WEALTH AND MONEY PART XXXI THE FRIGHTENING IGNORANCE OF THE “BALANCED BUDGET AMENDMENT”
A dangerous assault on the United States of America is now well underway. It hardly makes the news. Under the guidance of the billionaire Koch brothers funded American Legislative Exchange Council (ALEC) and other corporately supported think tanks, 29 states have passed a resolution calling for a Constitutional Convention for the purpose of passing a federal “Balanced Budget Amendment.” Only 5 more states are needed to reach the 34 required to force the holding of this historically unprecedented event (the original Constitutional Convention was held in 1787). Led by Republican State Senator Chris Kapenga, a long-time ALEC member, Wisconsin may soon become number 30.
“Article V” of the U.S. Constitution defines the two processes for making amendments: “The Congress, whenever two thirds of both houses shall deem it necessary, shall propose amendments to this Constitution, or, on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments (bold added) .” To date, all 27 amendments to the Constitution have been passed using the first method. So one must ask two questions:
- Why are billionaires and corporations so intent on using a Constitutional Convention to pass an amendment when all other amendments have been ratified through the U.S. Congress?
- Why are billionaires and corporations so intent on passing a federal “Balanced Budget Amendment?”
Addressing the first question. . . . While the framers of the Constitution provided an avenue for calling for a Constitutional Convention in “Article V,” they provided no guidelines for how this convention should be conducted or what could be done to the existing Constitution. In other words those individuals and entities in political power at the time the convention is called would be free to modify the law of the land to their own liking. Since the billionaire class and corporations are now in near total control of America, rewriting the Constitution in their own behalf is the final step in colonizing America.
Should the President of the United States be selected by a Corporate Tribunal? Done.
Should the Supreme Court be replaced by a Corporate Tribunal? Done.
Should political offices be held only by White Male Landowners? Done.
Should any regulation of corporate entities be illegal? Done.
Should all forms of protest be considered a terrorist act punishable by death? Done.
Should women’s reproductive rights be solely governed by a White Male Tribunal? Done.
Should police be allowed to enter any home at any time without notice or justification? Done.
Should all child labor laws be illegal? Done.
Should all “debtors” be placed in forced labor camps? Done.
Should all public education be taken over by corporate entities? Done.
Should water, roads and infrastructure be transferred to corporate ownership? Done.
To think that the above changes to the U.S. Constitution cannot happen if a Constitutional Convention is called is denying history. These things have occurred, can occur, and will occur. This is why billionaires and corporations are using politicians like Chris Kapenga to push for a Constitutional Convention.
Addressing the second question. . . . The lack of fiscal and historical knowledge inherent in believing the budget of the U.S. Government is like a household budget that needs to be “balanced” is not uncommon. But that it continues to be the simplistic belief of many of our politicians is frightening.
Some history is in order. Government debt is always stated in dollars by the corporate mainstream media. It is never stated in percentage of national Gross Domestic Product (GDP). This is deliberate. Huge figures showing trillions of dollars of debt strike fear in the heart of an unsuspecting public “mortgaging the lives of their children.” But let us view federal debt as a percentage of GDP.
Current government debt is 104.17 percent of GDP and growing. But government debt in 1947 following World War II was 121.7 percent of GDP. However, instead of continuing to grow, by 1975 the debt had fallen to 37 percent of GDP and Americans were experiencing a level of prosperity unheard of in all human history. The difference between then and now? In a word, taxes.
Following World War II we had a responsible, Republican president named Dwight D. Eisenhower who cared about our nation. Knowing that the war effort had to be paid for, he supported high progressive and corporate taxes. While the debt plummeted, we also completed the largest public infrastructure project in world history – – – the American interstate highway system.
Unfortunately, greed is insatiable. The rich of the 1960’s and 70’s would not tolerate shared prosperity. With the installation of Ronald Reagan as president in 1980 taxes on the wealthy and corporations began to be cut. With minor variations, this process has continued to the present. President Bill Clinton raised taxes slightly, but by installing Wall Street banker Robert Rubin as Secretary of Treasury and deregulating the financial industry, Clinton gave our government to the billionaires. In a final act of fiscal insanity, President George W. Bush dragged us into the mindless wars of Iraq and Afghanistan while at the same enacting massive tax cuts for the rich. We have fallen from Dwight Eisenhower to Donald Trump and our stooge legislators sacrifice America rather than tax the wealthy donors that elect them.
But this is just part of the deception supporting the “balanced budget amendment.” To further understand we must go back to the original framing of our laws. Article 1, Section 8 of the Constitution states: “The Congress shall have Power to coin Money and regulate the Value thereof.” In other words, the US Government has the power to create the nation’s money. There have been arguments that the Constitution meant only metal coins, but the 1819 Supreme Court decision McCulloch vs Maryland ruled unanimously that the Second Bank of the United States and the banknotes it issued on behalf of the federal government were Constitutional.
This may seem a trivial matter, but where the “balanced budget” is concerned, nothing could be of more importance. Simply stated it means the Government of the United States does not need to borrow money from any outside entity for any purpose. It can create its own money. In fact Abraham Lincoln began doing exactly this to pay for the Civil War. Government bonds had been sold to gain funds, but eventually Lincoln bypassed the banks and created the government issued “greenback.” He understood how crippling it was to the nation to allow the private banking cartel to continue being the creator America’s money supply. But with Lincoln’s assassination the banks were able to regain control of the purse strings.
“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.” – – Abraham Lincoln
This, of course, begs the question: Why doesn’t America return to creating its own money and avoid borrowing from the private Wall Street banks? To answer this we must jump to 1910 and a place called Jekyll Island off the coast of Georgia. It was here during a secret “duck hunt” that Senator Nelson Aldrich, a Rhode Island Republican, met with a group of powerful financiers at J.P. Morgan’s Jekyll Island Club to develop the plan for what in 1913 would become the Federal Reserve Bank (FED) that creates and controls the nation’s money supply to this day. Not actually federal at all, the FED is owned by a group of the largest private banks. There is some government oversight, but in the end the FED is a private central bank serving the profits of the private banking cartel.
What does all of this mean? In short it means that the government of the United States is forced to borrow its own money from the private Wall Street banks. This is why there is government debt.
“We have what is known as the Federal Reserve Bank System. That system is not owned by the Government. Many people think that it is because it says “Federal Reserve.” It belongs to private banks, private corporations. So we have farmed out to the Federal Reserve Banking System – that which is owned exclusively, wholly, one hundred percent to the private banks – we have farmed out to them the privilege of issuing the Government’s money!” – – U.S. Congressman Wright Patman (1893-1976) – – Chairman of the House Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913.
The following testimony from the Congressional Record was presented in Part V of this Wealth and Money series. Given the serious nature of the current “balanced budget” assault on our nation, it bears repeating. It was a conversation between Marriner Eccles, Chairman of the Federal Reserve, and U.S. Congressman Wright Patman, Chairman of the House Committee on Banking and Currency, March 3-5, 1947. It concerns the Federal Reserve Act of 1913 and the power of the FED to create the nation’s money out of thin air, give it to the private Wall Street banks, who then lend it to the government at interest. The same money could be created by the nation itself, debt and interest free:
CONGRESSMAN PATMAN: “The original act as passed in 1913, up until about 1935, gave the Federal Reserve banks that power is that right? . . . Yes; now, since 1935, in order for the Federal Reserve banks to buy Government bonds, they had to go through a middleman, is that correct?”
CHAIRMAN ECCLES: “That is correct.”
Mr. PATMAN: “In other words, Mr. Eccles, that is an argument in favor of the Government selling bonds to the commercial banks and permitting them to pay for them by a bookkeeping transaction and receive interest on them in order to pay the cost of carrying their accounts with individuals and corporations; is that correct?”
Mr. ECCLES: “That is right.”
Mr. PATMAN: “In other words, it is a subsidy, is it not? In the beginning, may I make it plain that I am not opposed to interest being paid by individuals or corporations for the use of other people’s money that they have hired [borrowed]. Neither am I opposed to the payment of interest by States, counties, and political subdivisions for money that they hire [borrow]. I am opposed to the United States Government, which possesses the sovereign and exclusive privilege of creating money, paying private bankers for the use of its own money. These private bankers do not hire [lend] their own money to the Government; they hire [lend] only the Government’s money to the Government, and collect an interest charge annually. . . .” (bold added)
Mr. ECCLES: “The framers of the United States Constitution, in article I, section 8, very wisely said: “Congress shall have the power to coin money and regulate the value thereof.” This provision of the Constitution is mandatory. All Members of Congress are sworn to uphold the Constitution. Why has this provision never been carried out? The answer is simple. In the early days of our national existence the people were deceived into believing that the subject of money was so mysterious and intricate that only a few of the financiers understood the subject and therefore the great privilege of issuing and distributing money should be farmed out to them. This was done, and it has never been changed, except to give them more power and authority.” (bold added)
It is impossible to overstate the importance of the above discussion between Eccles and Patman. The private banking industry, including the Federal Reserve Bank, is bleeding the life out of all but the richest Americans. The “balanced budget amendment” is fraud based on lies based on deception based on corruption. Billionaires use gullible political pawns like Chris Kapenga to push for it because it will allow them to literally privatize and take ownership of the United States of America.
Wealth and Money XXXII will discuss: What is Money?