Throughout the history of the United States, up to the present time, this dispute, along with the controversy between specie money and fiat money, remains philosophically unresolved, although in practice both the constitutionality of the "implied power" doctrine and the legality of fiat currency have been repeatedly upheld by the US Supreme Court. Jefferson considered the whole Hamiltonian banking scheme an unconstitutional threat to the basic fabric of American civilization. Jefferson prophesied: "If the American people allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive people of all property until their children will wake up homeless on the continent their fathers occupied ... The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs." It was a definitive statement against the political "independence" of central banks. This warning applies to the people of the world in the 21st century as well. All over the world, central banking has usurped the power of the people to issue money as legal tender and made money an instrument to serve those who already have it in excess at the expense of those who have not enough. The British saying "the rich get richer and the poor get children" has been transformed in the US as "the rich get richer and the poor can't afford children". A national bank is at least an instrument of economic nationalism; an international central banking regime is an instrument of the international financial elite for the perpetuation of poverty for the majority of the world's population as a natural law of finance, robbing them of their natural power to issue sovereign credit for their own development. Thenceforth, being creative and hard-working is insufficient for fulfilling one economic potential: one also needs capital, which can only be acquired from those who have excess money or those who exercise control on the issuance of money.
Andrew Jackson as Democratic president (1829-37), in advocating what came to be known as Jacksonian democracy, was also vehemently opposed to the idea of a national bank as a citadel of privilege and monopoly against the common man. Jackson maintained that a national bank was a threat to democratic institutions. BUS2, under Nicholas Biddle, a member of the financial elite from Philadelphia, sought political support by lending large sums to congressmen and newspaper editors without proper collateral and not pressing them for repayment. Roger Taney, Jackson's Treasury secretary, carried out the president's order to withdraw federal deposits from BUS2 beginning in September 1833 to a number of state-chartered banks in the west that, free of BUS2 supervision and buoyant by federal deposits, pushed the US economy quickly into a debt bubble, much of it unfortunately centering on speculation on the sale price of public land rather than infrastructure development. The boom produced a sudden increase of government revenue and, in 1835, for the first and last time in history, the US paid off its national debt completely, with a mounting surplus in the Treasury. In 1836, Congress passed a bill to distribute the surplus to the states. Far from being an economic blessing, this development turned out to be an economic disaster because it had the effect of shrinking the nation's money supply. Alan Greenspan's recent warning about US deficits is misplaced. A balanced budget or a fiscal surplus was the last thing the US's expanding economy needed at the time of Jackson, or ever. The problem with the fiscal deficit was not that it existed, but that the funds were spent on the land speculation that did not contribute to full employment and real economic growth. Today, the problem with the US fiscal deficit is that it is spent mostly on war, homeland security and interest payments, rather than on constructive projects such as infrastructure and education that will lead to further growth. |
