measure of financial freedom, promote portfolio diversification, and play an “insurance” role.
Holding quality real estate, high-quality, durable clothing, equipment and conveyance appropriate to one’s surroundings. The acquisition and storing of physical gold and silver, being sure to avoiding high premium “collectibles”, “rare” coins, and “limited editions”.
And in this day and age of tectonic-plate change embodied by the blockchain revolution, consider an evolving digital vehicle – cryptographic silver – embodied by the LODE Cryptographic Silver Monetary System (CSMS) to which contributors either purchase from or deliver to (currently) one of 10 vaults world-wide, .999 fine silver coins or bars for storage – and the eventual backing – upon the project’s launch, projected to be by early 2019 – of two digital coins, 100% backed by physical silver. In effect, envisioning the a back to the future monetary system.