(Part one, about Michael Tellinger and paying off bank “loans” with self-issued promissory notes, can be found here.)
What better day to write and post a story involving Irish banks and Irish ingenuity than St. Patrick’s Day?
Readers of this blog may remember that a big part of my solution to the problem of banks creating money out of thin air is to take that power away from the banks and give it to every natural person, since we the people already really have that power anyway but we are all forced by law to pretend that such is not that case. In other words, each person would have the power to issue US dollars without going through a bank. I call that “self-issued currency,” and here is how I envision it working:
It is beyond dispute that money can be–and has been–anything: gold, paper, shells, sticks, salt, binary code, cigarettes, fabric, etc., etc. So it stands to reason that money can (and arguably ought to) be the following: a check written by a buyer for any amount requested by a seller and drawn on a fictional, non-existent account. In other words, self-issued currency. And everyone would have this same check-writing power. The only problem with this scenario? No more poverty, no more control of the masses, no more larceny, no more want, no more war, no more prostitution, no more slavery, no more debt. Oh wait, those aren’t problems at all–unless you’re one of the few people benefiting from the present system of rapaciously fraudulent currency.
Very simple idea, that—checks written against fictional bank accounts. Very easy leap to make once you realize that money is and always has been created out of nothing and does not exist in nature (no, gold and silver are not money, only representations of it). Indeed, since money itself is fictional, fake, mythical, or however you want to put it, why not just let people pay for things with checks drawn on non-existent accounts? And I should make it clear that these checks would be denominated in the national currency of whatever country the check is written in. A number of critics of this check idea have taken it to mean that the self-issued currency would be the currency of the person issuing it, so that there would be millions of different currencies and said critics point out that such a thing would be impractical. That’s not what I mean at all, again, just to be clear.
Irish Bank Closures of 1970
Now, when I wrote about these drafts against fictional accounts, I had never heard about the closure of Irish banks in 1970. It wasn’t until sometime last year when I read Felix Martin’s 2014 book “Money: The Unauthorized Biography” that I knew anything about it. I was shocked and elated to read that my idea was not only not new or original, but that it had already been tried, and been successful! So what happened with the Irish banks in 1970? Martin’s book reproduces a notice that was run in the May 4, 1970 issue of the Irish Independent newspaper, which stated the following (p. 23):
CLOSURE OF BANKS
As a result of industrial action by the Irish Bank Officials’ Association for the past eight weeks, a position has now been reached where it is impossible for the undermentioned banks to continue to provide even the recent restricted service in the Republic of Ireland.
In the circumstances it is with regret that these banks must announce the closure of all their offices in the Republic of Ireland on and from Friday, 1st May, until further notice.
Nine banks were listed in the notice as being part of this indefinite closure. The “industrial relations” referred to in the notice were essentially a labor dispute.
The obvious question is, if banks are closed in a modern economy, how can commercial activity possibly continue? For the purposes of our self-issued currency solution, we might even go one further and assume that banks are not just closed temporarily but in fact closed forever, never to open again. How could the economy carry on then? Indeed, those inclined to argue for the continued existence of banks and their imaginary currency which they create out of nothing might want answers to questions like the following: How can people exchange goods and services without banks? How will everyday trading shake out? Won’t things just come to a complete standstill? How will buyers be able to trust sellers without banks as intermediaries? The bank defenders would assume that the answer to all of these questions would tend to show the inarguable need for banks to create and “lend” their imaginary money.
Fortunately, that didn’t happen at all in Ireland. Here’s how Martin describes what happened after the Irish banks closed (pp. 24):
“…the vast majority of payments continued to be made by cheque…despite the fact that the banks at which these accounts were all held were shut…For individuals in particular, there was really no other option: for any expenses in excess of the cash they had in hand when the banks shut their doors on 1 May, their only hope was to write IOUs in the form of cheques and hope they would be accepted.”
In other words, the Irish were self-issuing their currency and writing checks against what were, for the moment anyway, functionally non-existent bank accounts. That is, the bank accounts existed, but could not be accessed, so for all practical purposes, they didn’t exist for the period of the bank closures. But here’s the crux of what went on (p. 24):
“Remarkably, as the summer wore on, transactions continued to take place and cheques to be exchanged almost exactly as usual. The one difference, of course, was that none of the cheques could be submitted to the banks. With the banking system shut, however, cheques were for the time being just personal or corporate IOUs.”
So no, the Irish economy did not collapse without banks. People just wrote and accepted checks for the things they wanted and needed–and continued to do so for many months–even though there was no way to “clear” the checks. That is what you call self-issued currency in action. So, it’s been tried at least this one time and it worked like a charm. Martin again (p. 25):
“…the business lobby—encouraged by the banks and exasperated by the expenses they were incurring to find ways round the closure—began planting scare stories in the newspapers claiming, for example, that ‘a rapidly growing paralysis is spreading through the economy because of the banks dispute.’ But the evidence collated by the Central Bank of Ireland once the crisis was finally resolved in November 1970 showed quite the opposite. Their review of the closure concluded not only that ‘the Irish economy continued to function for a reasonably long period of time with its main clearing banks closed for business,’ but that ‘the level of economic activity continued to increase’ over the period.”
Not only no collapse, but also increased economic activity using self-issued currency? Sounds like a good outcome to me. Martin one more time (p. 25):
“Both before and after the event, it seemed unbelievable—but somehow, it had worked: for six and a half months, in one of the then thirty wealthiest economies in the world, ‘a highly personalized credit system without any definite time horizon for the eventual clearance of debits and credits substituted for the existing institutionalized banking system.’”
So that’s all self-issued currency really is, then—“a highly personalized credit system without any definite time horizon for the eventual clearance of debits and credits.” That’s because, in a self-issued currency system like the one I have described and the one that was temporarily in place in Ireland, there is no need to “clear” debits and credits. Indeed, if everyone has exactly equal access to money as would be the case when using self-issued currency, then the notion of a monetary debit or credit becomes obsolete. In the self-issued currency scheme, “money” is not a store of value or measure of value. It’s not really even a medium of exchange so much as it is an acknowledgment of an exchange.
Why even bother with a currency at all, one might wonder, if the self-issued currency essentially makes everything free? Well, that’s just it—things aren’t “free” in the self-issued currency scheme. Prices would still be denominated in the national currency and self-issued checks would be written for those amounts. But the checks would function more as a “thank you note”—again, an acknowledgment that person A did something for or gave something to person B. That’s what money is already, we just aren’t trained to think of it that way. That is, all money is already fake and already worthless, even in the Federal Reserve/modern central bank scheme under which we live. Indeed, “Federal Reserve Notes” and “thank you notes” are both notes, they’re only distinguishable by their legal status, not by their value. And that’s why self-issued currency is more palatable than no currency at all—because people want an acknowledgment of a transaction. They don’t want to feel that someone got something over on them or that somebody got something for nothing. For that reason, there needs to be some form of currency, but it should be self-issued and not state- or bank-issued.
Anyway, more on the “thank you note” currency in the future. Main takeaway—self-issued currency works! It’s been tried and proved to work. We just write each other checks and everyone has equal access to money and then suddenly there’s no poverty, no prostitution, better health, etc., etc.
Stay tuned for part 3!
And now for one of me favorite Irish-American tunes: