----- Original Message -----
From: Boudewijn Wegerif
To: Undisclosed-Recipient:;;
Sent: Monday, August 20, 2001 11:09 AM
Subject: MONEY MATTERS - Towards free money + Précis of 2 articles by Prof Auriti
MONEY MATTERS -- 20 August 2001
From Debt Money, to Public Service Money, to Dictatorship or People Generated
Currencies – Plus, A Précis of two articles by Professor Giacinto Auriti
_______________________
Dear list members,
On Friday I wrote that news about the SDR paper gold scandal would be
spreading round the globe this weekend, along with references to NESARA as a
real option for cleaning up the mess.
I should perhaps have added that I am not entirely supportive of NESARA. In
the US there is also the monetary reform bill proposed in the Money Masters
video to consider – see www.moneymasters.com . I am not 100 percent
supportive of that either, except as a possible interim measure.
In the long term, very simply put: “There cannot be full distribution of
wealth without full distribution of money power.” – E. Reigal in Private
Enterprise Money (1944).
I have drawn the quotation from an e-mail posted by Peter Scott to the New
Zealand Banking Reform E-group - NZ_Banking_Reform@yahoogroups.com - on August 12. Peter sent me the e-mail in response to my request for some personal
information to know him by as a new list member.
I wrote back that I am inclined to agree with him that one must be very
cautious about giving government the right to issue money. But I would not
want to be too doctrinaire about it. If, by some very long shot, democratic
institutions are given the chance to manage the economy when the
cannibalising of the economy by the banks is brought to an end, it might be
necessary to have them issue the money.
However, I would want to write into the legislation for this that it is a
temporary expedient, to be accompanied by a reformed education system, in
which young people acquire the skills of contact and response-ability –
giving and receiving – so as to graduate into adult life as competent
generators of their own money, through an advanced and developed form of
LETS and similar exchange programmes. Without this provision, I believe that
the new democratically ordered system of money supply will simply lead into
a more tyrannical form of dictatorship to that of today’s plutocratic, yet
in some ways still relatively liberal banking system.
Read for example what historian Alexander Tyler had to say about the fall of
the Athenian republic, some 2,200 years ago (according to Anne-Marie
Cook -light4us@pilot.infi.net- in a Russ Michael
posting -russ.michael@vpn.at):
"A democracy cannot exist as a permanent form of government. It can only
exist until the voters discover that they can vote themselves money from the
public treasury. From that moment on, the majority always votes for the
candidates promising the most money from the public treasury, with the
result that a democracy always collapses over loose fiscal policy followed
by a dictatorship.”
I first used this statement by Tyler in a MONEY MATTERS letter in October
last year, and I followed it up with the comment that this is certainly what
happened in France after the French Revolution, with Napoleon Bonaparte
riding in to the legislative assembly on a white horse to rescue the country
from the hyper-inflation caused by the printing of millions upon millions of
worthless assignats. The new emperor/dictator promised to be as good as
gold. “While I live,” he declared, “I will never resort to irredeemable
paper.” (Source, The Penniless Billionaires by Max Shapiro – Times Books,
1980).
There are two steps involved, therefore, in the liberation of the money
supply. First a public service money supply, then a dictatorship or, as a
first in history, genuinely free, people-generated currencies.
I am working on a model for this, and will share some of my thinking about
it in an article I have promised on economies of renewal run on solar, wind,
water and earth energies – and, I would add, mind in matter powers.
Here, in this letter, I want to put the record straight regarding my
apparent enthusiasm for NESARA. And I am taking the opportunity to call on
the monetary reform movement around the world to be better co-ordinated, to
try to arrive at and lobby for an agreed approach to reform legislation.
A good starting point might be to make more use of the excellent Monques
website - http://landru.i-link-2.net/monques/ - edited by list member Robert
Carroll. So far as I can judge, there are already well presented links at
Monques to the monetary reform network, including the American Monetary
Institute - www.monetary.org - directed by Stephen Zarlenga and the New
Economics Foundation in England - at www.neweconomics.org. (I am being
subjectively, not comprehensively selective here, but never mind.) Re the
NEF, I recommend that you click to new publications and download (or
purchase, at £7.95) the book Creating New Money by Joseph Huber and John
Robinson.
In Creating New Money, Huber and Robinson have formulated a quite detailed
plan for putting new money into circulation as public spending, not as
profit-making loans by commercial banks. “In Britain, the result would be
equivalent to 12p off income tax. Other countries would benefit comparably,”
is written in the blurb for the book.
As part of my own outreach, I have been taking another look at the website
of Giacinto Auriti at http://www.calneva.com/money/italy . Auriti is a
77-year-old, wealthy aristocrat and retired law professor who spent a
million or so dollars to launch a local currency, the simec, in the North
Italian town Guardiagrele, population 12,000. Mystery still surrounds what
he was actually up to exchanging the simecs for one lira with the town’s
people and giving two lira for them when they were proffered to him for
redemption by the 40 or so town merchants who were willing to accept them as
currency from customers. You can read how the Wall Street Journal and an
Italian newspaper (in translation) reported on this at the website.
More relevantly, I think, Professor Auriti was active in the mid-1990s in a
movement that drew an acknowledgement from officials of the Italian Treasury
that the Bank of Italy is not the owners of the money it issues but the
principal debtor. Auriti and his cohorts then went on to seek a ruling from
the Italian High Court to confirm that the Italian citizens are the real
owners of the national money. A Senator Natali also presented parliament
with a legislative draft proposal for a publicly supplied monetary currency,
in the form of a citizen’s income. Judging from there being nothing on the
web about the result of these initiatives, one must presume that they were
stymied.
Unfortunately, the English translations are poor of the two website articles
in which Giacinto Auriti explains why money rightfully belongs to people not
the banks. In the first article he also calls for amendments to the
Maastricht Treaty and in the second he calls on the Church of Rome to issue
“money of the poor” as “money of the Jubilee”. I have put together a précis,
below, which I think conveys the message.
In friendship,
Boudewijn Wegerif
Monetary Studies Programme
Folkhogskola Vardingeby **
_______________________
Independent Précis by Boudewijn Wegerif of two articles by Professor
Giacinto Auriti, posted at http://www.calneva.com/italy/money01.htm
The first article is headed, “Ownership of money and the induction of value
to money – Lack of uniform rules in statutory and constitutional systems –
Additional proposals for the Treaty of Maastricht”, And was written in 1996
when Giacinto Auriti was still Professor of Law at the University of Teramo.
In the article, Professor Auriti proposes that the 1991 Maastricht Treaty,
for the formation of the European Union, be amended to allow for the
"popular ownership of money" and a citizen’s income.
He argues that there is no clarity in law, and specifically not in the
Maastricht Treaty, as to who actually owns money at the point of issue.
Because of this, “we cannot say with certainty who the debtor and who the
creditor is of the money being issued”. This represents “a legislative
deficiency that can no longer be tolerated”.
The question of ownership of money must be settled by considering who and
what gives money its value. Auriti sets out to answer the question with the
proposition that “Money has value because it measures value”.
The real value of money, he argues, is not in gold or foreign exchange
reserve holdings. Money acquires its value in use. Value can never be
considered as a property of the material. It is the property of a “temporal
relationship”, based on forecast or anticipation. “If a pen has value,
because we anticipate writing, money, too, has value because we anticipate
purchasing.” This value is induced.
Auriti draws a parallel between the way the mechanical energy of an electric
dynamo produces electrical energy and the way in which the convention of
legal tender generates monetary value. “In the case of a dynamo, an increase
in the rotational speed of the generating components causes an increase in
the quantity of electric energy. Likewise, in the case of money, an increase
in the velocity of circulation causes an increase in the induced value, i.e.
in the purchasing power.”
NO INTRINSIC VALUE TO GOLD
Monetary value through purchasing power applies irrespective of what the
money is made of. The value of gold is not in the metal as such. There is no
‘intrinsic value’. Like everything else, gold has value because it has been
agreed that it shall have it. “Since the metal has been traditionally
regarded as a monetary symbol, an induced value has been attributed to it by
custom . . . Gold’s so-called ‘intrinsic value’ is really its ‘induced value
’,” writes Auriti.
By attaching a ‘credit value’ to money issued against a reserve of gold and
other deposits we disallow its ‘induced value’. “Money is not credit, but by
legal induction it is a real good, an asset.” As such, it can also be an
object of credit, but that is not what gives it its value.
After all, argues Auriti, if it were true that the reserve could give money
its purchasing power, then the dollar should have lost its value completely
when the Bretton Woods agreement was broken with the abolition of the gold
backing to the dollar. Yet the dollar has not lost its value, and has even
taken the place of gold as the basic monetary unit of the global, monetary
system.
Thanks to the induced, legal value attached to dollars as money, we are now
able to exchange six $50 bills say for an ounce of gold, even while knowing
that the commodity value of the dollar bills is a minute fraction of the
value of the gold that has been purchased.
“By defining the value of money as a legal value, it is as if we had made
the discovery of a goldmine, which can be exploited without cost,” writes
Auriti.
Auriti uses the desert-island metaphor to show that the value of money is
not created by the bank, but by the community: “If a bank governor begins to
issue money on a desert island, the money will have no value, because there
is no community. Therefore, we may conclude that the value of money is
created not by the one who issues the symbols but by the one who accepts
them” He reinforces the point with another metaphor. “To say that the value
of money is not created by the one who accepts it but by the one who issues
the symbols is like saying that electrical energy is created not by the
person who causes the dynamo to rotate but by the person who manufactures
it.
“The usurocratic hegemony of the banking system is based on this
misunderstanding.”
FROM BEING THE MONEY OWNER,
THE BEARER IS TURNED INTO A DEBTOR
As to the nature of the “big usury”, Auriti writes: “It is unquestionably true that the monetary mass constitutes a mirror-like duplicate of the value of real goods, measured, or measurable, in terms of their value. [I would say, in terms of their priced value – BW.] This duplicate value can have the positive sign of an asset (and in this case, it doubles the people's wealth), or the negative sign of a debt (in
which case it creates a desperate and agonising situation because of inevitable insolvency).”
When money was made from gold, the bearer was also the owner. Since the
advent of ‘nominal money’, the bearer has become a debtor, without fully
realising it. “All ‘nominal money’ is issued by the banks in the form of
loans. Thus all money in circulation is burdened with debt to the central
banks. Therefore, if someone wants to pay off a debt of money with money, it
would be the same as paying a debt with another debt. IT CANNOT BE DONE. In the long run, one is forced to pay with ones own capital and with the
produce of ones labour.
Auriti then puts forward the notion that by loaning out what is in fact due
to the recipient needing money, the central bank imposes a cost of 200
percent on money, at the point of issue, thus: “The initial 100 percent
because it expropriates the community of the induced value (only an owner
can lend money) and a further 100 percent by forcing the national community
into debt, to the same extent.”
He goes on to point out how through the principle of credit multiplication
developed by Paterson, in 1694, for the Bank of England debts have
accumulated to the extent of the induced, total purchase price of all goods
and services, and beyond that. As a result, “the people of the world have
been dispossessed of their own money and been forced into debt, without
receiving anything in return.”
DEBT MONEY DRAWS HUMANITY INTO DECADENCE
Giacinto Auriti goes on to give “a correct interpretation of the modern
age.” He argues that with the coming of the constitutional state, society
came to be considered as an ‘instrument’ to be made use of rather than
served. “ We can only make use of an instrument; it is ridiculous to serve
an instrument.”
Thus a concept of ethics developed by which the principle of "that which is
right and just is advantageous" has been replaced by the principle of "that
which is advantageous is right". In the process societies based on natural
law – “i.e. people united by an organic relationship” – have become
exploited societies and humanity has entered an age of decadence.
“‘Debt-money’ is the instrument that the ‘exploiters’ have used so as to
become the real puppet-masters of history . . . It is as if someone lending
empty fish-baskets to fishermen, thereby, forced them into debt, not only
for fish-baskets, but also for the fish.”
FORMULATING A LEGISLATIVE DRAFT FOR POPULAR MONEY
Basic to Giacinto Auriti’s approach to monetary reform is the proposition
that because there is a scarcity limit to resources “money must also exhibit
scarcity”.
Going out from this proposition, the next step is to recognise that when
money was gold, “the scarcity of gold could assure the scarcity of money”,
and it is reasonable to conclude from this that “‘nominal money’, which is
independent of every form of reserve, imposes the necessity of formulating a
scientific law of scarcity.”
To date, writes Auriti, the limit to the quantity of money has been based
“on the supposed ‘wisdom’ of the central bank's governor, a sort of rational
and functional autonomy, independent of any political control.” But now we
need “to rigorously define rational, scientific principles, on which a
socially, useful limit of monetary scarcity can be based.”
The limit to money supply, he suggests, could be easily deduced from market
indicators. And since the ‘market price’ not only gives an indication of the
value of the goods, but also of the saturation point of the market, “the
market is full when prices tend to coincide with production costs. When this
happens, it is opportune to desist from an increase in the monetary supply
and from the production of goods.”
Principles such as these have been written into a legislative draft for "the
popular ownership of money", which was put to parliament by Senator Natali,
I presume in 1995 (n. 1282, 11 January 1995, Senate's Acts CII Legislature).
Article 1 of the draft calls for issued money to be credited to the state by
the central bank as the property of all Italian citizens. “In this way,
debt-money is transformed into asset-money,” writes Auriti.
Article 2 of the draft calls for a “code of social income” to be attributed
to every citizen, by which “the sum of income that has been produced by the
monetary issue, and by other sources of income, can be credited to him". [It
is not clear to me what is meant here; perhaps the original Italian is
explicit BW.]
Two other important features of the proposed legislation for a people’s
money is that the money required by the state will be drawn off at source –
therefore, no taxes – and that property “must be attributed to human beings
and not to corporate bodies”. [If by this is meant an end to limited
liability companies, good – BW-]
_______________________
A CALL ON THE CHURCH
TO ISSUE “MONEY OF THE POOR” AS “MONEY OF THE JUBILEE”
In the second article, Money of the Poor - Money of the Jubilee, Professor
Auriti writes that “asking for the remittance of the poor nations' debts,
as it happens almost everywhere, is like asking the swindler to renounce –
for a noble principle – the lucre he obtains, thanks to his crime.”
Because the money belongs to the people, in the spirit of jurisprudence,
there clearly is no debt. It doesn't exist at all.
Making all people owners of their money, at the point of issue, means
changing people from debtors into owners of their money, “according to the
teaching of the Social Doctrine of the Catholic Church everyone is an
owner.”
Auriti supports his contention that “the money of the poor is the money of
the Jubilee” with a statement by Pope John Paul 11: "There is something
which is due to a man, because it is of the man,” (encyclical "Centesimuas
Annus").
Mosaic monetary law is based on the principle of lending to the poor (Deut.:
15.8). Therefore, he who borrows has an obligation to repay. However, in
Christian Law, there is no obligation to repay on the recipient of what is
the recipient’s due.
There has been a fundamental turn around, therefore. The substitution of
nominal money for gold as money has involved a “deep and substantial
juridical innovation.”
“The Mosaic Law has come true thanks to the coming of the ‘debt money’,”
writes Auriti. “The formula ‘lend to the poor’ means that the man has become
poor because he ‘borrowed’ something (according to the Mosaic Law) which is
in fact his ‘due’ (according to the Christian Law).
“On these premises, the Church of Rome must issue the ‘money of the poor’ in
order to set human beings free from the poverty which is wickedly planned by
the ‘big usury’.”
Giacinto Auriti concludes: “When money was made out of gold, it was not
possible to attribute it gratis to the issue because of the high cost of
gold. Today, with the symbols of no cost, it is not only possible but
dutiful as well, in order to release humanity from the domination of the big
usury. We are sure that money issued by the church would really be in
accordance with the great event of the Jubilee. Moreover, all the religions
that are against usury will certainly agree, from an essentially ecumenical
viewpoint.”
________________________
** Boudewijn Wegerif
Monetary Studies Programme
c/o FHSK Vardingeby, 150 21 Molnbo
Tel:+46.158.23035 – e-mail 552.10327, till end September; thereafter
+46.552.21112
The Monetary Studies Programme prepares commentaries and study material on
the psychology and history of money. Through the Money Matters mailing list,
information is spread about monetary reform and the growing movement for a
positive economic future, freed from debt oppression and money making for
its own sake. The programme is sponsored by the Adult Education Residential
College, Folkhogskola Vardingeby, south of Stockholm, and works closely with
the members’ owned, interest-free bank JAK (www.jak.se).
