Chapter XVIII
Inflation And Featherbedding

Permit me in this closing chapter to emphasize two facts: (a) cash, bills and coins, is not a part of our volume of money; (b) Private banking corporations and not the Government and labour are responsible for high prices. — high wages, high rents, high taxes, cheap money — inflation.

On page 27, Reserve book (1939) we read: "There are two principal ways by which any individual gets paper money and coin.  Either he draws it out of the bank and has it charged to his account; or he is paid for his labour, his services, or his merchandise with money that has been drawn out of a bank by someone else."

On page 19, same book, we find: "Currency is actually used for only a small part of the country's total volume of payments, the greater part being effected by the use of bank (personal) cheques."

Since one must cheque over to the bank a portion of his deposits that he may get cash, then it stands to reason that personal cheques and cash are interchangeable, and not supplementary.  The last edition of this book, 1954, which seeks to camouflage the whole picture, says on page 5: "When a person has $10 in his pocket and $100 in his chequeing account in the bank he is in a position to spend $110."  Then on page 7: "For a general idea of money, the two kinds — pocket money and demand money — should be considered together."

The author forgot that he or someone else had chequed the $10 out of the bank.

Both of those statements are designed to camouflage the fact that there is but one kind of money today, bank deposits.  If we are to consider different "kinds" of money, we must list more than two kinds, we must list all express and postal money orders, all travellers cheques, cashiers' cheques, because all of these forms of "money" are good in any market of the United States, when bought and signed.

And to limit our volume of money just to the "demand deposits," is the sorriest sort of reckoning.  Time deposits may easily be transferred over to the demand column.  And the same is true of savings deposits, and many other "deposits" hidden in different nooks, and cached in many secret places.  Any form of monetary obligation may be quickly and easily converted into demand deposits, therefore nobody, and I mean nobody knows the volume of all of the monetary funds listed under the many headings.  Yet, to arrive at the volume of money we must ascertain all of these funds, and reach a grand total.  To do so would alarm even the informed in the creative field of money.

Cash does not enter that picture, because it is exchangeable with cheques, bank deposits.  You transform anyone of the several kinds of deposits into another, by changing the figures from one column to another; but when you draw money out of the bank, you have your account debited an equivalent amount, and while you have the cash in your hand, you use it rather than a personal cheque.

It is the sorriest sort of cover up to say that we have just two kinds of money, cash and demand deposits, when a child should know that the only difference between time deposits and demand deposits is a mere matter of time, and that at any time you may have the banker transfer your time deposits to your demand deposits, and you may proceed to cheque against it immediately.  So fellow-citizens, when you take just the volume of cash plus the volume of demand deposits for our total volume of money, you have only a small percentage of our money supply.  The time deposits, the savings deposits, the billions of bank credit which may be quickly converted into deposits; aye, you may convert your investment obligations, from a promissory note to U.S. Bonds" quickly into new deposits, swelling the, volume of money, and all of it sends the total volume of money skyward.

If you accept such spurious reasoning as that we have just "two kinds of money, cash and demand deposits," then why not go a step further and admit that there are many millions in the demand deposit columns that are never chequed out, and as far as the circulating money is concerned, it too is "time" dead deposits.

All writers who are assiduously seeking to have the similes of bankers, and enjoy their crumbs, seek by might and main to keep the true volume of money a secret to the people.  Let this be said as a final fact: Our volume of money is the total value of all monetary investment obligations which may be easily and quickly converted into bank deposits" subject to cheque, plus the hundreds of billions of deposits on the books of banks and all financial institutions.

And remember this: there is no more reason for adding the cash in a bank's vaults to the volume of deposits to arrive at its total money supply, than there is to add the possible total of personal cheques which might be written. If you would understand banking, money as it now is and functions, forget about cash, and keep your eye on bank deposits.

Now let's examine inflation.  As an introductory lesson, let's quote a "Professor of Business Administration and Retailing at the American University, Washington, D.C., a Mr. Harold B. Weiss, a former vice-president of Macy's, New York.

"Unless, the major economic trend of the last 25 years in this country is reversed, the only free enterprise system left in the world will bleed itself to death.  It is not a depression that threatens us; the imminent danger is inflation. . . . We are now caught in a vicious circle.  The more the Government spends, the more inflation; the more inflation, the higher are government expenses.  Another vicious circle is the continuing increase in labour costs, which bring higher prices, more inflation, then still, higher wages, until the bubble bursts, as it must."  He knows that Government spending does not increase money supply.  Only government borrowing!

The professor is either ignorant of money, economics, and causes and effects, or he is criminally trying to brainwash the people.  There is not a grain of truth in a single assertion quoted above.  The "professor" leads out the old, jaded nags, Government spending, and Labor greed.

Let's look at Government spending.  Who is to blame for it?  Why must we keep a $32 billion military program going?  To protect the labouring masses? The common people?  Nay, verily.  It is to protect the crowd the professor is seeking to serve, international investors.  Are you willing, Mr. Weiss, to disband our military forces?  Are you ready to dry up the trickle that goes to all other agencies of the government, a bagatelle, three and a half billion?

If we are going to jump on Uncle Sam for spending, what about the corporation spending, the Reserve Banks buying investment obligations, the hundreds of billions in loans made to persons, firms, corporations, municipalities, states, which is new money, inflation?  What of the Reserve Open Market Committee, who may buy, any day, corporation stock running into many millions of dollars, and giving the corporation a cheque against no funds, which on being deposited in a commercial bank swells the volume of money, face of the cheque, and bank credits five times the cheque?

On page 39, 1939 Reserve book, we find that "The aggregate deposits in the banking system as a whole (not just demand deposits but the aggregate, all deposits in all accounts) represent mainly funds lent by banks or paid by banks for securities, mortgages, and other forms of investment obligations. . . the proceeds go on deposit to be disbursed by cheque, and aggregate deposits are increased."

During the last 25 years, Mr. Weiss, there must have been many trillions of dollars in loans, made, U.S. Bonds, notes, and other investment obligations bought by banks, and every time they made a loan or bought an investment obligation, they gave the seller deposit credits, which were new deposits, added to the volume at the time the loan was made.

That's the nigger in the wood pile, dear readers.  High prices, high wages, high taxes are not inflation.  They are the result of money inflation.  We have hundreds of billions too much money in circulation, on deposit, cached in many secret niches.

Of course every time the Government issues bonds, the volume of money is increased that amount; but for every dollar in bonds of the United States there are many, many times more bank created new deposits on their books.  It is true that Government bonds, to a small degree, create Reserve funds, as we have shown in our story; but every time the Reserve authorities buy corporation stock, buy anything, the reserves of banks are increased dollar for dollar, and all of these reserves when converted into bank credit, which is as negotiable as your bank deposits, are five times more than the reserves.

Mr. Weiss and the large battalion of camouflagers for bankers, always ride the same old jaded nags, the government and labour.

Certainly inflation is too much money.  It blows up the bag which is prices just as applying the hose to your tire inflates it.  Too many dollars cheapen dollars.

The crime of it all is that every bank-created dollar is a counterfeit, phoney dollar, given respectability by the Congress passing the infamous Reserve Act. Except for this fact there is no reason why counterfeiters should not be given full leeway; for certainly, until a banker spots a counterfeit dollar, it circulates, paying bills, doing just as good service as the Treasury Certificate; but, should that be granted, all of us would quit work and begin printing counterfeit bills — the Reserve Act legalized counterfeiting by commercial and Reserve banks; and they fight counterfeiters because they don't want competition.

When Congress takes back the issuing of money and regulates its value, all of this inflation of money will disappear, for the constant effort of Congress will be to keep the volume of money and the volume of business of the nation in lockstep.  Fight, dear reader, every attempt of anyone to lay inflation on the Government or labour.  Should Congress direct the Treasurer to give it credit on the books of the Treasury for 10 million dollars it would create new money.  The same step has been taken under the Reserve system; but under the Reserve system the Congress ordered the Treasurer to engrave and turn over to the banks an equal amount of bonds free!  Double, or nothing with bankers.

There is now and ought to be just one sort of money, deposits; and the Congress should take over, aggregate those deposits of whatever kind, and squeeze the phoney dollars out until the volume of deposits would be equivalent to the total business done in the current year.  That would regulate the value of the dollar, of money, and only that would fix the value of money.  Weiss pleads with labour to "give of itself," and complains that an engineer got full-day pay for just turning an electric switch in the morning and turning it off in the afternoon.  Of course the engineer just left and went fishing He didn't, of course, have to be there every moment that he might take over if a fuse were blown, or some other mishap stopped the electric motor.

On how many days does Mr. Weiss now as Professor, and when he was a vice-president at Macy's go to his office, nod to the secretary, sign a couple of letters, get up and walk around until time to join his buddies in a golf game-rarely do these big fellows go to their offices before 11:00 a.m., and stay later than 1 p.m., yet when they see a workman who is not frantically working, they whine that that fellow is "featherbedding."

No give us a sound, controlled-in-volume money, and the labouring people will not have to plead and strike year in and year out, because then the dollar they get will buy the same tomorrow it bought today, and when that is true labourers are happy, and have no mind to strike.  But when you pay them off with a phoney dollar that grows cheaper and cheaper as the days go by, and buys less and less, they must have more or starve.  Who is to blame?  The money changer, the private corporation, that godless, soulless, conscienceless "person" the Supreme Court foisted upon us, specifically The Federal Reserve System, which includes every commercial bank and deposit keeping institution in the Nation.

You could not compel them to disgorge those hundreds of billions of dollars, so long as you legalize their rapacity.  The law must be repealed.  All U.S. Bonds must be destroyed, and never engrave another, and Congress must issue our money and regulate its value . . . for the Constitution recognizes no other agency of the Government, and makes no provision for Congress to re-delegate that great and important function of Government to corporations.

Read Josiah Stamp's utterances again, and then if "you want to continue the slaves of bankers and pay the cost of your own slavery," let Congress continue to legalize the crimes of banking.

Since we have shown that every dollar created by Reserve and commercial banks is a phoney, counterfeit dollar, then their adding new deposit dollars to the volume of money is as much a crime as the printing by a person counterfeit bills.  Our courts here, in quick order, just a few days ago convicted two printers, and the wife of one of counterfeiting Reserve notes, and circulating a few of them in Texas; yet we legalize the Federal Reserve banks and commercial banks to add counterfeit dollars to our volume of money in a constant torrent.

Seems sort of unjust to send the little printer, who was too expert at printing, to federal prison because he printed a few bills; and let his crippled brother and wife out under suspended sentences, while the five children of the head counterfeiter were torn from their parents and sent to an orphans' home, while this big corporation has committed the same sin millions of times, and not only goes scot free, but its deeds are dignified and legalized by our Congress, who each and severally took an oath to support, uphold, and defend the Constitution of the United States; yet perjured themselves by violating that same Constitution when they gave banking corporation the power to coin money and regulate the value thereof.

How long, oh, how long, gentle reader, are we going to permit Congress to do this criminal thing, and refuse to compel them to take back that Constitutional power they unconstitutionally gave to the banking; corporations?

"Banking was conceived in iniquity and born in sin."