Union Interest-Bearing Note, 1864: To finance the Civil War, the Union authorized the first issue of paper money by the government since the Continentals. These 'demand notes' were printed for about a year in $5, $10, and $20 denominations, redeemable in coins on demand, and green in color — (which is where the phrase "greenbacks" comes from). About $10 million in notes were issued. These notes, and all paper money issued since 1861, are still valid and redeemable in current cash at face value. No interest was charged and, most importantly, private banking institutions were out of the loop.
What if there was a financial system that would eliminate the need for the federal government to go into debt, that would eliminate the need for the Federal Reserve, that would end the practice of fractional reserve banking and that would dethrone the big banks? Would you be in favor of such a system? A surprising new IMF research paper entitled "
The Chicago Plan Revisited" by Jaromir Benes and Michael Kumhof is making waves in economic circles all over the globe.
The paper suggests that the world would be much better off if we adopted a system where the banks did not create our money. So instead of a system where more money is only created when more debt is created, we would have a system of debt-free money that is created directly by national governments. There have been others that
have suggested such a system before, but to have an IMF research paper actually recommend that such a system be adopted is a very big deal. At the moment, the world is experiencing the biggest debt crisis in human history, and this proposal is being described as a "radical solution" that could potentially remedy some of our largest financial problems. Unfortunately, apologists for the current system are already viciously attacking this new IMF paper, and of course the big banks would throw a major fit if such a system was ever to be seriously contemplated. That is why it is imperative that we educate people about how money really works. Our current system is in the process of collapsing and we desperately need to transition to a new one.
One of the fundamental problems with our current financial system is that it is based on debt. Just take a look at the United States. The way our system works today, the vast majority of all money is "created" either when we borrow money or the government borrows money. Therefore, the creation of more money
creates more debt. Under such a system, it should not be surprising that the total amount of debt in the United States is
more than 30 times larger than it was just 40 years ago.
Comment: A great educational resource on banking systems and banking reform is Web of Debt by Ellen Brown of the Public Banking Institute