Will Obama Like Lincoln Print GreenBacks to Save America

[keep_it_real]

In the civil war in order to save America President Lincoln printed "greenbacks" to save America - will President Obama do the same?

Why did Lincoln print greenbacks? What kind of money were greenbacks?

[babylonsister]

1. Why don't you tell us? nt

[rockymountaindem]

2. The situations are not analogous

I'm not sure what you're driving at.

[keep_it_real]

4. They are analogous if you know your history.

American was in a economic cries as America is today. In order to fund the war Lincoln had to borrow money from private bankers and plunge the US government into debt to the bankers but Lincoln did not do that he printed greenbacks that were DEBT free and funded the war and saved the US government.

They don't teach you this is college.

[rockymountaindem]

6. Okay....

I guess the fact that there was essentially no single American currency with which to pay for war goods, or soldiers' salaries, didn't play into it at all? It was more than an inflationary measure, it was designed to put everybody on the same footing so that the war economy could function smoothly across all the states in an era when most currency was issued in the form of bank notes. That gave the Union a distinct advantage (and appeal over) the Confederacy, whose methods of payment were considerably more shaky.

Seeing as how the US does have a single currency today, thanks to Lincoln, and that the US is not in the middle of the most expensive war in our history, the interest in such inflationary policy (at least of that character) would be considerably diminished.

[keep_it_real]

8. To quote you

"Seeing as how the US does have a single currency today, thanks to Lincoln, and that the US is not in the middle of the most expensive war in our history, the interest in such inflationary policy (at least of that character) would be considerably diminished."

Yes, American does have currency today but the currency that America has today is DEBT money and not DEBT FREE greenbacks - do you understand the DIFFERENCE between "debt free greenbacks" and the DEBT money that we have today? Be honest and say you do not understand the difference. Don't be egotistical and act like you understand. Nothing wrong in admitting you do not know - i was like you and did not know also but i had sense enough to know when i did not know something and reached out for knowledge on the subject.

[rockymountaindem]

9. Wait wait wait

If by "not understanding" you mean "I have no idea what the heck you're talking about", then yes. If you think I don't understand the difference between taking on debt or following an inherently inflationary policy by printing money, then you're mistaken. Are you suggesting that the better choice for our current financial straits would be for the government to gin up a bunch of new $100 bills and hand them over to our creditors?

And with regard to egotism, don't step on any broken shards in that glass house of yours, Professor Condescension.

[keep_it_real]

11. would be for the government to gin up a bunch of new $100 bills and hand them over to our creditors?

Yes, that is what Lincoln did and they would be backed by the "full faith and CREDIT of the US Government by the people and for the people" - now do you think there is anything on the planet Earth that is greater than the "full faith and CREDIT of the US Government"?

[rockymountaindem]

12. If Lincoln's money was backed by "full faith and credit" how is that not debt?

Are you going to make an argument or keep stringing this along until I say what you want to hear?

[keep_it_real]

15. Because there was no INTEREST attached to the greenbacks . . .

The the private banks issue a loan they create money out of thin air, the amount of the loan and the interest on the loan but there was not interest connected to the greenbacks or the US Dollar that JFK created.

Look step back and ask yourself "am I missing something here?" And the answer is "yes, your are missing a piece of knowledge here that will pull the whole puzzle together" - but you have to recognize that you don't know and ask for the knowledge the key to the puzzle.

See I KNOW you don't know cause I was right were you are at; I know what state you are in on this subject.

[rockymountaindem]

16. Ok, I'm an idiot. Tell me.

[anigbrowl]

31. You're missing something...an understanding of banking.

the only reason greenbacks were 'debt free' is because Lincoln intended to seize gold to back them. I think you are wildly overestimating your own understanding of finance and economics, sorry. Let's check: where do profits from the federal reserve go?

[Truth2Tell]

34. *sigh* Not this again.

The direct profits of the Fed are returned to the Treasury. Yes. But the member banks make the real bulk of the lending profits themselves by virtue of their access to special rate Fed funds. Just borrowing at the Fed window and turning around and buying 30 year Treasury bonds has made the owners of the member banks Billions. And this is a zero sum activity so their gain is someone's loss, primarily the taxpayers.

[anigbrowl]

35. That doesn't really make sense when you think about it

I mean, if that were such a surefire winner, why bother dealing with the public at all? In reality, the banks buy bonds to hedge the risks they take on equities and direct lending to customers and small businesses (which everyone likes, but is in fact one of the most risky activities for a bank to undertake in normal times).

But we're not going to agree on this. You think all financial institutions are an invention of Satan and I don't expect to convince you otherwise.

[Truth2Tell]

37. Do you suggest that the Fed

shareholding banks have NOT made Billions by virtue of their access to cheap Fed money? Those "most risky" activities that the oh-so-benevolent bankers have generously undertaken have worked out pretty well for them I'd say. But at least they took that "risk" off the plate of the Government and the taxpayers. Whew, we sure dodged a multi-Billion dollar profit bullet there.

[anigbrowl]

39. Over what period

Since the inception of the federal reserve, sure. But what you suggest isn't a big source of their profit. Some risky activities have worked out for them, some not. I mentioned small business loans because they tend to have a particularly high risk of default. there's a good survey in the current Economist about the state of the banking system, which should put a smile on your face as it goes into some detail about how much bank shareholders and bondholders have lost. http://www.economist.com/specialreports/displayStory.cfm?story_id=13604663

[Truth2Tell]

40. Conservative lenders can manage risk.

What I suggested in regard to 30-year bonds has indeed been a major source of profit to Fed shareholder banks, but only one of many. There is no escaping the fact that "member" banks of the Fed have benefited enormously from their access to cut-rate capital. A few points can make a lifetime of difference, as I'm sure you well understand. The suggestion that they have somehow borne some great risk on our behalf by assuming the role of central bankers is ludicrous.

I don't buy the vast conspiracy theories about the Fed, nor do I endorse this particular OP. But I do think the "partial privatization" of our central banking has resulted in some long-time gorging at the trough by a handful of participants. And that behavior has had opportunity costs for all of us.

[anigbrowl]

41. yes...by buying bonds

I don't disagree with you that bankers are greedy and will take advantage of whatever favorable terms they can get. However, I don't think there's anything fundamentally wrong with the central (not commercial or investment) banking model as practiced here - ie a central bank separate from the treasury, with whom large commercial banks maintain funds on deposit. It's imperfect in many ways, but countries where the central bank is under direct control of the treasury seem to be subject to even greater levels of fiscal instability.

I don't know any country where the latter works really well, unless you count tiny countries like Andorra or such which have good balance sheets but unusual economies that don't really scale to any feasible size (Andorra is a tiny tiny country between France and Spain, which makes 80% of its income from tourism - it is very financially stable but the whole country is only 75,000 people. Some libertarian I was talking to recently suggested it as a better model than France, just as some folks on the left look at one good aspect of Cuba and ignore the multiple problems that would occur if you tried to scale up the Cuban model to the size of the US. This isn't directed at you, particularly).

I don't know how you got the idea that I was saying they'd borne great risk by assuming the role of central bankers. I was just pointing out that some of the most publicly-approved banking activities are actually among the riskiest and most in need of hedging. Iceland's recent encounter with big finance is educational in that regard (good solid economy to begin with, then the Icelanders convince themselves that they're financial gods, can do no wrong, and spend themselves into oblivion).

[Truth2Tell]

42. I don't see the evidence to suggest

that countries with central banks tied to their treasuries are subject to higher levels of instability. And as you point out, the examples are limited enough and the circumstances are unique enough - on both sides of the coin - that it's difficult to draw any solid conclusions either way. There is however, no logical reason that should be the case. Yes, naturally central banks controlled fully by central governments are subject to more political influence than central banks on the public/private model. But I've seen no evidence that arrangement is any more corrupted - particularly within a properly functioning democracy - than an arrangement like ours - subject in part to the unregulated greed of private individuals.

[anigbrowl]

43. Well, Zimbabwe would be the current example of how badly that can go wrong.

[Truth2Tell]

45. Perfect example of unique circumstances.

And not exactly a properly functioning democracy.

[anigbrowl]

46. It's on example among many, just the one that happens to be in the news right now

There's nothing particularly unique about greed and corruption. They're widespread, in fact. And to the extent that they're present in government, they'll debase a country's currency for short-term political gain. An independent central bank is not foolproof, but by having a separation of fiscal powers it acts as a brake - just the same way that having separate executive, legislative and judicial branches of government tends to work better than a unitary form, despite the many flaws and contradictions that result.

[Truth2Tell]

47. That's some twisted logic right there. Individuals independent of government

are equally capable of malfeasance and debasement. The logic of removing critical social functions from government control and placing them in the hands of private individuals to avoid potential abuse or corruption makes no more sense applied to banking than it does to anything else. Frankly that's part of the same far-right rationale used to justify privatizing the military or social security or social services like health care and education. If you don't think a democratic government can be trusted to manage our currency then it seems to me you aren't really much a believer in democratic governance.

[anigbrowl]

48. That's why we have checks and balances.

Far right rationale my ass. good day.

[Truth2Tell]

49. Checks and balances in a democracy operate

between branches of government, not between the government and corrupt oligarchs.

Good day back at ya.

[Thothmes]

26. Would doubt that Abraham Lincoln

would ever claim that he saved the U.S.Government His aim and result was that he saved the United States.

[tritsofme]

3. Please tell us how magical greenbacks can Save America!

Do they have to be green?

[Rosa Luxemburg]

5. who is the guy on the $5 dollar bills?

[keep_it_real]

7. The very fact that you have to ask the question means you don't

Know the true history of America but only what you have been fed in some class room or what the media has told you.

The greenbacks were interest free. Every Federal Dollar note that we use today as currency is created by the private banks along with interest that must be paid to the private banks but the founding founders want all interest paid on loans in the US to be created by US national banks so that the interest on these loans went to the government. And the Benjamin Francklin believed that it was the right only of the Congress to create money through loans and the issuing of credit.

Find out more here:
http://www.webofdebt.com/

[tritsofme]

14. Believe me, I know all about these nuts.

The reason that President Obama will most certainly not be taking the advice of your esteemed colleagues, is that they are not part of the serious conversation, and the adults are in charge.

[Name removed]

17. Deleted message

Message removed by moderator. Click here to review the message board rules.

[tritsofme]

20. You stumbled on the path of some conspiracy theorists.

And now you think the crap they spew is somehow significant.

It isn't. Its just some guy yelling on the corner.

[keep_it_real]

22. Maybe there is something here but you don't get it.

Look, the powers that be already have us on an eternal treadmill everyday to nowhere but death; so we have already lost and are losing everyday; now take a chance on winning once on your treadmill life:

http://www.webofdebt.com/

[tritsofme]

23. There have been people out there pushing apocalyptic theories of doom for ages.

That's all it is.

I hope your friend at that website sells a lot of books and makes a lot of money.

But as I said, he is not part of a serious discussion. Not even on the radar.

[keep_it_real]

19. It is tool long a story for me to tell but here you go; go for it!

http://www.webofdebt.com/

[islandmkl]

10. please explain how the 'debt-free' part worked...

i don't doubt for a second that Lincoln printed the money, for all the reasons you have given...

but, you have totally failed to explain how merely printing money made it 'debt-free'...

was it the gold backing it or what??

[keep_it_real]

21. Here is your answer: it is too long a story for me to tell

http://www.webofdebt.com/

[anigbrowl]

33. If you really got it, it would be simple to explain

Go ahead, buy the book. I bet about 75 pages in they'll start in with the 'why you don't have to pay income tax' line, and a few pages later you'll be wondering why you were dumb enough to spend $19.99 or whatever it is on buying one of the oldest right-wing conspiracy theories on the net.

[Art_from_Ark]

13. "Greenbacks" was a derogatory term,

like "shinplasters" (fractional paper currency). Paper money was hated in the day of Lincoln and was often accepted at a discount to gold or silver.

[keep_it_real]

18. The Right of the US government to Print money was GREATER

Than paper money backed by gold or silver. Lincoln KNEW this. Paper money backed by gold or silver is just another ILLUSION that you have to learn to see through.

The governments RIGHT to print its money, any and all governments on planet earth, IS THE GREATEST.

[Art_from_Ark]

24. Gold and silver were mandated by the Constitution

What Lincoln did was viewed as being unconstitutional, especially given the country's previous experiences with paper money. So why did Lincoln have vision, but Jefferson Davis failed miserably, even though they both tried to finance their wars with unbacked paper?

[Thothmes]

27. Abe was able to buy larger armies and more higher quality equipment.

[Art_from_Ark]

28. Would Abe have been able to do that

if his paper had only been backed by cotton? Or did the promise of payment in specie from the gold fields of California, the silver bonanza that was the Comstock Lode, and the new mines that were opening up in the Union-held West have something to with it?

At any rate, the average citizen hated paper, and a $5 gold piece, or even $5 dollars in silver, had more purchasing power than $5 in Uncle Abe's paper.

[Thothmes]

29. Abe's money was highly

valued in the south. Much more so than the paper printed by the Confederate Government.

[Art_from_Ark]

30. Southerners might have liked Abe's greenbacks

since their own currency became just so much wallpaper, but Northerners had a different view of them

From Wiki (although the same type of information appears in various numismatic publications as well):

"During the American Civil War, banking interests did not want United States Notes to be a legal tender to pay the national debt, so the Senate put in an exception clause, which allowed Government creditors to be paid in gold. Thaddeus Stevens, the Chairman of the House of Representatives Committee of Ways and Means which authored the original United States Notes bill to be a legal tender for all debts, denounced the Senate's amended exception clause, calling the new bill "mischievous" because it made United States Notes an intentionally depreciated currency for the masses, while the banks who loaned to the government got "sound money" in gold. However, it appeared necessary to allow the banks the exception clause, or else perhaps there would have been no other way to fund the civil war effort.

"At the end of the Civil War, the Radical Republicans, led by Abraham Lincoln and his economic advisor Henry Charles Carey sought to make the Greenback System permanent. In March 1865 Carey published a series of letters to the Speaker of the House of Representatives entitled The Way to Outdo England Without Fighting Her in which he called for the two-pronged financial strategy for post-war reconstruction of raising the Bank Adequacy Ratio to 50% and issuing public credit in the form of Greenbacks. However, Lincoln was assassinated in the next month and the United States then began to move towards a gold standard and contract the supply of greenbacks.

"U.S. notes were not immediately redeemable in gold. However, while the United States was on the gold standard, it was possible to redeem them for gold indirectly by exchanging them for a currency of a different obligation, for example a Gold Certificate. Whoever accepted the exchange was left with the less-trusted fiat currency. At the time United States Notes were issued, this was a serious concern, as the government sought to strike a balance between coin shortages and fiat currency. The greenback traded at a substantial discount from gold, which prompted Congress to pass the short-lived Anti-gold futures act of 1864 which was promptly repealed after it seemed to accelerate the decline of the greenback."

http://en.wikipedia.org/wiki/United_States_Note

[zbdent]

25. print money?

geez ... it's all electronic these days ...

Don't remember too many stories of someone paying for a car or house using actual physical money ... drug dealers, maybe ...

[Art_from_Ark]

32. I used real physical money to pay for my car

But I bought it in Japan, where such transactions are the norm rather than the exception.

[Occam Bandage]

36. Yes! Let's print our way out of this crisis! Weimar Republic, here we come! nt

[Old Hob]

38. What is quantitative easing? What is Ben Bernanke's solution to deflation?

Why did Lincoln have such a hardon for fiat currency anyways?

[ThomWV]

44. Such a funny question - no, because nobody uses cash anymore. Now they create credit instead.

Bingo!