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http://theawakeningoftheamericamind.blogspot.com/2008/07/emergent-sustainability.html?m=1

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These are the notes to a new book I'm presently working on. Anyone interested in these ideas should contact me at: lloyd.gillespie@gmail.com

http://kondratyev.blogspot.com/2007_04_01_archive.html#7650962301580507691

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Necessary and Proper Category Logic__Cultures’ Varying Intelligence Collisions, and Why, Where and How Values Were Cast Aside…

I finally figured out why true intelligence is missing from our modern world. We all know the world has experienced many periods of great flourishing of many cultures’ brilliant intelligences, but I’ve been extremely puzzled why nations, that once were intelligent, lost or lose their intelligence of sensible action, over time. To figure this out, I’ve extensively studied Peirce’s category logic for the last 10+ years, without really laying my mind to exactly what was so important about it, until just recently, when I decided to do a serious comparative analysis, of the interaction of varying nations’ intelligences, over historical time. What I discovered really shocked me, as it’s really so simple to understand, but will take a considerable explanation of a few of these simple facts…

First, let me break down intelligence into a few philosophical categories, we can generally accept as having the capacity to hold most other philosophical intelligence categories under them. Historically we’ve long known about idealism and realism or nominalism and realism, as two majors from Plato and Aristotle to Kant. Since Kant, we’ve had rationalism and empiricism in the modern sense, generally speaking, as it’s really earlier, but anyway… We’ve further and more modernly developed six major additions to these older systems; positivism, logical positivism, Peircean pragmatism, James-Dewey pragmatisms, continental philosophy and analytic philosophy of the language and linguistic brands. I’m purposely not listing others such as transcendentalism, existentialism, nihilism, skepticism, etc., as I feel these can be generally taken up under the above more widely studied systems, and the points I wish to make more concern the category mistakes made by most of the main systems mentioned…

Now, since the early Greeks, mathematics, values, esthetics, ethics and logic played large roles in all the philosophies for some 2500 years, with these mentioned systems being categorized near the top of the priority lists, with lesser prioritized subjects below. Of course the arguments went back and forth between all the metaphysical, ontological, epistemological, phenomenological, etc., discussions all through the 2500 year period, but math, values, esthetics, ethics and logic were all held in high esteem, except of course through the European Dark Ages era, yet these early Greek sciences and values systems were kept in play by the Arabic speaking lands, and finally transferred to Europe during the enlightenment and reformation periods__and greatly admired, I might add. But, something began to change between philosophy’s values and category systems in relation to its more scientific studies, as they were in battle with the Church over the definition of values, and just who was going to control such values, and herein begins the split between values and the more scientific systems of knowledge and intelligence, of these periods. But, this isn’t the main part of my story. It’s only the prelude to what was to take place within Philosophy’s category systems, in the more modern era…

To put this as simple as possible, what was in general standard category logic, from the early Greeks to the positivists, had been the math, esthetic and ethical values, fully joined to logic, at the head of the major category systems. But, this all started to change with the first positivist, Compte, where he promoted math, science and logic above the older and standard Greek values, thus divorcing esthetic and ethical values from his_‘thought so’_more modern scientific view. Now, at first glance, this may not seem to harmful, as science has the right to develop its own independent systems and methodologies, and it’s true, this wouldn’t be much concern, until one realizes this system takes on an entire cultural identity through academics, over the years_as younger students are rote-programmed/educated/trained with this new way of priority categorizing academic knowledge and possible or impossible intelligence, which also filters out into the general society, over time. Still, you may say, “…not such a problem as you make out…” Well, that’s before one realizes the rest of the story…

Since we have more information from Peirce and Frege’ onward, let’s see where we go by dealing with modern logic and psychology, as per the category system of math, logic, language and linguistics’ priorities, in relation to producing nominalism or realism, which existed, more or less, before this period. To the point; Frege’ tried to promote logic and language up the category list, above mathematics, and also tried excluding metaphysics, psychology and values, almost completely from his category system_which was followed also by Russell, Wittgenstein and others, to the present co. of Quine and Chomsky, etc._Thus turning standard logic, values and knowledge on its head_banging itself into egoic nominalism_and eliminating any possibility of true intelligence, guided by community, esthetic and ethical values, in recognition of Greek, Roman, natural, logical, syllogistic and common law__Which had been the sensible way for centuries before…

At this same time, Peirce was working the bugs out of his own system and brand of pragmatism__Where he found that mathematics was necessary to be stationed at the original top placement of the category list, as logic, when attempting the super-fine structures, runs out of explanatory power, and math must take over. Also, Peirce discovered by studying the scholastic logicians, they’d concentrated heavily on values being very important to their logic, thus giving logic its purpose of reasoning, in the first place, not to mention maintaining the personal and social values, the Church had always failingly tried to foster, due to its metaphysical nominalist stance, which is no more than taking belief too far into extremes_but, that’s a story for another book, or more_And I’ll pass on that... Thus we have the opposite ended systems of the logical positivism of Frege and co., and the analytic pragmatism of Peirce, with entirely opposite values and operations, especially when academics filters all these oppositions into culture at large…

If one looks carefully at Frege’ and co’s. system of prioritizing logic, language and linguistics over math and values_and Peirce’s system of prioritizing math, esthics and ethical values over, through and with logic, language and linguistics, one can easily see the clash of civilizations’ intelligences, in an unnecessary battle over priorities_and instead of increasing knowledge, such a conflated battle simply and naturally decreases knowledge, by destroying the necessary and proper values of societies, founding and grounding the continuity of any possible true meaning and learning. Without esthetics and ethics guiding logic’s proper decisions into the maths and sciences, Frege’ and co’s., mistaken category logic priority system simply destroys values and true intelligence, as there’s no continuity to such a bastardized logic system__Thus, such a system ends in pure dialectical nominalism, or the worship of the ego of false logics’, languages’ and linguistics’ idealisms__lacking all true meaning, to the real world of necessary and proper cultural values, knowledge and true intelligence… Oh, and btw, James, Dewey and the Continental philosophers have simply waffled between these two systems of Frege’s nominalism and Peirce’s realism…

Finally, analytically comparing our six original chosen modern philosophic systems; imo, only Pierce’s pragmatic analytic teleological realist system, does not suffer from the others’ egoic nominalist dialectical redundancy.  It’s simply all a matter of prioritizing real effectuated esthetic and ethical values over logic, language and linguistics to produce the desired values for all our sciences, experiences and actions. Of course, this system will need be made widely known and recognized by the academic community, who already threw away Peirce, long ago__Yet, he’s actually the only person to have ever lived, who put the entire philosophical system of true knowledge, science and psychology together properly, which also saves values, by having logic itself, depend on these very same values, in all its analytic systems of actionable use. I think academics has a lot of steps to retrace, to see just what they threw away…

The choice is yours__Values and true intelligence or no values and pseudo-intelligence, for our future…

A NEW MONETARY SYSTEM for THE ELECTROSPHERE

©LLOYD GILLESPIE 1991-2003

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"All problems using crude money must be overcome to survive the future eco-techno-electrosphere."

"Since the first wave agricultural revolution only required simple single entry banking –– and the second wave industrial revolution invented and required double entry banking –– then the third wave technological revolution [will] invent and [require] "TRIPLE ENTRY BANKING.""


In 1982 I empirically discovered an entirely new capitalist monetary system. This system is in direct evolution with the existing system. It is fully compatible with all known forms of money systems –– past – present – or future. The system is INTERNAL EXCHANGE CLEARING –– TRIPLE ENTRY BANKING – a transactions truth. This new monetary system can be implemented cost free and effectively either unilaterally or globally. It can be instituted on a percentage basis from one percent, to twenty percent –– its most cost effective and productive percentage of operations' basis.

In this short paper, I will explain why I feel a new monetary system is necessary –– what it exactly is –– and how to painlessly implement it. First, I will discuss the present capitalist system to make clear why such a new system is needed. I will frame my discussion on four tenets –– demographics –– jobs and wages –– the present floating exchange rate non-regime –– and the technological revolution.

Many falsely believe the miracle of capitalist markets will cure all our future problems. Let me see if I can change your mind, to show markets of the future may need some new help. The most glaringly obvious problem is one of demographics alone. With the nation five trillion dollars in debt and both political parties fighting for the next spendable penny, when we at present don't yet have a demographic problem –– where do you think the money is coming from to support the retirement of the massive increase of baby-boomers?

This is not only a problem of our nation, but that of all industrial nations and many of the world's lesser nations as well. Japan has been flat on its economic back for five years now. Europe also has flat growth, high unemployment, massive debts, and intolerable rates of taxation. We need say little of the lesser nations as everyone is well aware of their bankrupt conditions. If we are short of the necessary funds now, what nation or group of nations is going to grow enough to resolve the present quagmire –– let alone the future's massive demographic increase of tax burdens? How will they grow? What economic incentives and organizations are presently planned and feasible? Are they capable of meeting future needs? I simply ask you to be the judge.

If nations are to grow their way out of the demographic problems of the future, where are the jobs and wages necessary to do so coming from? At present we are downsizing every economy in the world –– with massive mergers, outsourcing, and layoffs. Wages for forty to fifty percent of the population of America alone have declined over the last twenty years. Yes, it is true some at the top have benefited precipitously –– but at the cost of the bottom? High skilled jobs, such as unions, have shrunk dramatically –– from thirty-six percent of the work force to sixteen percent of the workplace. Are these evidences of true growth in jobs and wages over the last twenty years ––– as many would have us believe? And they fight against an increase in the minimum wage! Where will jobs and wages come from when the computer-robotic-revolution displaces more human workers ––– daily?

I don't mean to sound pessimistic, as I am not. I am only painting a true picture of present capitalism's stature. The system I am proposing –– INTERNAL EXCHANGE CLEARING –– is thoroughly optimistic. So bear with me while I make my points about the present system's problems.

If you think these problems can be easily solved by conventional policy and market performance, you know little of the workings in the foreign exchange markets. These markets exist wherever a foreign exchange takes place –– sort of everywhere and nowhere. They exist everywhere a computer-telephone link is, and nowhere is there any real control. This system is an absolute free-for-all buying, selling, and swapping trillions of dollars and other currencies around the world at the speed of light twenty-four hours a day –– three-sixty-five days a year. The global transactions' figures presently stand somewhere between two-hundred-fifty and two-hundred-seventy-five trillion dollars per year. They are well over a trillion dollars per business day.

In order to understand the above, you must know these markets encompass the Euro-dollar system – the entire foreign exchange system – the forward exchange markets – the entire international banking system – interest, goods, and services arbitrage and hedging – derivatives – swaps – fixed and floating currencies – nations' inflation and tax systems – and all nations' governments and actions –– to mention just a few. The above includes the most intricate and complex of markets in the world. When the courts can't even understand these intricate markets –– how are the policy makers supposed to?

Let me give you a clear example of the above. George Soros has stated "Speculators can short the markets a trillion dollars quicker than governments can print it." He should know as he made one billion dollars on one speculative trade in 1993 against the European Economic Community –– which he documented in his book "SOROS ON SOROS". This is no isolated case, I assure you. Andrew Krieger has also written a book of his speculative exploits titled "THE MONEY BAZAAR – Inside the Trillion-Dollar World of Currency Trading." Both these books are excellent first hand sources of information about speculating against the present easily manipulated floating exchange non-system. Systems of this character must change to survive the ever increasing encrypted computerized future.

If you think the above issues can be brought under policy control – of two warring political parties in our country – I think you have missed the boat. Not only is it almost politically impossible in our own country, but it is even more politically unlikely to succeed globally. Internal tension and gridlock prevents local problem solving, while global tensions of Chinese communism, and Islamic fundamentalism prevents international problem solving. For these reasons, I have designed INTERNAL EXCHANGE CLEARING to be instituted and function properly unilaterally –– with the support and respect of both warring political parties –– and to further be complementary to and compatible with external international processes.

Before explaining the above system, we must explore my fourth tenet –– the technological revolution. Professor of history Paul Kennedy has done the definitive work in this area. I would like to add my vision about the future of technology. I can nowheres near compare to the stature of Mr. Kennedy, but I have a unique perspective –– as I am an international currency and market speculator –– with considerable computer and robotics expertise.

Mr. Kennedy has rightfully shown the nightmare scenario we could be headed for if change is not undertaken. For his part of warning us, he has received the title of "Dr. Doom." Not only is his work not about doom, it is the most accurate possible course of history I have seen. We have a choice to let the future play out terribly ––– or to change it for the better. We had better listen to those who have better ideas than our own.

With all nations being forced by competition to adopt the latest advances in technology –– we are locked in an ever increasing scenario of technological evolution. The forces of markets are pushing us closer to a robotic and databased wage and pricing mechanism future. As the power and agility of robots increase, companies and corporations will be forced by competition to implement this new technology –– thus eliminating more human jobs and wages. Already, Japan is re-importing jobs they earlier outsourced to human labor, to be handled by robots cheaper at home. In other words, even some of the third world's labor is losing to robots –– and we have just begun. Databases, once simply a tool of improving efficiency within companies and corporations, are now being employed to handle massive world pricing mechanisms and on time global delivery systems. Competition in this area will be the most fierce, because it is the most cost effective method to improve profits. This area alone will be where massive layoffs of upper income workers will come from. So ––– while robots lay off the bottom tier –– databases lay off the top tier! And if you don't think this is true –– just check out who is tops on the web ––– Digital and Inktomi – the fastest!

The future will see massive increases in the use of robots to eliminate human labor and wages' costs –– competition requires it. We will see massive increases in the use of giant supercomputer databases and on time global delivery systems to eliminate human labor and wages' costs –– competition requires it. These two technologies alone can do nothing but downsize further the entire global economy ––– eliminating massive human work forces and wages –––– for the bottom line –––––––– profits!!!

There is no turning back. We must go forward with new monetary systems.

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INTERNAL EXCHANGE CLEARING – A NEW MONETARY SYSTEM for THE GLOBAL ELECTROSPHERE

©LLOYD GILLESPIE

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"All problems using crude money must be overcome to survive the future eco-techno-electrosphere."
"Anyone who thinks the use of crude money will not be necessary in the future is crazy!"
"The present electronic world is diminishing collective opportunity ––– fast!"


Over the past two centuries we have built a wondrous spectacle for the rest of the world to emulate. We have set the standards high for civil human conduct and happiness. The moral, ethical, and family stance we take should make us proud and respected. The institutions we have erected set the rest of the world at awe. Our scientific and industrial evolution and strength have revolutionized the entire planet –– especially since the end of WWII... So why do we feel so insecure?

The reason is we have reached economic entropy under the present world monetary systems and organizations. The technology revolution is creating real job and wage decreases as population increases. This is why we feel so insecure and helpless. To this point in time there are no serious conventional solutions being put forth. This is why I am offering an unconventional solution to our present economic stalemate.

On the surface "INTERNAL EXCHANGE CLEARING" is not a difficult system to understand. It is simply a system to reorganize the control of the foreign exchange market to function more efficiently through internal mechanisms instead of external –– thus making more productive use of our or all nations' national debts. This system will stabilize exchange and inflation rates internally and externally when instituted. This is the real solution we truly seek –– to once and for all end inflation and disequilibria of the exchange rate mechanism. Only this solution will increase real jobs and wages in the coming eco-tecno-electronic revolution of the twenty-first century.

Why? You may ask will this system work better than the present one? What? You may ask is this system and how does it work? I should warn you, this system should not be confused with external exchange clearing advocated by Plato and Dr. Paul Einzig –– though they are the inventors of the groundwork of this system. Plato first advocated such a system some twenty-four-hundred years ago, and Dr. Paul Einzig (the WWII Finance Minister of England) has written the only book on exchange clearing I believe to be in print (Exchange Control, Macmillan and Co.1934). "INTERNAL EXCHANGE CLEARING" is simply a higher evolution of these two great men's work.

"INTERNAL EXCHANGE CLEARING" is based on a new framework of laws for existing markets to function under more efficiently. These new laws recognize and solve the existing problems through a one-fifth military style "P.X". and a "TRIPLE ENTRY BANKING" system. You must realize we do not have a production or resource problem. We have a monetary problem the above system solves at no cost to any parties involved. You say, "This is the old free lunch impossibility." I say, "The future being fast diminished by technological evolution requires a semi-free lunch." Notice this system is only a one-fifth change of existing structures –– and when further inspected is even no total change in existing assets. The system I am proposing takes from no-one, yet has the ability to operate semi-philanthropically for the benefit of all.

The one-fifth level mentioned above does not require being instituted at the twenty-percent level. The system can safely evolve to the twenty-percent level in small increments per year –– through the guidance of the new social contract laws we pass. At present, most every nation of the world is governed approximately twenty-percent by the external forces of multinational trade and international financial flows. "INTERNAL EXCHANGE CLEARING" simply moves the control of the functioning of the mechanics of these markets from external malfunction to internal function. It does not change any actual control of these real and complex markets. They are still free to function as is even after institution. The real change only takes place internally, where we set government in competition with existing business at the one to twenty-percent over time level. By this I mean a reduction in present nationalization from its some forty-percent level to its new twenty-percent level.

To accomplish the above, a national set price "P.X." will be instituted, where one to twenty-percent of everything from dust to diamonds is available to all comers alike –– citizen and entrepreneur alike. This is a government created independent "P.X" market totally separate from all present existing businesses –– yet set in competition with all existing business to create truly competitive and fair markets for all players and citizens alike. This market by the very existence of its instituted mechanics automatically controls all inflation, exchange rates, and prices into fair and equitable balances –– once and for ever!

The above market will be semi-philanthropically subsidized by the new "TRIPLE ENTRY BANKING" system –– which must be instituted along with the "P.X." and "INTERNAL EXCHANGE CLEARING" systems. The functioning of the above markets' instituted mechanics make the semi-philanthropic system possible. The system will function unilaterally or universally. It is best recommended as a universal system –– though there is nothing to prevent its unilateral success as well. The advantage of multilateral acceptance is the cooperation of all nations advancing in unison to lessen world tensions. The philanthropic percentage could be set by agreement among many or all participating nations' equal ratios of GNP expansions.

I often state,"We need a fixed value monetary system. At the present time, we have none. Under floating exchanges, America is simply a powerful ship on an ocean, with no rudder. Old gold, silver, and other known standards will no longer work. They will not work due to the massive increases in communication's speed, the varied endowments of nations' natural resources, and encrypted international speculative opportunities. Therefore, we need a new system. INTERNAL EXCHANGE CLEARING is such a system. It is an entirely new fixed value enhancing - [production standard] - monetary system, to benefit all humankind."

It all comes down to: "If we set up government – all government – in business, in competition with existing private commercial business –– we can unilaterally make unlimited reasonable use of the printing press!"

Let's stop the ridiculous political and class battles and consider the abilities of the above to solve our problems ––– and once again unite us in all our desired goals and destinies.

Thank you,
L.A. Gillespie

Metaphysics of Emergence

Metaphysics of Emergence A Strange Kind of Being Emerges; Kent D. Palmer, Ph.D. http://holonomic.net/me00a02.pdf 

A post by, Beate Reszat from my twitter account...

The foreign exchange market in London in the 1920s and a newly arrived young financial journalist with a passion: wp.me/p1tpdQ-1A9

A Universal Geometry of The Mind’s Eye P=NP Complete __pic.twitter.com/c8Q592pO15

A Rational Morality...

A Rational Morality

By, http://intelligentparty.wordpress.com/

I’ve found on a number of occasions that people who conceive of morality as something handed down from on high don’t understand how there could be any alternative to that view. “If you don’t get your morals from [deity of choice], where do you get them?”The frequency with which this line of questioning appears demonstrates a profound misunderstanding of what sort of a concept morality is and how we can coherently define it. The assumption at the heart of the misunderstanding is that morals must be things in the world—not necessarily that they must be tangible, but that they have an existence independent of the human mind. For a person holding this view, morals are fixed, constant, and external.
(Continued below the fold.)

The Source
This notion of external moral values is equally ludicrous whether the perceived source is a deity or a dictator. Morality is a value-based judgment system, a human-created way of applying conceptual labels to human interaction and decision-making. These labels, the words of moral judgment—good, bad, right, wrong, just, unjust—have no real-world referent, the way ‘pencil’ or ‘babboon’ do. They only exist in the abstract, which is to say that they only exist as products of the human mind, and this is the only way they really make any sort of sense—as linguistic constructions for describing and evaluating human behavior. People intuitively understand this, I think, but they persist in thinking of moral values as something existing independent of human reason (and often not even accessible to human reason).
Nature certainly doesn’t make sense as a source for morality, given that nature (pathetic fallacy aside) has no particular interest in whether we act “morally” or “immorally.” This is to say that two actions, one “moral” and one “immoral,” may have markedly different consequences, but nature has no real investment in one over the other for the sake of adhering to a moral system. Examined in this light, moral actions are not qualitatively different from immoral actions from any perspective other than a human one. The only distinction between actions, from a natural standpoint, is due to a difference in the direct consequences of those actions. Any attempt to claim the natural world as a source for arbitrarily chosen moral values is bogus, and is most likely an attempt to rationalize a supernaturally-based view of morality.

Defining the System
It is important for us to understand why morality exists, what purpose it serves in human discourse. Morality is most readily understood as a system we impose in order to make our lives easier—in terms of both individual quality of life and overall utility—and to turn them into something other than ‘kill or be killed.’ In its rational form (as distinct from the sense of ‘public morality,’ where things are arbitrarily chosen as ‘good’ or ‘bad’ for no logical reason), it is a product of extrapolating from rational self-interest. The impulse towards morality is not, fundamentally speaking, an impulse towards treating people justly or fairly for its own sake, but rather an impulse towards treating people justly and fairly in the hopes that they will treat us in such a way. An appropriately chosen moral value within such a system is one that strikes the right balance between self and other, in the sense that the negatives of obeying it ourselves are balanced out by the positives of everyone else obeying it. The most obvious example is the widely held moral prohibition against killing for reasons other than self defense. This is an appropriate moral value for us to hold, because we can reasonably (there’s that word again) expect that the desire to not be killed is more or less universal, that the convenience of not worrying about being murdered will outweigh the inconvenience of not being able to slit the throat of someone who pisses us off. That this is often overlooked in moments of passion in no way invalidates it as an ethos—it just means that there are situations in which people will make decisions based on something other than morality.

Extrapolation and Universality
You will undoubtedly notice a certain degree of speculation within such a system. This is unavoidable, practically speaking, given the overwhelming numbers of people on the earth; it’s not even remotely feasible that we interview the entirety of the human population, in order to have a truly universal representation of human desires. We must rely on experience and reason to give us a sense of what humans value, and which of these values must/should be considered unimpeachable—life, liberty, property, pursuit of happiness, etc. As we’ve previously established, reason is the only universal language available to us for discussing and analyzing these issues; emotion is not irrelevant, especially when utility and happiness are so closely linked, but the fact that something makes us feel good doesn’t in and of itself make it a universal good in any sense. And there is a need for morality to come from a universally accessible source, because otherwise it becomes meaningless as a system for human behavior. If, say, concepts of morality were bestowed by Hypothetical Supernatural Entity #1, and Hypothetical Supernatural Entity #1 was only perceptible to a certain subset of the population, then the rest of the population couldn’t be fully participating in the system, in the sense that they wouldn’t have any direct access to these “moral values.” Likewise, there is a need for some sort of universal morality in our increasingly global culture; if ever there was a time when different cultures could function with drastically different moral systems without affecting each other, that time is long since gone.

To What End?
The end result of this sort of moral reasoning (post-conventional, under Kohlberg’s very useful rubric, which I expect I’ll discuss again at some future point) is less clear than the merits and methods of the process itself. The only coherent theory of morality, it seems to me, is one which falls under the heading of a social contract, given the lack of justification for drawing moral values from external (non-human) sources. We identify, by careful reasoning, certain values which we all implicitly agree to live by, in order that we may enjoy the advantages of civilization over a more animalistic, survival of the fittest system. The logistics of this are troublesome, as is determining the ideal relationship of morality and law, but the point is that we must embrace a rational definition of morality, wherein we recognize that moral frameworks exist only insofar as we create them and impose them on ourselves and, by extension, on others. It should also be recognized that morality is not, from a broad perspective, a necessity; rather, it is a particularly useful system we’ve concocted to keep from killing and raping and stealing from each other (which is to say: to keep from being killed or raped or stolen from). The sooner we recognize the necessarily rational nature of moral judgments and stop trying to assign some absolute “moral” status to random beliefs and prejudices, the more just and pleasant our world will become, and the less we will abridge the fundamental rights of others.
–Urizen

Testimony of Marriner Eccles to the Committee on the Investigation of Economic Problems in 1933

London Banker...

Below are excerpts from the testimony of Marriner Eccles to the Senate Committee on the Investigation of Economic Problems in 1933. It is an historic document – laying out the future terms of the Federal Deposit Insurance Corporation, the management of money supply nationally through open market operations, the Bretton Woods Accord on currency stability, mortgage refinancing as monetary stimulus, and reforms of the Federal Reserve System to eradicate the excesses of untamed capitalism and financial dominance of Wall Street. He proposes higher income and inheritance taxes as essential to promote economic growth, curb inequality and forestall political instability. He encourages federal regulation of child labor, unemployment insurance, social security and other farsighted reforms. And he avows himself a capitalist throughout.

Although he was a titan of industry - with banks, railroads and corporations spanning the American west - Eccles was born the son of an illiterate, bigamist, Mormon, Scottish immigrant. He was about as far as you could get from the Eastern elite ranks that ran US banking on Wall Street. But he sure understood money, economics and trade, and had the personal drive and charisma to carry his point with the president and with Congress.

Following his testimony, the Utah banker was invited by Franklin Roosevelt to come to Washington to spearhead legislation to enact his proposed reforms. Within two years he had drafted and enacted the Securities Act of 1933 and the Banking Act of 1933(a.k.a., The Glass-Steagall Act, which separated investment and commercial banking and established the FDIC) and the Banking Act of 1935 (which created the modern Board of Governors of the Federal Reserve System and Federal Open Market Committee). He served as Chairman of the Board of Governors of the Federal Reserve System from 1934 until 1951.

Read this and know that just one person, with vision and principles, can make a difference to the world in a time of crisis, establishing the basis for decades of prosperity and growth.

[page 8]

Before effective action can be taken to stop the devastating effects of the depression, it must be recognised that the breakdown of our present economic system is due to the failure of our political and financial leadership to intelligently deal with the money problem. In the real world there is no cause nor reason for the unemployment with its resultant dsestitution and suffering of fully one-third of our entire population. We have all and more of the material wealth which we had at the peak of our prosperity in the year 1929. Our people need and want everything which our abundant facilities and resources are able to provide for them. The problem of production has been solved, and we need no further capital accumulation for the present, which could only be utilised in further increasing our productive facilities or extending further foreign credits. We have a complete economic plant able to supply a superabundance of not only all the necessities of our people, but the comforts and luxuries as well. Our problem, then, becomes one purely of distribution. This can only be brought about by providing purchasing power sufficiently adequate to enable the people to obtain the consumption goods which we, as a nation, are able to produce. The economic system can serve no other purpose and expect to survive.

If our problem is then the result of the failure of our money system to properly function, which today is generally recognised, we then must turn to the consideration of the necessary corrective measures to be brought about in that field; otherwise, we can only expect to sink deeper in our dilemma and distress, with possible revolution, with social disintegration, with the world in ruins, the network of its financial obligations in shreds, with the very basis of law and order shattered. Under such a condition nothing but a primitive society is possible. Difficult and slow would then be the process of rebuilding and it could only then be brought about on a basis of a new political, economic and social system. Why risk such a catastrophe when it can be averted by aggressive measures in the right direction on the part of the Government?

* * *

[page 9]

We could do business on the basis of any dollar value as long as we have a reasonable balance between the value of all goods and services if it were not for the debt structure. The debt structure has obtained its present astronomical proportions due to an unbalanced distribution of wealth production as measured in buying power during our years of prosperity. Too much of the product of labor was diverted into capital goods, and as a result what seemed to be our prosperity was maintained on a basis of abnormal credit both at home and abroad. The time came when we seemed to reach a point of saturation in the credit structure where, generally speaking, additional credi was no longer available, with the result that debtors were forced to curtail their consumption in an effort to create a margin to apply on the reduction of debts. This naturally reduced the demand for goods of all kinds, bringing about what appeared to be overproduction, but what in reality was underconsumption measured in terms of the real world and not the money world. This naturally brought about a falling in prices and unemployment. Unemployment further decreased the consumption of goods, which further increased unemployment, thus bringing about a continuing decline in prices. Earnings began to disappear, requiring economies of all kinds – decreases in wages, salaries, and time of those employed.

[page 10]

The debt structure, in spite of the great amount of liquidation during the past three years, is rapidly becoming unsupportable, with the result that foreclosures, receiverships and bankruptcies are increasing in every field; delinquent taxes are mounting and forcing the closing of schools, thus breaking down our educational system, and moratoriums of all kinds are being resorted to – all this resulting in a steady and gradual breaking down of our entire credit structure, which can only bring additional distress, fear, rebellion, and chaos.

* * *

As an example of Government control and operation of the economic system look to the period of the war, at which time, under Government direction, we were able to produce enough and support not only our entire civilian population on a standard of living far higher than at present, but an immense army of our most productive workers engaged in the business of war, parasites on the economic system, consuming and destroying vast quantities produced by our civilian population; we also provided allies with an endless stream of war materials and consumption goods of all kinds. It seemed as though we were enriched by the waste and destruction of war. Certainly we were not impoverished, because we did not consume and waste except that which we produced. As a matter of fact we consumed and wasted less than we produced as evidenced by the additions to our plant and facilities during the war and the goods which we furnished to our allies. The debt incurred by the Government during the war represents the profit which accrued to certain portions of our population through the operation of our economic system. No Government debt would have been necessary and no great price inflation would have resulted if we had drawn back into the Federal Treasury through taxation all of the profits and savings accumulated during the war.

* * *

[page 11]

How was it that during the period of the prosperity after the war we were able in spite of what is termed our extravagance – which was not extravagance at all; we saved too much and consumed too little – how was it we were able to balance a $4,000,000,000 annual Budget, to pay off ten billion of the Government debt, to make four major reductions in our income tax rates (otherwise all of the Government debt would have been paid), to extend $10,000,000,000 credit to foreign countries represented by our surplus production which we shipped abroad, and add approximately $100,000,000,000 by capital accumulation to our national wealth, represented by plants, equipment, buildings, and construction of all kinds? In the light of this record, is it consistent for our political and financial leadership to demand at this time a balanced Budget by the inauguration of a general sales tax, further reducing the buying power of our people? Is it necessary to conserve Government credit to the point of providing a starvation existence for millions of our people in a land of superabundance? Is the universal demand for Government economy consistent at this time? Is the present lack of confidence due to an unbalanced Budget?

What the public and the business men of this country are interested in is a revival of employment and purchasing power. This would automatically restore confidence and increase profits to a point where the Budget would automatically be balanced in just the same manner as the individual, corporation, State, and city budget would be balanced.

[page 12]

During the past three years there has been such tremendous liquidation and scaling down of debts that extraordinary measures have had to be taken to prevent a general collapse of the credit structure. If such a policy is continued what assurance is there that the influences radiating from a marking down of the claims of creditors will not result in a further decline of prices? In other words, after we have reduced all debts through a basis of scaling down 25 per cent to 50 per cent, what reason have we to expect that prices will not have a further decline by like amount? And then again, the practical difficulties of bringing about such a adjustment on a broad scale seem to be insurmountable.

The time element required would indefinitely prolong the depression; such a policy would necessitate the further liquidation of banks, insurance companies, and all credit institutions, for if the obligations of public bodies, corporations, and individuals were appreciably reduced the assets of such institutions would diminish correspondingly, forcing their liquidation on a large scale. Nothing would so hinder any possibility of recovery. Bank and insurance failures destroy confidence and spread disaster and fear throughout the economic world. The present volume of money would diminish with increased hoarding and decreased credit and velocity, making for further deflation and requiring increased Government support without beneficial results until we would be forced from the gold standard in spite of our 40 per cent of the world’s gold, and, at that point, an undesirable and possibly an uncontrolled inflation with all its attendant evils would likely result, and thus the very action designed to preserve the gold standard and re-establish confidence would destroy both.

[page 13]

We have nearly one and a half billion currency more in circulation at the present time than we had at the peak of 1929, and under our present money system we are able to increase this by several billion more without resorting to any of the three inflationary measures popularly advocated. There is sufficient money available in our present system to adequately adjust our present price structure. Our price structure depends more upon the velocity of money than it does upon its volume.

* * *

In 1929 the high level of prices was supported by a corresponding velocity of credit. The last Federal Reserve Bulletin gives an illuminating picture of this relationship as shown by figures of all member banks. From 1923 to 1925 the turnover of deposits fluctuated from 26 to 32 times per year. From the autumn of 1925 to 1929 the turnover rose to 45 times per year. In 1930, with deposits still increasing, the turnover declined at the year end to 26 times. During the last quarter of 1932 the turnover dropped to 16 times per year. Note that from the high price level of 1929 to the low level of the present this turnover has declined from 45 to 16, or 64 per cent.

[page 14]

I repeat there is plenty of money today to bring about a restoration of prices, but the chief trouble is that it is in the wrong place; it is concentrated in the larger financial centers of the country, the creditor sections, leaving a great portion of the back country, or the debtor sections, drained dry and making it appear that there is a great shortage of money and that it is, therefore, necessary for the Government to print more. This maldistribution of our money supply is the result of the relationship between debtor and creditor sections – just the same as the realtion between this as a creditor nation and another nation as a debtor nation – and the development of our industries into vast systems concentrated in the larger centers. During the period of the depression the creditor sections have acted on our system like a great suction pump, drawing a large portion of the available income and deposits in payment of interest, debts, insurance and dividends as well as in the transfer of balances by the larger corporations normally carried throughout the country.

[page 15]

The maladjustment referred to must be corrected before there can be the necessary velocity of money. I see no way of correcting this situation except through Government action.

[page 21]

Mr Eccles: Of course, the way I look at this matter is that we have the power to produce, just as in the period of prosperity after the war demonstrated when we had a standard of living for a period from 1921 to 1929 which, of course, was far in excess of what it is now. Yet in spite of that standard of living we saved too much a I have previously tried to show.

Senator Gore: You have got Foster in the back of your head?

Mr Eccles: I only wish there were more who had. We saved too much in this regard, that we added too much to our capital equipment. Creating overproduction in one case and underconsumption in the other because of an uneconomic distribution of wealth production. . . . Of course, we are losing $2,000,000,000 per month in unemployment. I can conceive of no greater waste than the waste of reducing our national income about half of what it was. I can not conceive of any waste as great as that. Labor, after all, is our only source of wealth.

[page 22]

There could be no waste in post offices or in roads or in schools. You would have something to show for it. With war all you have left is the expense of taking care of maimed and crippled and sick veterans. That is what is left from war. And it is all wastage.

Senator Gore: You have touched the point. The real cause of the existing trouble was the war, with destruction of over 300 billion dollars of wealth in four years. We are paying the price now. The boys paid the price in blood on the field. We are paying the economic price today. And you may just as well pass a resolution to raise the dead that fell in France as to try to pass laws to avert the inevitable consequences of that war.

Mr Eccles: It is true we are suffering the consequences of the war, but there is no reason why we should be suffering from the consequences of the war if it had not been for the international or the interallied debt that resulted from it. WE are suffering from a debt structure. We are not suffering from the waste, because after all, we know today that we have the power and the facilities to produce certainly all that the people of this country need and want.

* * *

We now see, after nearly four years of depression, that private capital will not go into public works or self-liquidating projects except through government and that if we leave our “rugged individual” to follow his own interest under these conditions he does precisely the wrong thing. Each corporation for its own protection discharges men, reduces pay rolls, curtails its orders for raw materials, postpones construction of new plants and pays off bank loans, adding to the surplus of unusable funds. Every single thing it does to reduce the flow of money makes the situation worse for business as a whole.

[page 24]

I am talking about private credit. If it is credit we need why do not say 200 of our great corporations controlling 40 per cent of our industrial output that are in such shape that they do not need credit – they have great amounts of surplus funds – if it is credit that is needed why do they not put men to work? For the very reason that there is not a demand for goods, that we have destroyed the ability to buy at the source through the operation of our capitalistic system, which has brought about such a maldistribution of wealth production that it has gravitated and gravitated into the hands of – well, comparatively few. Maybe several millions of people. We have still got the unemployment and have got no buying power as a result.

[page 25 – proposal of bank deposit insurance and failed bank resolution]

[page 27 – laying out the basis for what was later to be the FDIC]

However, there is always this danger about that class of thing [Government guarantee of bank deposits]. It encourages bad practices and bad management. It may put a premium on them, which of course we do not want to do, and if it is done there must be rules and regulations for the proper conduct of banks requiring eligibility, and if they fail to meet the eligibility they would be suspended after so much notice, and the fund would be drawn upon to take care of any loss.

[page 31]

Farm mortgages at present are possibly the most undesirable and frozen of all loans, and frozen loans are preventing, to some extent, the necessary expansion of credit. The plan I have proposed [to refinance existing farm mortgages at new lower rates] will very effectively and immediately make liquid billions of dollars of assets for which there is no market today, while at the same time it will bring about a reduction of at least one-third of the average annual payments on the farm debt now required to be made by farm mortgage debtors without requiring any financing or loss by the Federal Government, thus bringing about the necessary relief in the farm mortgage field. This plan has the advantage, as a result of the Government guarantee of the Federal land bank bonds, of diverting surplus funds carried in the great creditor sections into the indirect financing of farm mortgages where it is impossible even at a high rate of interest, which farmers can not pay, to attract those funds directly.

* * *

No program designed to bring this country out of the depression can be considered apart from the relations of this country to the rest of the world unless a policy of complete isolation is adopted and an embargo put on gold exports and our domestic economy adjusted to meet such a condition.

Our international problems are far more difficult and will be slower to work out because of our inability to control the action of other nations. These problems can be met only through international conferences over a period of time. The most important of these problems and the one which must be settled before any progress can be made in the meeting of our domestic or other foreign problems is the problem of interallied debts.

There is a great demand on the part of the public and most of the press of this country that these debts be paid. It seems to me that our political leaders have lacked the courage to face this problem in a realistic manner. This has greatly contributed to prolonging the depression. The public, generally speaking, is not fully informed as to the impossibility of our foreign debtors complying with these demands, which cn only be complied with at the expense of our own people.

[page 32]

It is elementary that debts between nations can ultimately be paid only in goods, gold, or services, or a combination of the three. We already have over 40 per cent of the gold supply of the world – that is not true; it is between 35 and 40 per cent – and as a result most of the former gold standard countries have been forced to leave that standard and currency inflation has been the result. This has greatly reduced the cost of producing foreign goods in terms of our dollar and has made it almost impossible for foreign countries to buy American goods because of the high price of our dollar measured in the depreciated value of their money. This naturally has resulted in debtors trying to meet their obligations by producing and selling more than they buy, thus enabling them to have a favourable balance of trade necessary to meet their obligations to us. If this country is to receive payment of foreign debts, it must buy and consume more than it produces, thus creating a trade balance favourable to our debtors.

* * *

We must choose either between accepting sufficient foreign goods to pay the foreign debts owing to this country, or cancel the debts. This is not a moral problem, but a mathematical one.

[page 33 – the outline of what later became the Bretton Woods Accord]

Cancellation, or a settlement of the debts on a basis which would practically amount to cancellation, in exchange for stabilisation of the currency of the debtors, together with certain trade concessions and an agreement to reduce armaments would be a small price for this country to pay as compared with the great benefits which the entire world, including ourselves, would derive therefrom. Without a stabilisation of foreign currencies it will be difficult, if not impossible, in my opinion, to substantially raise the price level in this country as long as we stay on a gold basis. Our debtors will default and we will likely be forced to abandon gold and depreciate our currency in relation to that of other countries in order to raise our price level in this country and to meet foreign competition unless we are instrumental in inducing foreign countries to stabilise their currencies on a gold basis, or gold and silver basis if action is taken internationally to remonetise silver.

[page 33]

Senator Shortridge: Then I take it you would have the tariffs reduced?

Mr Eccles: No. Debts cancelled. Then I think with the prosperity that you would get in this country you can collect more than that in income and inheritance taxes when you stop this loss of $2,000,000,000 a month through unemployment. You start the process of wealth, and even a capitalist is far better off. I am a capitalist.

* * *

The program which I have proposed is largely of an emergency nature designed to bring rapid economic recovery. However, when recovery is restored, I believe that in order to avoid future disastrous depressions and sustain a balanced prosperity, it will be necessary during the next few years for the Government to assume a greater control and regulation of our entire economic system. There must be a more equitable distribution of wealth production in order to keep purchasing power in a more even balance with production.

If this is to be accomplished there should be a unification of our banking system under the supervision of the Federal Reserve Bank in order to more effectively control our entire money and credit system; a high income and inheritance tax is essential in order to control capital accumulations (this diversion of taxes should be left solely to the central government – the real property and sales tax left to the States); there should be national child labor, minimum wage, unemployment insurance and old age pension laws (such laws left up to the States only create confusion and can not meet the situation nationally unless similar and uniform laws are passed by all States at the same time, which is improbable); all new capital issues offered to the public and all foreign financing should receive the approval of an agency of the Federal Government; this control should also extend to all means of transportation and communication so as to ensure their operation in the public interest. A national planning board, similar to the industries board during the war, is necessary to the proper coordination of public and private activities of the economic world.

Such measures as I have proposed may frighten those of our people who possess wealth. However, they should feel reassured in reflecting upon the following quotation from one of our leading economists:

It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

[page 35]
I feel that one of two things is inevitable: That either we have got to take a chance on meeting this unemployment problem and this low-price problem or we are going to get a collapse of our credit structure, which means a collapse of our capitalistic system, and we will then start over. And I therefore would like to see us attempt to regulate and operate our economy which today requires more action from the top due to our entire interdependency than it did in our earlier days.

The quote I have bolded is my favorite part of this testimony, though it is not Eccles' own words. I would be grateful for anyone who can track down a proper citation for the quote. Eccles thought it was either Stuart Chase or William Trufant Foster.

If you've made it this far, you might also enjoy: Fisher's Debt Deflation Theory of Great Depressions and a possible revision