A Science of money shows that issuing money belongs in the hands of the nation to be used for the common good. A Plutocracy counters with a mythology, the slur that government, the organized expression of our society can't handle it.

Commodities can be improperly monetized by law. The result will make the money system hostage to the commodities situation; hostage to the people, companies, countries that control the commodity. Ultimately it removes the monetary power from society and places it into the hands of the wealthy.

AMERICAN MONETARY INSTITUTE http://www.monetary.org

The War of Private Vs Public Control of Society's Money Power The Order of Battle: Adam Smith vs Aristotle

by Stephen Zarlenga

A main arena of human struggle is over the monetary control of societies. It's exercised through obscure theories where corrupt interests have misdefined the nature of money to seize control of the money power, dominating society and deforming humanity in the process.

The money system is society's greatest dispenser of justice or injustice. A good one functions fairly, helping create values for life. A bad, unjust one obstructs the creation of values; gives special privileges to some and disadvantage to others causing unfair concentrations of wealth and power; leading to social strife and eventually warfare and a thousand unforeseen bad consequences - physical AND Spiritual.

Because great power is exercised through money, power-hungry elements from ancient times to the present pursued the political ambition to dominate through the Money Power. Their main weapon has been the manipulation of language and thought, where definitions serve as heavy artillery. Those benefiting from the corruption see that "professionals" are financed to promote their viewpoint with economic "theories."


"All goods must therefore be measured by some one thing...now this unit is in truth, demand, which holds all things together...but money has become by convention a sort of representative of demand; and this is why it has the name nomisma - because it exists not by nature, but by law or binding custom" (which in Greek was nomos)

Aristotle identified money as an abstract legal power - a social invention. Its essence is not tangible wealth, but a power to obtain wealth - A crucial distinction. Plato agreed and advocated such fiat money for his Republic.

Aristotle explained that money is not a commodity. And in clear demonstration of that principle, the Spartans purposely destroyed the commodity value of their iron money, dipping it in vinegar while hot.


In Rome it became the plutocracy versus Rome. After the Punic wars weakened Rome's money system, she regressed to silver then gold, and then civil war contenders privately issued coinage. Wealth concentrated and the general population regressed into slavery.

In England the struggle became the goldsmiths vs the Monarchy representing society. Later it was the Bank of England vs. Society.

Those behind the Bank of England obscured the real source of the Bank's power - ITS LEGAL PRIVILEGE - its notes were accepted in payments to the government. Recovering the science of money, for the private profit of a small group produced harmful results: 120 years of continuous warfare spawned an unpayable national debt leading to excessive taxation leading to horrors like the Irish Potato Famine. Before then, when a nation's money system was used for taxation, the revenue generally aided the society. But the Bank of England concentrated society's resources in the wrong hands, crippling the possibility for government to function properly, leading to a growing contempt of government.

Today it's still the bankers versus the society. In philosophical shorthand it can be expressed as Adam Smith, or present day Economics vs Aristotle. But at base, the battle remains Private Money vs. Public Money. The outcome determines whether the money system operates to serve the few in control, or the whole society.


Smith helped erect a Mythology of Money obscuring the science of money. History and thought shows moneys essence to be an abstract legal power, but economists still argue whether it should be a commodity like gold; or a private credit issued by banks. Economics has never properly defined money! The "father of economics" himself - Adam Smith - promoted this confusion by attacking the legal concept of money.


Those Promoting Usury viciously Attacked Aristotle's strong condemnations of capitalism's brat - usury. He pointed out how usury was against the nature/purpose of money:

"The most hated sort (of wealth getting), and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest. And this term interest (tokos), which means the birth of money from money is applied to the breeding of money because the offspringresembles the parent. Wherefore of all modes of getting wealth, this is the most unnatural." (1258b, POLITICS)

A curious book on money appeared, written anonymously by Calvinist clergyman John Witherspoon. The book attacked Government money and promoted Adam Smith's primitive view that only gold and silver are money. It stonewalled our hard won colonial monetary experience.

The power for government to create money, long considered a necessary part of sovereignty was already in the articles of Confederation, but the Federalists fought to exclude this crucial power from the new government, arguing that it could not be trusted with it! Some of them intended to get hold of the power privately as had been done in England.

THE SUPREME IMPORTANCE of understanding the nature of money now becomes evident: For if money obtains its value from "intrinsic" qualities, it could be viewed more as a creature of merchants and bankers rather than of governments.

But if money's essence is an abstract social institution obtaining value through law, then its a creature of government and the Constitution had better deal with it adequately. Describing how a uniform currency is to be provided, controlled and kept reasonably stable, in a just manner. The Constitutional Convention faltered on this crucial question.

The delegates accepted Smith's primitive concept of money and didn't firmly place the money power into government's hands, leaving it ambiguous.

The Constitution left the money power up for grabs. Alexander Hamilton wasted no time in grabbing.

Hamilton's Federalists quickly put through legislation chartering the First Bank of The United States, as a privately owned central bank on the Bank of England model.

Thus the real question was whether it would be private banks or the government that would issue paper money. Will the immense power and profit of issuing currency go to the benefit of the whole nation, or to the private bankers? That's always been the real monetary question in America.

Gold and silver served as a smoke-screen. What the bankers counted on were the legal considerations of the money. They knew that all that was needed to give their paper notes value, was for the government to accept them in payment for taxes. That, and not issuing too excessive a quantity. Under those conditions, the paper notes they printed out of thin air, would be a claim on any wealth existing in the society.

Even if the bank had "faithfully" stuck to gold and silver, the nation's monetary power would still have been alienated to the east - to the European holders of those commodities. Same people we'd just fought the revolution against!

Thanks to Jefferson's efforts, the bank was liquidated in 1811. Three quarters of it was found to be owned by English and Dutch.


A Science of money shows that issuing money belongs in the hands of the nation to be used for the common good. A Plutocracy counters with a mythology- the slur that government - the organized expression of our society can't handle it. Centuries of propaganda raise the fear of inflation and abuse under government money, even though the record shows much greater monetary abuse by private systems.

Shaw's History of Currency, written in 1896, could identify only one case of monarchical coinage irresponsibility:

"This instance of debasement (1545-46 under Henry VIII) is the only one on record in English currency history," he wrote, and it amounted to a grand debasement of about 15%! WHAT'S THE BIG DEAL? If your mental impression of that case is a lot worse, it shows how effective the propaganda is.

First THE CONTINENTAL CURRENCY of the American Revolution. $200 million were authorized and $200 million issued. They functioned well until General Howe made New York City the center for British counterfeiting. You Brits counterfeited billions of our Continentals. If you ever find out how many, please let us know for the record! Newspaper ads openly offered the forgeries; yet General Clinton complained:

"The experiments suggested by your Lordships have been tried, no assistance that could be drawn from the power of gold or the arts of counterfeiting have been left untried; but still the currency...has not failed."

The Continental Currency gave us a nation.

In the money battle White's short book Fiat Money Inflation in France is a major propaganda weapon against government money and is direct evidence of how the battle is fought. Stephen Dillaye writes us that White, whose inherited fortune arose from banking, neglected to mention that Britain counterfeited far more Assignats than the French ever created. This was documented in English court cases where the counterfeiters sued each other! Whites book has somehow been continuously kept in print by conservative foundations, the latest being the Cato Institute; Dillaye's important essay, out of print for 125 years is quite rare but we managed to find one, and will reprint it.

WELL SURELY GERMANY'S 1923 HYPERINFLATION condemns government money!!

Sorry - But in fact that occurred under a privately owned and privately controlled Reichsbank. Furthermore the hyperinflation began the very month that all German governmental influence on the bank was removed and placed in private hands at the insistence of the occupation forces. Furthermore Hjalmar Schacht tells us in his 1967 book The Magic of Money, that this private Reichsbank actually facilitated the hyperinflation by financing the speculators short sales of the mark. He didn't mention these things in his 1928 book on the subject.Do you see the pattern that emerges from these monetary fiascos? Can you see that the Austrian School, to say the least - is not accurately relating the facts on these episodes?


Again this case doesn't stand scrutiny. $450 million were authorized and $450 million were printed. Counterfeiters couldn't duplicate the Greenbacks. Greenbacks were not promises to pay money later - they were the money. Since they were not borrowed, they did not give rise to interest payments and did not add to any national debt. The U.S. Treasury printed them and spent them into circulation. Neither were they public credit! Knowledgeable reformers - Butler - apparently aware of this conceptual problem referred to them as certificates of value - MONEY is the better term!

AND WHAT IF instead of being spent on destruction, they went into building infrastructure, and canals and roads? Spending such money on infrastructure need not be inflationary. THE GREAT LESSON OF THE GREENBACKS Is That In Times Of Crisis - and other times too - our nation has Power to do what's financially necessary. We don"t have to beg or borrow from the wealthy and create an astronomical national debt; or tax the middle class into oblivion, or cancel necessary programs. We can use the nations' sovereign money power far more than we presently have been allowed to realize.


First: Nationalize the Federal Reserve System. Reconstitute it in the US Treasury, to evolve into a fourth branch of government. Only the government would create money. What would such government money look like? Well you have some in your pockets right now. Coin Vs Paper Money.

SECOND: Remove the privilege which banks presently have to create money. This is done through an elegant and gentle process which automatically turns all the previously issued bank credit into real American money. 100% reserves are reached not by calling in loans but by increasing reserves. This would be neither inflationary or deflationary. It would make real, what was thought to be the money supply. UNDERSTAND This is very different from simply demanding 100% reserves, which would wreck the economy.

THIRD: institute programs for automatic, constitutionally determined government money creation, starting with the 2 trillion $ which the Civil Engineers need to bring our infrastructure up to acceptable levels. From there we go forward carefully determining how to best run the monetary system, and thoughtfully use Aristotle's method, we learn by doing.

What difference would reconstituting the money power in government make? Government money goes into infrastructure; better life; better jobs; education, safer roads, cleaner water; better health care; social security, etc. Society is empowered by being able to direct the money power to solve pressing problems rather than into useless speculation. We no longer have to say we can't afford it, when so many people and resources are unemployed!

These three reforms can be closer than we think; and in a crisis situation if only 5% of the citizenry has an awareness of the societal/legal nature of money, they could be enacted.


beware of:

The Money "error, the Attack on Society/Government; the Smithian Free Trade Trap; and Smith's Selfishness Assumption.


Beneath the battle of public vs private money, there really lies an attack on government, which really cannot be separated from society. This is so important in monetary matters because we find that the modern 250 year attack on government originated largely in Adam Smith's efforts to keep the monetary power within the Bank of England. Smith glorified the Bank and obscured its private ownership saying it functioned as "a great engine of state." He attacked government issued money.

Smith's insulting attacks on the English Government marks the modern beginning of a relentless attack on society - the belittling and smearing of its organizational form - government. The single organization potentially able to block plutocracy's encroachments. Smith also inadvertently illuminates the major purpose of this attack: - to keep the money power in private hands.

Every day in America we see examples of how this disease has reached epidemic proportions. It has spread from the Austrian economists, and Hayek and Ayn Rand to their intellectual heir Rush Limbaugh and his propaganda radio.

Furthermore we find that the fraudulent monetary attack on government is also at the base of sources of the freedom diversion as practiced by the Libertarians. An example is how Robert Nozick launches his State, Anarchy, Utopia book, one of the Libertarians bibles, on Menger's false notion of the Origin of Money right on page 18. Thus AMI Research Paper # 1 is A Refutation of Menger's Theory Of The Origin of Money.


The "Freedom Mantra" is now placed on all sorts of doubtful practices to cleanse their image and shield them from closer scrutiny. For example, the Iraq horror is officially termed operation "Enduring Freedom." By labeling any activity, however criminal, with the word "free," you are expected to kneel and worship it.

"Free Market" Worship shows itself to be more a religion to be obeyed, rather than an economic policy to be analyzed and critiqued. The market is held to be omnipotent, omniscient, and beneficial - the three attributes of a deity. A strange deity that abhors morality; Served by an Austrian/Libertarian priesthood that confuses Ayn Rand novels as historical evidence.

The Free Banking Movement is one example. They set aside the universal condemnation of free banking as mere "anecdotal evidence" which they think they can whitewash with theories. But in my book I point out the six major errors of this so-called "free banking" movement (Ch. 16), including their misidentifying the free banking period in America.

FINALLY REGARDING THE SELFISHNESS ERROR, Henry George eloquently described Smith's Selfishness error:

"Buckles understanding of Political Economy was that it eliminated every other feeling than selfishness." Wherein Smith 'generalizes the laws of wealth, not from the phenomena of wealth, nor from statistical statements, but from the phenomena of selfishness; thus making a deductive application of one set of mental principles to the whole set of economical facts. He everywhere assumes that the great moving power of all men, all interests and all classes, in all ages and in all countries is selfishness...indeed Adam Smith will hardly admit common humanity into his theory of motives.'" (SPE, 89, 90)

Consider the negative impact on humanity of Smith's selfishness assumption: If Man is defined in such a base manner and systems of laws with their rewards and punishments are enforced along those lines, then over time, they will tend to create a form of humanity in "harmony" with their false concept of an economic mankind.

This de-evolutionary process, encouraging a lower form of humanity has been ongoing especially in the English speaking world for well over 2 centuries. The work of great English novelists such as Charles Dickens may have slowed it, but didn't stop it. Henry George saw exactly where it would lead:

"Nor can we abstract from man all but selfish qualities in order to make as the object of our thought...what has been called 'economic man', without getting what is really a monster, not a man." (SPE, 99)

George substituted a different concept for Smith's destructive error:

"The fundamental principle of human action ... is that men seek to gratify their desires with the least exertion."(P&P, 203)

Then taking a giant step, he poetically described the essence of humanity-


"It is not selfishness that enriches the annals of every people with heroes and saints... that on every page of the world's history bursts out in sudden splendor...that turned (Buddhas' back to his royal home or bade (Joan of Arc) lift the sword from the altar; that held the Three Hundred (Spartans) in the Pass of Thermopylae, or gathered into Winkelreid's bosom the sheaf of spears...Call it religion, patriotism, or the love of God - give it what name you will; there is yet a force which overcomes and drives out selfishness; a force which is the electricity of the moral universe; a force beside which all others are weak...I call this force destiny toward human nature - a higher, nobler nature than we generally manifest...And this force of forces - that now goes to waste or assumes perverted forms - we may use for the strengthening, and building up, and ennobling of society, if we but will..."(P&P, 463)

Sun Tzu in the Art of War discussed amateur techniques compared to the present methods used in the money battles. You know a lot of Wall Street people were drawn to Sun Tzu as part of their ethos, comparing themselves to warriors or grand strategists. He discusses how the best victory is to convince the opponent that they can't win or even fight.