THE MONEY QUESTION: Old and New
February 20, 2022
It turns out that The Money Question was a common topic of civic conversation in colonial U.S. and early U.S. history. In 1913, the adoption of the Federal Reserve Act, which privatized the U.S. money system “permanently”, seemed to put an end to public discussion about The Money Question.
I first learned about The Money Question at the age of 67 (in 2018) when a colleague alerted monetary reform folks in the Chicago area to a new book by a history professor based at U. of Illinois-Chicago: Sovereign of the Market: The Money Question in Early America, by Jeffrey Sklansky. This knowledge, coupled with Stephen Zarlenga’s description of the U.S. as a laboratory for the science of money, woke me up to money as an unfinished human construct, capable of myriads of manipulations, corruptions, and confusions.
It turns out that “sovereign of the market” is also a phrase from that era, but that’s another story and perhaps speaks to the general confusion between the creation of money itself — the currency, The Money Question, on the one hand — and other features of a money economy, on the other, e.g., the market.
Now in 2022, as the money supply is diminishing faster and faster, it seems as if the U.S. public is ready to start the conversation again:
— Who creates new U.S. money? Who should create new U.S. money?
— How does new U.S. money enter the economy? How should it enter the economy?
— According to what principles and rules, decided by whom?
People in the rest of the world, who’ve also experienced the devastating consequences of a privately controlled money and banking system and global economy (engineered and refined with the help and leadership of the U.S. government), are both cheering U.S. voters on and having their own conversations about patriarchal economics.
Luckily, over the last 15-25 years, numerous groups, scholars, grassroots activists, etc., have been exploring The Money Question and other aspects of our increasingly financialized economies. Personally, I work on a number of monetary and banking reforms, all of which are necessary in order to realize our American ideals. These include public banking, funded sovereignty (guaranteed basic income for all voters), and economic metrics that reflect reality (e.g., Genuine Progress Indicator instead of GDP).
In this blog, I concentrate on the core issue, The Money Question, starting with early America, as explained by Jeffrey Sklansky. Section #2 contains my new proposal — a new version of The Money Question and a new version of my answer.
1. THE MONEY QUESTION in Early America
2. MY PROPOSAL: A new version of The Money Question with a new suggested answer
3. NEXT STEPS?
4. SUGGESTED FIRST PRIORITIES for a women-run Monetary Authority
1. THE MONEY QUESTION in Early America
a. BOOK: Sovereign of the Market: The Money Question in Early America
The publisher’s blurb of Sklansky’s book (U. of Chicago Press, 2017) reads as follows:
What should serve as money, who should control its creation and circulation, and according to what rules? For more than two hundred years, the “money question” shaped American social thought, becoming a central subject of political debate and class conflict. Sovereign of the Market reveals how and why this happened.
Jeffrey Sklansky’s wide-ranging study comprises three chronological parts devoted to major episodes in the career of the money question. First, the fight over the innovation of paper money in colonial New England. Second, the battle over the development of commercial banking in the new United States. And third, the struggle over the national banking system and the international gold standard in the late nineteenth century. Each section explores a broader problem of power that framed each conflict in successive phases of capitalist development: circulation, representation, and association. The three parts also encompass intellectual biographies of opposing reformers for each period, shedding new light on the connections between economic thought and other aspects of early American culture. The result is a fascinating, insightful, and deeply considered contribution to the history of capitalism.
The Table of Contents:
Introduction: The Elusive Sovereign
Part I Paper Money and the Problem of Circulation in the Colonial Era
1 John Wise and the Natural Law of Commerce
2 William Douglass and the Natural History of Credit
Part II Commercial Banking and the Problem of Representation in the Jacksonian Era
3 William Leggett and the Melodrama of the Market
4 Nicholas Biddle and the Beauty of Banking
Part III Big Business and the Problem of Association in the Gilded Age and Progressive Era
5 Charles Macune and the Currency of Cooperation
6 Charles Conant and the Fund of Trust Conclusion
b. VIDEO: The Money Question in American History
In Nov. 2021, Sklansky gave a presentation at the 17th annual American Monetary Institute conference about his book. It’s only 30 minutes and well worth listening to because Sklansky’s case studies really crack open the question of what money is, who creates, etc.
Of particular interest to me, as someone who always thought Karl Marx was missing something (and that 21st century Marxists are still missing that something), is Sklansky’s discussion about the marketplace vs. the workplace at about 15:30, especially this observation:
“Capitalism was a question about the organization of money, as well as about the organization of labor — indeed before it was about labor.”
“And even long after most Americans became accustomed to being paid for their labors and being paid for their subsistence, they persisted in treating the mode of payment as an urgent political question rather than a foregone conclusion. I think that’s why the subjects of money and banking gave rise to such long, sustained and deep-rooted conflict in America, as Glen Davies put it.
“One purpose of my book is to show that the labor question and the money question went together for 19th century Americans, forming flip sides of the question of capitalism in the discourse of labor leaders and currency crusaders alike, from the workingman’s movement of the 1820s and 30s to the populist movement of the 1880s and 90s.”
The presentation ends with a reference to cryptocurrencies (digital currency):
27:30 “What is really at stake is not financial technology, but financial democracy. Now is then. What matters most is not the material form of money, but who manages it.”
2. MY PROPOSAL: A new version of The Money Question
with a new suggested answer
In 2019, I posted a 23-page autobiographical analysis of money and governance in the U.S. It is titled The Money Question, The Democracy Answer and is still my pinned Tweet at the top of my Twitter timeline.
My new version of The Money Question is not substantively different than Sklansky’s or my own original version. Nor is my new suggested answer a cancellation of my original one: Democracy.
The new question and new answer do add specific context, however, which, as a public policy strategist, I’ve found to be very helpful in lobbying and passing bills. Updated language is also useful in reaching legislators, voters, and other officials. More to the point, I believe that the new question and new answer increase the likelihood that they will be considered and possibly implemented.
In a financial democracy, who should manage money creation and distribution?
Who should be the Monetary Authority in the U.S.?
“Monetary Authority” is a term used in the 2012 NEED Act (the primary focus of U.S. monetary reform activism, through American Monetary Institute), now being updated under the name of American Monetary Reform Act (AMRA) by AMI’s action spin-off, Alliance For Just Money.
Unfortunately, our current monetary authority — the Fed — is totally discounting the pain and suffering of U.S. people vis-a-vis a fast diminishing money supply. Here’s the telltale paragraphs from the Fed’s webpage on Money Supply:
“Over some periods, measures of the money supply have exhibited fairly close relationships with important economic variables such as nominal gross domestic product (GDP) and the price level. Based partly on these relationships, some economists—Milton Friedman being the most famous example—have argued that the money supply provides important information about the near-term course for the economy and determines the level of prices and inflation in the long run. Central banks, including the Federal Reserve, have at times used measures of the money supply as an important guide in the conduct of monetary policy.
“Over recent decades, however, the relationships between various measures of the money supply and variables such as GDP growth and inflation in the United States have been quite unstable. As a result, the importance of the money supply as a guide for the conduct of monetary policy in the United States has diminished over time. The Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System, still regularly reviews money supply data in conducting monetary policy, but money supply figures are just part of a wide array of financial and economic data that policymakers review.”
It seems as if the U.S. monetary authority should be a group of people who both notice and understand the pain and suffering caused by a diminshed money supply.
Thus, I propose that mature women would make the best Monetary Authority for the U.S. as having the skills and spiritual inclination to both (a) notice and understand the suffering caused by a diminished money supply, and (b) best implement the still unmanifested ideals of the U.S. I call this “women’s public authority” — as a Twitter hashtag, #WomensPublicAuthority.
To better understand the term “mature women”, I look to Barbara Alice Mann’s 2000 book, Iroquoian Women: The Gantowisas. On page 16, Prof. Mann defines Gantowisas:
An Iroquoian equivalent of “woman” is gantowisas, yet the term conveys more than woman. She is political woman, faith keeping woman, mediating woman; leader, counselor, judge. Gantowisas indicates mother, grandmother, and even the Mother of Nations, as well as the Corn Mother, Herself, whose shining new face lies beneath the ground to rise again, each year. In the first decades of the twentieth century, the revered Cayuga Chief Deskaheh (1873-1925) of the Canadian Six Nations Council at Grand River, Canada, defined gantowisas as a mature woman acting in her official capacity. Her official capacity was public in every way. Her duties were frankly political, economic, judicial, and shamanic. Gantowisas, then means Indispensable Woman.
There are other key structural differences between the U.S. Constitution and the Great Law of Peace that would facilitate such a Monetary Authority’s ability to implement a fair economy for all. I first described these structural differences in a 2018 blog, In Case of Constitutional Crisis…Start here: The Great Law of Peace. It’s worth reviewing those differences here, in one place:
Foundational Structures of the Great Law of Peace
Most of these basic structures are codified in the Great Law of Peace and discussed in great detail inIroquoian Women: The Gantowisas. Some are discussed in the Native American resources included in my blog.
Political structures(bicameral self-governance for 500+ years)
Women’s councils + men’s councils
— 100% inclusion: all adults
— Living document (ease of amendment): 5-year sunset clause
Responsibilities of women’s councils:
— Set the agenda for men’s councils (including preferred options)
— Appoint and remove chiefs
— Initiate and end war
— Funded sovereignty: basic income
— Reciprocal economics: gift economy (absence of “bullyboy” economics)
— Distribution hubs: clan mothers
— Women: farming
— Men: forestry, hunting, fishing
— Full personal liberty for all
— Legal identity, record-keeping: clan mothersEducation, spiritual responsibilities
So that 21st century westerners can best understand the powers of Iroquoian women, Prof. Mann uses western governmental terms for their public responsibilities. On page 228, she calls the gantowisas “the Exchequer of the League” because, as a Jesuit observer, Joseph Lafitau, wrote in the early 1700s, women “hold the taxes and the public treasure”.
On page 236, Mann describes the central economic mechanism of the Haudenosaunee League, Gifting — “the Keeping, selection, and distribution of the gift-goods and the management of the feasts associated with them”. She then identifies who was in charge: “The gantowisas were not the scullery maids of the League….They were its Federal Reserve Board.”
3. NEXT STEPS?
a. How would the Monetary Authority be structured?
What would be the mission statement — what are the specific characteristics of a financial democracy? That would be for the women of the U.S. to say.
For research purposes, see Sec. 302. Establishment of the U.S. Monetary Authority, p. 12-15 of the current draft of AMRA (July 2021). The basic substance is contained in the following two clauses:
(4) DUTIES.—The Monetary Authority shall—
(A) establish monetary supply policy and monitor the Nation’s monetary status; and
(B) carry out such other responsibilities as the President may delegate to the Monetary Authority or that may be provided by an Act of Congress.
(5) GOVERNING PRINCIPLE OF MONETARY POLICY.—The Monetary Authority shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner. The Monetary Authority shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long- term interest rates.
b. How would we decide?
How can all U.S. women participate in designing the Monetary Authority that works for everyone?
That’s another question for another time.
AKA I don’t know right this minute but I’m working on it.
4. SUGGESTED FIRST PRIORITIES for a women-run Monetary Authority
Here are my first thoughts on basic needs that a women-designed and women-run Monetary Authority might prioritize:
a. Restore our Mother, the Earth: soil, water, air
b. Food, housing, etc., for all children
c. Create and support women’s spaces, designed and run by women, such as
— Red Tents in every neighborhood, per DeAnna Lam (based in California)
— “Positive” birthing centers, per Milli Hill in UK (I’m not currently aware of any similar U.S. organization)
d. Funded sovereignty: Guaranteed basic income for all voters (to enable every U.S. voter to spend 5-10 hours/week implementing democracy)