Socialism and/or Populism in America

Both Socialism and Populism have been invoked during Bernie Sanders’ presidential campaign run and this has led to no small amount of conceptual confusion among the American people – myself included.  His rhetoric and record as a senator has been overwhelmingly anti-Wall Street, pro-worker, and, well, popular, so when I heard the label “Socialist” coming from the more conservative side from the mainstream media I thought it was another scare-tactic and then embraced it as a possible cure for our neoliberal malaise of debt-fueled Superimperialism [Michael Hudson’s latest on US Neoliberal Empire].  His brand of Socialism isn’t the type that conservatives would have you believe though, many avowed Socialists have even distanced themselves from Sanders.  It came as somewhat of a surprise, but more of a moment of clarity, when Douglas Edwards (@SebastosPublius) tweeted to me that he is not in fact a Socialist but still demands support from the left in the way he steers the conversation in the media away from compromise with wealthy financiers and corporate giants embedded within the political process [How Wall Street Is Burning Democracy].

Bernie Sanders is not a Socialist because Socialism means state ownership of the means of production, the effective nationalization of industry and seizure of the capital, materials, and distribution for a government operating in the name of “the people”, and that is not his platform.

On Bernie as a Socialistic Democrat, or Democratic Socialist (or whatever):

“the next time you hear me attacked as a socialist, remember this:

I don’t believe government should own the means of production, but I do believe that the middle class and the working families who produce the wealth of America deserve a fair deal.” [Source]

This makes Bernie Sanders definitively not a Socialist – and he shouldn’t be.  While the battle against the interest of the super-wealthy is just and necessary on our imperiled planet, Socialism never figured out a way of preventing the shoring up of power within a single party after the revolutions they helped accelerate. This consolidation of massive power within a single party is in no way democratic, which is why ‘democratic socialism’ is the term that the Sanders campaign has settled on.  These ghosts are too easily conjured up by reactionary apologists for Capitalism and American Imperial supremacy; the problem is that the wrong tradition of thought is being drawn on.   It would be a sad state of affairs if Bernie Sanders were defeated over a single label that he doesn’t even own.  Perhaps the only recourse for anti-capitalist, humanists, and those fighting for the interests of the great many, when it comes to imagining a just society in economic and political terms, in the recent past has been Socialism.


To be clear here, Socialism is and has been a theoretical framework that challenges Capitalism and seeks to solve its horrendous consequences by reappropriating the wealth, factories, products, etc. and redistributing it.  It is not the content of Socialism that people are demanding however, its main strength is in giving people a discourse with which to locate the main actors that are creating so much misery.  It is this appeal that has gotten people excited about electing a Socialist president (albeit in a lighter form [Bernie Sanders’ New Deal Socialism]).  However, there is another tradition of economic thought that fits in better with Sanders’ aspirations and the 99%’s as well, the only downside is that it has been suppressed from our cultural memory.

The other big word that is seeing a revived by Sanders’ campaign is “Populism”.  This word invokes a tradition that precedes Socialism as a body of thought and rallying cry by a few decades in the late nineteenth century – to those who know about it.  For a brief time, southern, mid-west, and many northern farmers in the wake of the Civil War were embroiled in a political insurrection against the dominant interests of the financial class in the east and the politicians they controlled.  Overburdened by a system called “crop-lien” and without recourse to anything but the two parties who wouldn’t listen to them, they got creative and formed their own party based on their own ideas for how the money system should work.  In fact, throughout the entire nineteenth century, and even late eighteenth century, the newly formed United States of America wrestled with itself over how the money system should work, who would benefit the most from it, and what, in general, it’s money would be.  In contrast to the Socialists, whose body of thought came from figures like Saint-Simon and was taken up and refined by the Proudhon’s and Marx’s in Europe, the Populists grew organically by burgeoning farmer-activists and American monetary theorists whose ideas didn’t stick in quite the same way.  Rather than talking about “the means of production” or “the proletarian working class” (these terms gained in significance and explanatory power during the era of mass industrialization, which had only just gotten underway in the era of Populism), they talked about money more openly as farmers with an urgent need for credit.  The image of the “independent farmer” of Thomas Jefferson’s vision was closer to people’s self-identification and they called economic crises “money shortages,” due in large part to the failure of the much reviled banks.

The Greenback Party argued a strong case for a more flexible currency that was not controlled by debt-wielding banks and their “gold-backed” banknotes and they preceded the Populists, who accepted their critique and broadened it to a larger swath of Americans. This by-and-large forgotten body of thought and history is far better suited for Bernie’s campaign to invoke.  Not only is populism “made-in-America” but it has a penetrating critique and solution for how to deal with the vice-grip that bankers and investors hold on the greater population in terms of both politics and, via their debt-money, economics.  There is no better place to look for a solution to what to do after Sander’s “political revolution” than America’s own history, coming straight from the masses of early American farmers themselves and the proposal for a money system that galvanized them.

The Sanders campaign has rightfully taken up the anti-Wall Street sentiment that has swept through the nation because they are the ones standing most directly in the way of meaningful change.  Lack of access to cheap credit and the reliance on bankers as the producers of money-for-debt are (I would argue) the single biggest barrier to altering business as usual and healing the planet of its growing fever [James Hansen’s latest report on Climate Change].  The greater left neglects the most crucial aspect of economics (money) by remaining within the entrenched mindset of materialist political economy (rooted in the works of David Ricardo, Adam Smith, John Stuart Mill, and Marx) and the Socialists who derived much of the fundamental tenets of their thought from.  Heck, if a modern day politician starting talking about Greenbackism and reforming the money system in the way that Americans used to, it could completely change the political landscape in a time when both political parties and their congress people are reviled by a great majority of the population but [Poll Ratings], for lack of a popular base and a robust third party organization, are unable to see beyond.  This is the political climate in which Bernie Sanders and Donald Trump have risen through parties that do not want them to win but enjoy far more support among their base than any other candidate they could groom.

Having heard a bit about the Populists and their monetary reform crusade, I picked up one of its brief histories by Lawrence Goodwyn on a tip from and activist friend.  I would highly recommend giving it a read, for Goodwyn gives a detailed account of a grassroots movement and explains what we would call the monetary theory that they relied on to save them from their destitution.  In what follows I would like to give an even more brief summary of the Populists, focusing on the systematic machinations of early American money and how they would have changed it had they been successful.

[Goodwyn, Lawrence. The Populist Moment. Oxford University Press, 1978 (link)]

The Populist Party rode to major success in the elections of early 1890’s that shook up the GOP, at the time as the Democrats controlling the South, forcing the Democratic Party to absorb them through political trickery or become fractured.  They got William Jennings Bryant to run for president for the Dems on a platform of monetary reform, but their message had been water-down to merely expanding the money supply with silver bullion instead of releasing the nation’s money from the grip of bankers entirely.  Silver would become the wedge that split the Populist Party and their radical (by our standards) monetary theory that would have released money from the illusion of a metallic backing.  Originally, the Populists wanted to bring back the Greenbacks that President Lincoln had issued to finance the Civil War without the help of banker’s high interest loans (25-35% – a nearly impossible sum to repay on such a large principle) and to allow credit to flow into the cooperative exchanges that the farmers had established to get better prices for their crops.  Nothing else they wanted or could create could work when the eastern financier elites and the merchant bulk supply purchasers they were in league with could simply choose not to do business with them until their cooperatives were broken apart and the purchasing prices lowered.  The farmers, journalists and movement organizers of the populists knew this through experience and strategy meetings: the only way to put a stop to their desperate poverty was to reform the money system and wrest the production of money from the hands of wealthy financiers.  It was a battle so vitally important to the soul of America that the victor was not satisfied with controlling the levers of money with their banks but insisted on destroying the very memory of the battle and the ideas they employed for fear of their resurrection.  Think that’s too strong?  Read the Hazard Circular written by the London financial capitalists for their American counterparts meant specifically to obscure the money question in politics and divide the population against itself before they figure it out. [The History of the Hazard Circular]


The “Greenback” United States Note

The major constraining force acting immediately on the farmers of America after the Civil War was the above mentioned “crop-lien” system.  It was by-and-large this system that kept farmers poor, disempowered, and sent many fleeing out west or into the cities to escape their debts.  Merchant supply houses controlled credit in the rural towns by lending out tools and materials needed to start a small farm.  The amount due to the creditors very often exceeded what farmers were able to gain from the crops they produced on their land at the harvest.  The problem was interest, and its accrual crushed indebted farmers:

“Acted out at as thousand merchant counters in the South after the Civil War, these scenes were so ubiquitous that to describe one is to convey a sense of them all.  The farmer, his eyes downcast, and his hat sometimes literally in his hand, approached the merchant with a list of his needs..  The man behind the counter consulted a ledger, and after a mumbled exchange, moved to his shelves to select the goods that would satisfy at least a  part of his customer’s wants.  Rarely did the farmer receive the range of items or even the quantity of one item he had requested.  No money changed hands; the merchant merely made brief notations in his ledger. Two weeks or a  month later, the farmer would return, the consultation would recur, the mumbled exchange and the careful selection of goods would ensue, and new additions would be noted in the ledger.  From early spring to late fall the ritual would be enacted until, at “settlin’-up” time, the farmer and the merchant would meet at the local cotton gin, where the fruits of a year’s toil would be ginned, bagged, tied, weighed, and sold.  At that moment, the farmer would learn what his cotton had brought.  The merchant, who had possessed title to the crop even before the farmer had planted it, then consulted his ledger for a final time.  The accumulated debt for the year, he informed the farmer, exceeded the income received from the cotton crop. The farmer had failed in his efforts to “pay out” – he still owed the merchant a remaining balance for the supplies “furnished” on credit during the year.  The “furnishing merchant” would then announce his intention to carry the farmer through the winter on a new account, the later merely having to sign a note mortgaging to the merchant the next year’s crop.  The lien signed, the farmer, empty-handed, climbed into his wagon and drove home, knowing that for the second or fifth or fifteenth year he had not paid out.

Such was the crop-lien system.  It constituted a new and debasing method of economic organization that took its specific form from the devastation of the Civil War and from the collapse of the economic structure of Southern society which had resulted from the war… The South had become, in the words of one historian, a “giant pawn shop.”

The furnishing merchants, able to get most of their goods on consignment from competing Northern mercantile houses, bought supplies and “furnished them on credit to farmers, taking a lien on the farmer’s crop for security.  Farmers learned that the interest they were paying on everything they consumed limited their lives in a new and terrible way; the rates imposed were frequently well in excess of 100 percent annually, sometimes over 200 percent.  The system had subtle ramifications which made this mountain of interest possible.  At the heart of the process was a simple two-price system for all items – one price for cash customers and a second and higher price for credit customers.” (p.21-22)

This crop-lien system was the mechanism that suppressed farmers and kept them “dirt poor.”  It was the ability to charge a higher rate for customers buying on credit and their control over access to the tools and materials that the farmers needed that allowed the merchants to gouge their debtors with a near endless cycle of repayment.  Under these desperate circumstances, farmers began to organize.

Populist Part ticket

The farmers of the South formed an alliance in 1878 and slowly encouraged other counties and states to form their own “suballiances” locally.  Two innovations helped pick up momentum for the Farmer’s Alliance: the consolidation of the farmer’s crop into a single storehouse that would then sell to the merchants collectively at a higher price instead of individually, and a traveling lecture circuit that would arrive at community centers (churches) and educate the farmers on how the new method of ‘bulking’ would help them.  The lecture circuit would double as a uniting force between the suballiances and it gave them a venue to promote the idea of Greenback money and a new idea coming from the Populist Farmers Alliance movement called the “sub-treasury plan.”

Before jumping into the substance of these ideas and how they would reverse the farmers fortunes, as well as the nature and production of money in America, a brief history of the Greenback dollar will help set the scene and give some context for why so many Americans demanded monetary reform.  For besides the lack of access to cheap credit, farmers were fetching a smaller price for their goods on the market simply from the change in value of the currency.  The Eastern financial class – those wealthy bondholders – wanted to ensure their government bonds had the highest value, regardless of how much of a burden this put on the rest of the country via a shrinking supply of money.  Goodwyn summarizes complicated money policy and competing interests very well and is worth quoting again at length:

“In technical language that millions of Americans would try to comprehend over the next two generations, “specie payments” had been “suspended.”  Two months after the Treasury ceased paying coin for its obligations, Congress, under relentless wartime spending pressure, authorized the issuance of “legal tender treasury notes” to cover obligations.  Because of the color of their ink, the notes soon became known as “greenbacks.”  By the end of the war some $450 million of these treasury notes were in circulation, having contributed to wartime inflation, greater commercial liquidity, and prosperity.

In orthodox financial circles favoring “gold monometallism” the postwar problem was one of ending “suspension’ and achieving “resumption” by retiring the greenbacks and returning to a redeemable currency of hard money.  The currency “contraction” that necessarily would follow might be painful for various members of the society, especially debtors, but only as the painful cleaning of a wound was essential to ultimate health.  At the heart of the banker’s approach was an understanding of gold and silver money not as a medium of exchange, but as a commodity that had “intrinsic value.”…

However, bankers and other creditor-bondholders had a more specific motive for specie resumption.  The currency had depreciated steadily during the war, and, having purchased government bonds then, they, understandably, looked forward to the windfall profits to be made from redeeming their holdings in gold valued at the prewar level.  A governmental decision to begin paying coin for its obligations would mean that, though the Civil War had been fought with fifty-cent dollars, the cost would be paid in one-hundred-cent dollars.  The nation’s taxpayer would pay the difference to the banking community holding the bonds.  Bankers marshaled a number of moral imperatives to support their case.  They argued that they had supported the war effort – albeit with depreciated money – by buying government securities on the assumption that the postwar dollar would be returned to “par.”… Bondholders and the Eastern financial community – the two terms were more or less interchangeable – further argued that resumption would encourage saving, investment, and economic growth by assuring holders of capital that the dollar would have “long-term stability.”  The country would be placed on a “sound” footing  Finally, the banker’s case was patriotic: the nation’s honor was at stake.

Some practical difficulties intruded, however.  A return to hard money could only be accomplished in one of two ways – both quite harmful to a great number of Americans.  The first was to raise taxes and then employ the proceeds to redeem wartime bonds and to retire greenbacks from circulation.  This, of course, would contract the economy abruptly, driving prices down, but also depressing business severely and increasing unemployment, perhaps to socially dangerous levels… Any immediate attempt to “resume specie payments” would have quickly exhausted the nation’s gold supply through an unfavorable balance of trade.

The second method of contracting the currency spread the resulting economic pain over a longer period of time.  The government could merely hold the supply of money at existing levels while the population and the economy of the nation expanded, thus forcing general price levels down to a point where it was no longer profitable to redeem paper dollars in gold to finance imports.  In due course, this is what happened.

To the nation’s farmers, contraction was a mass tragedy which eventually led to the Populist revolt.” (p.10-13)

The main cause for the lack of money available to the people and their resulting plight was the interests of the wealthy bondholders.  These people bought these bonds from the government with the hopes of receiving a good return on their investment after the war.  After all, the North could have lost the war and those bonds, as a result, would be useless without a government to pay them.  But they could have received a return on their money at a depreciated value, while the rest of the economy would have performed far better in an environment where money was more abundant and expanded along with the expansion of commerce in general.  Instead they used their resources to obtain the maximum value of their bonds and then buy up greenbacks and destroy them, phasing them out of existence and retaining control of the issuance of money within the banks.  The common interest of this stratum of society, together with their high education, vast wealth, and leisure time, allowed them to out-maneuver a vast majority only a few of which could understand what was happening to them.

USA Civil War Bond

While the bondholders got the most out of their bonds, the resulting contraction of the economy would drive down the price of the goods that the many farmers were selling, like cotton.  Simply selling one’s goods in American dollars brought a smaller return thanks to the contraction of money.  The farmers didn’t have much money in savings accounts, their money came to them at the harvest time when the purchasers came to town.  A contracted money supply means less money spread out to cover over greater commercial activity.  So, if you had money, it appreciated; if you had to sell goods to earn money to then buy other goods (or settle debts), the price at which you had to sell was lower.

The Populists would change this situation by mobilizing their lecturers to explain just how these financiers were diminishing the value of their crops by contracting the money supply.  They would also promote a solution that would give them hope for democratic control over the money system in their sub-treasury idea, which seized on the existing memory of the greenback and the latent power of the government to issue its own currency and spend it into existence instead of borrow it from banks.  The crux of the matter went to the very heart of what money is.  One could even say it went to the heart of how America would be run as a country, with economic democracy (via control of money supply and its issue) or economic oligarchy.  The bankers wanted their “sound money” (gold-backed banknotes issued by their fractional reserve method) and the Populists wanted “flexible money” that would come into existence by the government’s own initiative and be more plentiful.

“The debtor philosophy offered another way of stabilizing prices.  By reducing the content of the dollar to one-half its prewar figure, the nation could have simply accepted the fact that the currency had lost one-half of its purchasing power, frankly and rather painlessly acknowledging that currency devaluation had taken place during the war.  Granted that such a solution would remove the windfall profits that bondholders anticipated from the return of the old standard, it also avoided the multiple hazards to the rest of society implicit in the objectives of “sound money” bankers.

To greenbackers, the case for a fiat currency was completely persuasive because the nation needed an expanding monetary system to keep up with population growth and commercial expansion.  Greenbacks were “the people’s currency, elastic, cheap and inexportable, based on the entire wealth of the country.”  As this study of American populism reveals, the greenback cause was a many-faceted phenomenon, sometimes put forward in arguments which were opportunist and ephemeral, but more frequently presented in a coherent analysis that attained a level of advanced social criticism.

Whatever the short-run economic equities, the greenback critique of American finance capitalism – should it ever gain a mass popular following – constituted a political issue of the first magnitude.” (p.12-13)

So it didn’t take long for the disgruntled farmers to realize that their difficulties in production under the crop-lien system were connected to the system of money production itself.  Their crops were fetching a lower price than they should have if the money supply had grown with the growth of the economy.  On top of that, the furnishing merchants controlled the books by which farmers’ debts were calculated, charging usurious interest rates on their loaned out materials.  This kept farmers in a gigantic territory oppressed by monetary policy and the creditors who provided them with what they needed, only at high interest.  Solutions existed, but without a method to organize and act in concert the farmers were at the mercy of their creditors.

The Farmers Alliance changed this with their army of lecturers and suballiance system that gave the lecturers a place to travel to speak with and listen to the farmers.  Together they created a movement culture that successfully brought people a sense of their own worth in common and instilled hope for a new system that would benefit them.  They began the process of bulking their cotton together in large storehouses to get their higher prices and even allowed farmers to take out credit from these exchanges secured on future crops.  Bringing their crops together in these storehouses gave suballiances a direct benefit to their cooperative efforts, but the constant antagonism from the wealthy merchants seeking a lower price kept their existence tenuous.  They remained too small to help enough of the population and in order to expand they needed credit.  It was in this situation that Charles Macune introduced his idea of the “sub-treasury” monetary system, an idea that could link the cooperative storehouse bulking practice with the flexible, non-metallic currency idea of Greenbackism.

“In arguing for changed relations between “different classes,” Macune suggested a conscious raising of the stakes above those being gambled in the cooperative movement.  Macune’s plan called for federal warehouses to be erected in every county in the nation that annually yielded over $500,000 worth of agricultural produce. In these “sub-treasuries,” farmers could store their crops to await higher prices before selling.  They were to be permitted to borrow up to 80 per cent of the local market price upon storage, and could sell their sub-treasury “certificates of deposit” at the prevailing market price at at time of year.  Farmers were to pay interest at the rate of 2 per cent per annum, plus small changes for grading, storage, and insurance.  Wheat, corn, oats, barley, rye, rice, tobacco, cotton, wool, and sugar were included under the marketing program.

The plan carried far-reaching ramifications for the farmer, the nation’s monetary system, and the citizenry as a whole….  In effect, Macune had replaced the high-interest crop-mortgage of the furnishing merchant with a plan that mortgaged the crop of to the federal government at low interest.  It thus provided the farmer with the means to escape, at long last, the clutches of the advancing man and recover a measure of control over his own life.  For the farmers of the South, both black and white, the sub-treasury plan was revolutionary.” (p.109-110)

It was an ambitious plan, to say the least.  It was an appeal for the country’s money to be injected into the farmer’s local exchange directly, instead of through a bank intermediary that got to lend out its gold-backed banknotes.  The treasury would issue greenback dollar bills and lend them to the cooperative exchanges on the future market value of the crops that were stored in their warehouses.  No longer would there be a lack of credit flowing to farmers who produced real goods but couldn’t fetch a decent price for them.  The money system would be brought under democratic control in the sub-treasury plan, with a large portion of the supply of money determined by farmer’s needs instead of entirely controlled by who banks believed was a worthy investment.  Small farmers were left out of bank lending and without an injection of money directly from the source of money minting and printing, the government, they were left to the pawn-shops of furnishing merchants – unbanked and without access to cheap, non-usurious credit.

The Farmers' alliance history and agricultural digest

Charles Macune

“The status that the sub-treasury plan came to have in reform ranks is revealing.  For, to put the matter as quietly as possible, Macune’s plan was democratic.  Or, to put it in archaic political terminology, it was breathtakingly radical.  Under the sub-treasury, the power of private moneylenders to decide who “qualified” for crop loans and who did not would have been ended.  The contracted currency, the twenty-five year decline in volume and prices, would have ended in one abrupt – and democratic – restructuring.  The prosperity levels of 1865 would have been reclaimed in one inflationary – and democratic – swoop.  Most important of all, the sub-treasury addressed a  problem that has largely defeated twentieth-century reformers, namely the mal-distribution of income within American society.  By removing some of the more exploitative features embedded in the inherited monetary system, the sub-treasury would have achieved substantive redistribution of income from creditors to debtors.  Put simply, a more democratic monetary system would have produced a more democratic sharing of the nation’s total economic production.” (p.301-302)

Based on these ideas, the insurgent farmers from the American South and Mid-West formed the Populist Party and wrote The Omaha Platform that would outline the central tenets of their political aspirations.  [Source]  With the success of many of their campaigns to get congressmen, governors elected to office under their party, the Democrats took notice and set to co-opt their message and support base.  They pushed the idea of re-monetizing silver (which had already been the currency standard in America from 1792 until the Civil War [Coinage Act of 1792]), an idea that would not have structurally changed the flow of money in the country but only expanded it.  Even with the added support coming from the recently absorbed Populist Party, the Democrats lost the big election of 1896 to the Republican McKinley.

After the Party fell apart, more banking crises would erupt as they had been in the previous decade.  An especially bad banking crisis occurred in 1907 and set the stage for the secretly concocted Federal Reserve Act.  The Fed would not solve the problem of periodic bank failures and depressions, but would strengthen the biggest bank’s interests structurally.  Nobody has been able to move congress to enact reform of the money system democratically, though the Populists and the ingenious sub-treasury plan came the closest to anything outside of the existential threat of war to making it happen.  They had a vision, a base of voters and organizers, and a culture that could be legitimately laid claim to.  Their ideas strongly resonated with a huge number of Americans but through cooptation, smears in the newspapers, and an expensive and unprecedented election campaign, so grand and effective that it would set the standard for all subsequent presidential campaigns, the Populists were defeated.  The patriotic flag-waving supporters of McKinley defeated William Jennings Bryant with a gushing of campaign money to squash even the Democrats’ weak idea of monetary reform: a bimetallic standard that would have still kept the bankers at the levers of money production.

It is far too late to get someone like Bernie Sanders to switch gears and start talking about what would seem like an obscure history lesson in democratic movements.  Any lessons taken from the Populist Party and their struggle would have to be superimposed on the body of thought that is more familiar to everyone than to try and start from scratch.  The ideas of the Greenback and Populist Parties are close to another more modern body of thought called Sovereign Money spearheaded by Joseph Huber [website] and Positive Money [website] in the UK.  The point within the context of a President Bernie Sanders prospect is that we should be talking about (he should get us to talk about) socializing money, not all the industry in the country, but the money system.  Socialize money!  Don’t socialize the means of production, socialize the means of producing money!  This would not require nationalizing the big banks but removing their ability to control the money supply and how they are allowed to allocate it through issuing Federal Reserve Notes instead of United States Notes and collecting interest on nearly all the money in circulation.  We could give everyone the option of having a bank account at the Federal Reserve: our very own “sub-treasury system” for a modern economy.

The challenges that face organizing for a major Socialist reform/revolution have been well documented in our precarious gig-economy. [Gig Workers Need the Power to Organize] One simple fix to the money system would relieve great pain around the world by removing the ‘too-big-to-fail’ status of mega-banks within the economy and allowing the ultra-rich to loose money on their bad bets instead of ruining enter countries. [Greece: Austerity for the Bankers]  This question of who would control the money was once the single biggest issue on the minds of the American people, spurring the largest of social movements and riots. [Read: William Hogeland’s Founding Finance] The only problem is that we have forgotten this heritage and the textbooks won’t point students in the right direction.  An unfortunate historical fact is that we have few images of the Populists and their deeds to draw on, making it difficult to imagine their movement.

As an alternative to the mainstream histories of great statesmen and classical economists, Socialism is only a good start.  Throw in some financial literacy, a good theory of money [Read: Geoffrey Ingham’s The Nature of Money], and a President unrestrained by financier-capitalists and politics might start to get exciting again.

Until then, one-quarter the country will getting gouged by payday lenders, check-cashers, and their creditors in general, [Financial Services for the Unbanked] [25% of Americans have negative net worth]and over half of the country will not be able to raise $400 dollars at any given time without going into debt or selling their possessions. [Fed Report]

Coming_Money_Trust 1912


Bank Money vs Sovereign Money: References

I participated in talk  on the overarching and less-understood workings of the monetary system at the US Social Forum in San Jose, California last week called Who’s Money? Our Money!  We’re working on getting a draft of the talking points together into one document, but here is the list of references we draw from in our research (you know, to prove we’re not crazy):

Icelandic Proposal:

Positive Money Website:

Positive Money “Creating a Sovereign Money System.”:

Bank of London “Money Creation in the Modern World.”:

IMF Working Paper: The Chicago Plan Revisited :

Ellen Brown’s “Web of Debt.”:

Ellen Brown’s The Public Banking Solution :

USPS Office of the Inspector General “Providing Non-Bank Financial Services for the Underserved.” :

USPS OIG “The Road Ahead for Postal Financial Services.”:

Elizabeth Warren “Coming to a Post Office Near You: Loans You Can Trust?”:

Bank of North Dakota:

Federal Reserve System:


Strike Debt Bay Area:
Twitter: @strikedebtba

Community Check Cashing, Oakland:

Fringe Finance – International Debt: Polarities of the Debt-System

I did a brief speech at the latest debtors’ assembly for Strike Debt Bay Area on both Fringe Finance and International Debt. With the time allotted I couldn’t get to nearly as much as I wanted to, so I will reproduce my notes here:

Fringe Finance

The Debt-System effects everyone, even people outside of the traditional banking system. It costs people who don’t have a bank account (the unbanked or underbanked) more money just to use their own money.

People choose not to use banks mainly because they don’t have enough money to meet the minimum balance requirements of banks and have had bad experiences with overdraft charges. They are primarily poor people.

The un- and under-banked people make up about one-quarter of Americans, that’s 25% of all people in America not being served by the banking system. These people must turn to Alternative Financial Services.

Check Cashing Outlets

Check Cashers take out about 4% of your pay check. For someone who uses Check Cashers their entire life, the average amount given over their lifetime is about $40,000.

Check Cashing stores have more than doubled in number this century, and the cost for using them has gone up by about 75% in the period 1996-2006.

Pre-Paid Cards

Pre-Paid Cards have been getting popular, they are used by 13% of people in the US. They also charge you to access your own money, though a but cheaper than check cashers.

Examples of Pre-Paid Cards: GPR Cards and EBT Cards.

GPR (General Purpose Reloadable Cards) have many fees: monthly fees, activation fees, inquiry fees, and more.

EBT (Electronic Benefit Cards) are for funds given by governments to cut down on paper use (and extract fees). They are better for you when from the federal government than the state (like with Food Stamps and Unemployment Benefits). In California, fees and other costs of use are better than other states, but they’ll still hit you with lots of fees.

Welfare recipients paid $17 million plus in fees and ATM surcharges in CA alone in 2012. So fees add up with Pre-Paid Cards.

Pay Day Loans

12 million people took out a Pay Day Loan in 2012 and they’ve been getting more and more mainstream since the 2008 financial crash.

In the early 1990’s, there were less than 200 Pay Day Lenders, now there are 23,000 – that’s more than McDonalds for some perspective.

Pay Day Lenders give you money you need now at very high interest rates. Borrowers often end up paying back the Pay Day Lenders many times more than the original loan.

Most people (69%) take our Pay Day Loans to meet everyday expenses. So it’s not just emergencies that lead to Pay Day Loans, as some people believe.

The Pay Day Lenders’ game plan is to keep you in their Debt-Trap and keep the interest rolling over. They call it “Churning”: they don’t want you to pay do back the loan ASAP (only 2% of borrowers actually do). 75% of Pay Day Loans are for the purpose of this Churning and it nets them $3.5 billion.

Pay Day Loans are unsecured, meaning if you default they can’t repossess anything you own. No Debt Collectors, so don’t be frightened by them. They can contact a Credit Reporting Agency and lower your credit score, but they mostly use this as an empty threat.

There are also Pawn Shops, Auto Title Loans, and Rent-to-Own Stores which are more fringe finance institutions that extract fees, interest, and possessions primarily from poor people.

Solutions to Fring Finance:

Community Check Cashing exists in Fruitvale area if you can travel there conveniently. CCC works on a non-profit model which we are trying to extend in our working group. Join us if you like!

Postal Banking is the big one. It has already worked for over 50 years in the twentieth century very well. Postal Banking could perform just about all of the fringe finance business’ but on a cheaper public model, without the fees and usurious charges. Postal Banking is used in many countries now successfully, it is a kind low-level but far-reaching public bank.

Fringe Finance is perhaps the lowest level of the debt-system. People outside the banking system still get caught up in the debt-trap and are hit especially hard.

At perhaps the highest scale of the debt-system there is International Debt – the opposite extreme where entire countries are put under the control of financiers who weaponized debt.

International Debt

This is how the standard explanation goes: A sovereign country must borrow money and go into debt if it spends too much money and doesn’t collect enough taxes.

But they do this because central banks and other international institutions prevent them from issuing their own currency and controlling its supply, so that these countries cannot control the supply and creation of their own currencies.

Control of the money in a country is in almost every case now controlled by private banks and their willingness to lend.

The Bank of International Settlements (the BIS) in Basel, Switzerland sets the rules of the global financial game for most of the countries on the planet. It was set up in 1929 as a way to shore up the power the international bankers were losing during the beginning of the Great Depression.

But it was right after a World War II that the main standards of the global financial system were set at the Bretton Woods Conference in 1944. This is where the IMF and World Bank were established.

When a country needs money to expand its economy, repay a previous debt, or gain more foreign currency reserves, it must appeal for credit from the IMF or World Bank, or issue bonds (92% of bonds are issued/sold at New York or London).

When countries take out loans from the IMF or World Bank, they must grow their economies mainly by increasing exports. This allows them to match their debt repayment with profits from exporting to consuming nations. If they cannot repay all of the debt from those loans by competing on the global export market, they are caught in the debt-trap.

The IMF and World Bank then impose structural adjustment programs that slash public institutions, public benefits, and public infrastructure. They force countries to privatize public goods like land and industry, because they have to pay the debt instead of their own people.

Privatizing public goods, land, and services gives countries a one-time boost in profit but cancels all further public profit to governments and the free use of the commons.

So, this is all about control, and debt-based finance is perhaps the primary tool for control today besides military intervention.

Any country that tries to break free and play by their own rules can attacked with currency raids and short selling on the foreign exchange market – which devalues an entire worth of a country’s economy.

Nations led by the US can also impose sanctions, saber-rattle, and fund revolutions within the dissenting country to establish sympathetic military rulers (or Juntas).

This is what happened in Chile in the 70’s, Libya a few years ago, what’s happening in Syria and Venezuela now, and what they are trying to do to Iran and Russia. There are many other examples in South and Central America, the Middle East, and Africa.

A good example with a happy ending is Argentina. 70’s – military dictatorship. 80’s – Neoliberal regime that led to a hyperinflation scenario of too much money borrowing. 90’s – massive privatization of natural resources (oil, roads, and banks). The interest in the loans and austerity conditions attached to them meant an uncompetitive, depressed economy.

So, in 1995, there was a run on the banks and massive capital flight out of the country – a major depression.

Now for the good part: without any kind of decent banking system, people turned toward alternative currencies (local communities made-up their own money).

Propel conducted massive, sustained protests that delegitimized the entire Argentinian government and made them fear for total loss of control. “Que se Vayan Todos” – “They can all go (to hell)” was their main slogan.

This pressure from below forced the Argentinian government to default on its International Debts. By re-nationalizing it’s once privatized industries, doubling social spending, and public investment, Argentina’s economy grew rapidly in the 2000’s. They went from negative growth to over 8% per year growth.

Recap on Argentina: by walking away from its debts, brought on by massive popular protest, and a re-nationalization of privatized goods, services, and land, Argentina saw major economic revival.

They were able to restructure their debt to far less than the original amount and paid off their IMF debt altogether. They did this by *issuing their own currency under their own control* and boosting public investment.

In the 2000’s, Argentina saw poverty drop from over 50% to under 15%.

Vulture funds bought some debt and refused to renegotiate it down, and there is an ongoing court battle over these culture funds right to collect the entirety of the debt that they bought from someone else.


The big one is Sovereign Money: to allow treasuries to print their own national currencies without borrowing it first from Private Central Banks or issuing bonds. The Central Banks would be public and under public control vs. for-profit private banks.

It happened in America during the civil war when Lincoln printed Greenbacks, which are the original design for the dollars we use today. Now, however, they are federal reserve notes, not treasury notes).

Canada is under a court battle for this right now and Iceland gained this after their revolution…

And Finally, Public Banks

Public Banks put money earned from interest on loans (profit) into the accounts of city and state governments instead of private banks because it would be a municipal, state, or regional bank.

They would partner with local banks and credit unions not compete with them.

Luckily we have one already in the State of North Dakota. The Great Recession and bank failure of 2008 had no effect on their economy whatsoever.

Most all major successful economies around the world today have a strong public banking sector: China, India, Brazil, Russia, and Germany (plus more).

Wrap up:

The debt-system effects us all from big to small, from those outside of the banking system to entire countries, Fringe a Finance to International Debt. There are alternative models and solutions at each step, but we need major public pressure to recapture public goods, services, and land before these solutions can be put in place – like in Argentina.

The sources for this speech were The Debt Resistors’ Operations Manual [link], The Public Bank Solution by Ellen Brown [link], and The Democracy Project by David Graeber (for the bit about Argentina’s massive public protests of delegitimization)

Astra Taylor on The People’s Platform

This question of organization in the age of the internet seems to be one of the most crucial in any political project. How do we relate to each other on the internet, blogosphere, email, comment sections and all? How does this new form of largely isolated interaction effect more vulnerable embodied assemblages (groups/collectives)? Coming together in a common place as proximal bodies for a common purpose can never be replaced and I feel it must be emphasized – even in a blog post. What blogging does for me and others (to get all meta on you) is exchange ideas, or, if not an equalized interaction, absorb and affect each other’s expressions. I’ve learned quite a bit from the blogosphere – it is a neat surrogate for academia – but the emplacement of the student at the screen as the site of learning and sharing has its drawbacks. The internet has a great many strange places within, but the one in which the embodied user tends to inhabit is the glowing screen.

The debt activism that Asta Taylor is involved in is one case that I can relate to: I’ve done some organizing with Strike Debt Bay Area. It is extremely difficult to reach out to people *as debtors* and organize individuals into a collective *as debtors*. The isolation and shame attached to the position of debtor vis-a-vis creditors makes it less than desirable to claim as a subjectivity to come out as and own (although ‘gay’, ‘queer’, and I’m sure many others have odd histories of their own worth noting), yet the vast majority of people here in America (and many other places) are debtors burdened by the extractive economy. Is it alone, in our rooms, cafés, and other places of comfort that we will break off from adherence to a morality that sucks our energies up and keeps us from straying off of the main road? For some people yes. But for a mass movement of active bodies, most people need to meet up with others in greater gatherings. Debtors Assemblies have played that role, but in order to get people to come, to build that force, you’ve got to advertise. If you want to get people to come to your events I’ll give you some advice I gave to some students at the last Strike Debt Bay Area meeting: images everywhere. Posters, flyers, stickers, bulletin boards, walls, heavily trafficked areas… If you have a good idea, you need to get in people’s faces.

Too often do I turn off my tablet after a few hours and then think: “Okay, what did I just do on that one screen?”

synthetic zerø

“The Internet is said to be a space of democratic expression and transformation, both culturally and politically. But how true is that claim? What are some of the economic, technical, and legal obstacles in place? Drawing from her recent book, “The People’s Platform: Taking Back Power and Culture in the Digital Age,” and her experience as an artist and an activist, Astra Taylor — filmmaker, writer, and political organizer — addresses campaigns by musicians against streaming services and debtors against creditors to reflect on the larger question of how to organize and leverage change in an age of virtual networks — be they networks of cultural distribution or financial ones.”

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Graeber, Dual Power, and Monetary Reform

A friend of mine asked me to explain what it means for Graeber to say that he is an anarchist in the context of money and banking and this was my response, expanded for the blog post:

Graeber calls himself a “little a” anarchist in that he is not tied down by the ideology or any of the big names in the canon and considers it a principle of practicing politics. Anarchism mostly just means “without rulers” and the model of decision-making, the process a meeting takes on, is more important to him and other practically-minded activists that also use it. It is called the consensus model and, when done right (which is actually much harder than he makes it out to be in my experience), it is an extremely powerful and uplifting tool for organizing ourselves. The ideal in the consensus model is that a solution to a problem is worked out through deliberation that everyone can agree on. Voting is not desired but sometimes necessary when the group gets too big, but the intention is that the best solution for all people involved is reached with everyone getting to participate.

So when he talks about himself as an anarchist, it is the consensus process and direct action outside of/without communication with government agencies that he is mostly referring to. It sure as hell worked wonders during the occupy movement, but there were plenty of other factors that propelled and also hampered that movement. When you break it down, (little-a) anarchism is about self-rule instead of command rule. In a general assembly, people don’t interrupt (I love this), get on a stack (a serial list of who will talk next), clarify and debate proposals, take “temperature-checks” (in lieu of voting), and communicate non-verbally with hand-signals. It is very involving and gives everyone a sense that their thoughts actually matter and will have an effect on the course of the greater body-politic.

This style of self-organization will have limits when it comes to making policy in the present state of government, so legitimacy in the agencies of power and our liberal society is definitely lacking. The model itself comes off as antagonistic to the rest of our law-based, market oriented society because it refuses to negotiate or make demands. Although, there is no reason why some group of folks couldn’t consent on doing so. An anarchist, on the other hand, tends to hate the state as a quasi-religious ideological tenet. It started out as a humanistic desire for a non-violent world where nations did not continually embroil their populations in ruinous wars. It has spread deeper into culture with punk music – “don’t tell me what to do!”, hippies – “make love not war, man”, and the general protest politics that got big in the sixties. From the mid 1800’s until then, it was mainly thought of in the political economy sense of an alternative to capitalism that espoused grassroots revolution against all forms of oppression. Worker movements like the IWW or Wobblies wanted to use the power of the recent uprisings for a world run by those who work rather than those who profit off of them. They tended to be nomadic and were better organized before they were crushed, provoking many strikes by workers toiling in horrid conditions.

There are anarchists who are utopian socialists and engage in prefigurative politics like the syndicalists, but they generally refuse to take power and limit themselves to something like: “destroy all the states in a total revolution with a maximally invigorated population!” What comes afterward is up to your imagination, but I think some of the more committed anarchists would just continue fighting whoever seizes the obviously inevitably power vacuum that would result – probably until they are all dead. I think Graeber and those like him would be less militaristic, opting instead for constant organizing to the side of whatever government takes shape. However, there is something inherently aggressive in occupying space and claiming it for your own, marching around nearby (loudly and breaking shit occasionally), and defying all other mandates and orders but those you have crafted on your own inside. He makes the point that the Occupy movement was the most non-violent movement of its size though, probably ever. He also makes the point that occupying is somewhat of an aggressive assertion of a mass of people.

Some anarchists like to emphasize the ancient times before states and organized religion as if they were the manifestation of a timeless grassroots earth-people. It’s actually kind of appealing, until you notice the romantic folly of mixing ideals from the present, the historical past, and the ancient past and saying that underneath them there’s a timeless one that I’ve got. Still though, mythology and elemental worshipping sounds better to me than monotheism – if you have to have something of a cohesive cultural understanding through spiritual agents.

As for the debt subordinating nations and democracy, he gets most of his economic insights from Michael Hudson. He’s just a far better writer. Hudson talks about the nefarious ways in which America subordinates other nations to its interests being largely a result of its international monetary practices between the large, economically and militarily powerful nations. The U.S. has operated on a double standard for decades and forced the victorious allies after both world wars to repay it for supplies. It was through unwavering debt repayment that the U.S. got Britain to relinquish its status as top nation in the world, and the money shortages after WWI due to debt services to the U.S. all but directly caused the Great Depression. Since then, as you probably know, nations are under the illusion that they need to borrow money before it is created. But is it a failure in economic thinking or a veiled threat from the U.S.? If nations begin to print their own money debt-free and do anything socialistic like nationalize their industries, their currency will be attacked and they will be targeted for regime change. The only nations big enough to challenge this system are on the move right now, but it is still unclear whether their policies will differ from the U.S., especially in terms of debt and money policies. The interests of bond and share holders and bankers earning interest at all levels of lending (even when it shouldn’t need to be lent), plus American hegemony across the globe has got to be what he means.

What gets me is how so few people know about this, yet it is the most powerful force shaping and constraining governments and people throughout the earth. There is a gigantic geopolitical battle going on right now over trade areas and currency, yet the American public is simply not informed about it. Did you hear about Putin’s proposal for a free-trade area throughout all of Europe? I think Eurasia might be slipping away from the U.S. I heard a military (probably Navy) commander speak on a Democracy Now sound bite about how the Trans-Pacific Partnership would be a major boon to his strategic efforts to control the Pacific – “as good as another aircraft carrier.” Hudson also points to the intertwining of neoliberal philosophy and American foreign policy.

To wrap up, I think anarchists like Graeber would be willing and able to understand this stuff. Between he and Taibbi, we finally have people that can communicate complicated stuff to the public. But anarchists strategy is all delegitimization and uprising; you can’t count on them to create a public bank.

[Going further]

Graeber discusses monetary policy in this article for the Guardian. In his usual flowing style, he covers the history of money and how debt is built directly into money at its very source of creation in a breeze. I’ve written about it previously so I won’t go into it in depth, but the important thing in my eyes vis a vis anarchism is this question of how monetary reform could ever come from an anarchist movement espousing a consensus process. Here enters the concept of dual power:

“…the Occupy movement is ultimately based on what in revolutionary theory is often called a *dual power* strategy: we are trying to create liberated territories outside of the existing political, legal, and economic order, on the principle that that order is irredeemably corrupt. It is a space that operates to what extent it is possible, outside the apparatus of government and its claims of a monopoly on the legitimate use of force.” The Democracy Project: A History, a Crisis, a Movement

A burning question for someone like me who is interested in the undeniable force and vivacity of grassroots political organizing and the comfort it brings at meetings, and reclaiming the power to create money for the public is this: how can we reconcile these two opposing positions in the vein of the old populist movements around the turn of the century? The self-imposed distance from the state will make anarchist movements unwilling to touch any kind of policy objectives, no matter how transformative and how beneficial they would be to the current economic realities that most people must endure today. And yet, the greatest impediment to the liberating goals of revolutionaries is the debt structured central bank and international financial institution rule – a rule that would most easily be broken by the reinstating of sovereign money creation by governments and not private banks. Public control of money creation and distribution is more powerful in terms of confronting global oppression than any seizure of power in the traditional revolutionary sense. Such a “reform” in any individual nation would certainly travel very far in our hyper-connected age, the ripple effects of which would eventually turn power relations upside down.

So do we abandon these practices and start campaigning for political parties that would enact these reforms, form “broad coalitions” with public interest groups, and appeal to big-spender representatives with a list of demands? We should never allow ourselves to be pressured into taking sides on anyone else’s terms before we consider the options placed before us and determine if such a decision is actually required of us. Graeber’s appeal to dual power allows us to consider two different opposing forms of power and organization at once, not having to make them both find a common ground. Consensus-based direct action works well in autonomous spaces for non-bureaucratic people. Representatives regulating the money supply of a nation and administering loans at the local level would work too. The latter operates with the backing of national governments and organized military violence. The former an ideal of peaceful villagers cooperating amiably. Neither models are wholly adequate, but neither do we have to insist that they work out their differences and gel together to make the one right model. Such would be a forced choice insisting that we have one political identity and eliminate all other contradictory beliefs.

Expanding on the dual power concept Graeber elaborates on four different recent political strategies for turning grassroots political movement into sustained machines that have influenced their regions greatly.

The Sadr Strategy: armed militias with top-down discipline like those found in Iraq, which are much more likely to eventually become political parties and require a culturally cohesive base.

The San Andés Strategy: Zapatista organizations that fight and negotiate with national governments to keep their seized territory.

The El Alto Strategy: as found in Bolivia, “using autonomous institutions as the base to win a role in government and maintaining them as a directly democratic alternative completely separate from government”, which then elect representatives while putting “enormous pressure [on them] to do exactly the opposite of what they elected them to do.” This gives those representatives even more negotiating power.

The Buenos Aires Strategy: “try to strip [the political establishment] of all legitimacy.” This apparently worked in Argentina to default on its international debt. “… doing so set off a cascade of events that nearly destroyed international enforcement agencies like the International Monetary Fund, and effectively ended the Third World debt crisis.”

One gets the feeling that to enact major monetary reform would require delegitimization from populist grassroots movements *plus* inside economic policy makers pushing good ideas for public financing.

Dollar Hegemony and Super Imperialism: An Update from CounterPunch

Not only does the dollar enable the US empire, but also protecting the dollar’s status is a major reason for US imperial wars. American financial and military strength is based upon the fact that the dollar is the world’s reserve and international trade currency, creating a global demand for dollars which allows the US to print as many greenbacks as it likes. It then pumps them into the overbloated finance capital system and uses them to fund its criminal wars…

…Although it has so far been unsuccessful, the idea of rebalancing the world monetary system is extremely threatening to the US, and goes a long way toward explaining recent US wars and warmongering, which may otherwise seem irrational. The line of NATO bases in Eastern Europe and the coup d’etat in Ukraine are attempts to split Europe from Russia, trying to keep a subordinated Europe in the US sphere, prevent a single Eurasian economic area, and isolate and destabilize Russia. The Transatlantic Trade and Investment Partnership has the same goal. Weakening Russia and China (and the BRICS in general) on a military, economic and political level, with a regime change in mind, is a fundamental part of the US strategy for maintaining dollar hegemony. The US therefore has surrounded them with bases and continues to try to destabilize them. The US presence in the Middle East serves not primarily to gain access to its oil and gas (the US has its own, especially since the fracking boom) or even to control access to them (the Chinese are already there), but first and foremost to protect the petrodollar, to ensure that the global fossil fuel markets continue to be denominated in dollars. Iran has been talking about wanting to de-dollarize its oil and gas trade for years – thus, it and the Shia crescent are in the US line of fire…

…This is exactly in the interests of US financial imperialism: to economically undermine any rivals that question dollar hegemony. It is absolutely unacceptable that one country should arrogate to itself the right to set a wildly loose money policy for years and then tighten it at whim, giving the rest of the world a violent thrashing. It is unacceptable that any one country control the world’s reserve currency. As the above quote says, because of the circumstances created by QE and the zero interest rate policy, today if the US economy does well, the global South suffers. It’s a zero-sum equation. This is throwing burning obstacles in front of their process of de-dollarization, and making them suffer. On purpose? Again, it would be difficult to impute too much individual agency behind these effects, but they are predictable, necessary and not unprecedented consequences of the imperial monetary policy waged by the US for years. The question of agency in this case is moot: these policies serve the empire. They go along with and have similar effects to the more obvious forms of financial imperialism such as sanctions. The US should be held accountable for the disasters it sows, and the world should remove its imperial privileges, through the creation of a neutral world reserve currency.

What Is at Stake in the Ukraine: Global Financial Dominance

With the latest round of American and European news media outlets loudly announcing that President Obama is considering arming the neo-fascist Ukrainians to fight Eastern Ukrainian separatists, risking an escalating proxy war with Russia, it’s time we gained some broad perspective on this conflict.  Each side is pointing fingers at the other, with few facts being spoken that both sides can really agree on.  The US media-war-machine is vamping up the aggression of words as seen here: Fox[Obama Confirms Arming Ukraine on the Table if Diplomacy with Russia Fails ], USA Today[Obama Team Considers Arming Ukraine], NY Times[US Taking a Fresh Look at Arming Ukraine Forces] (no, going to all of those mainstream media websites was not a pleasant experience).
A tentative peace deal has been signed with leaders of Europe in attendance, with German Chancellor Angela Merkel leading the way in promoting a peaceful resolution to the conflict.  Whether this truce will hold is uncertain, but with major national interests at stake and their strategy plays already set in motion, we are entering a phase in which the drivers behind the conflict must be payed bare.  With all of this hate in the air, and pathetically little debate about the intricacies of the conflict, a number of questions need to be asked:
Why would the US risk setting off a proxy war with Russia and a potential nuke-firing, ’unthinkable’ World War III?  Where is the intense demonization of Putin in Washington and its long arm in the media coming from?  What is the US doing right on Russia’s doorstep using strong-arm tactics like sanctions and pursuing NATO expansion, including a new “rapid response force” [] ready to be deployed along the boarder of Russia at a moment’s notice?  We could flip the questions around for the sake of objectivity and ask: “why did Putin annex Crimea during the Maiden episode?” and also, “why would Putin arm and supply the East Ukrainians to fight the new Kiev government?”.   The two powers are squaring off alright, but if we turn off the highly charged rhetoric that is being flung around in the narrative and look at the situation in terms of geopolitical power and national interests, we find a set of dominant forces that span the globe are being challenged right now, ones that American global hegemony just might be willing to risk World War III to protect.
I will eventually offer some links and facts about the current crisis, but first the scope of this conflict needs to be elaborated.  Only then can we feel the weight of the conflict and answer those questions above.  So, why are these powers willing to risk so much?
When Putin and other Russian politicos speak about their motives and relay messages to their US and NATO counterparts, they have repeatedly been saying that they no longer accept the US dominated world order as it is.  [Putin Accuses United States of Damaging World Order].  They demand that the US stop interfering with affairs far away from their land and basically stop playing global policeman.  America has been the overwhelming superpower ever since WWII (despite the Cold War) but it was with debt, money, and currency manipulations that the US achieved a imperial superiority over the rest of the world unparalleled in history.  Few know how these mechanism work (and this was most likely intentionally obscured with the help of ideologically driven economist-speak), but it seems that Russia feels like it has regained enough of a footing in global politics to challenge US super-imperialism with its alliances and trade deals.  The US in turn ratchets up the pressure with a series of sanctions and foments unrest right on Russia’s doorstep.  If we take the longview on the Ukrainian conflict and tune-out the heated rhetoric we can see a major stand-off between the clear world hegemon desperately holding to its power and another large imperial nation who is refusing to bow down anymore.
This is what the Russians are talking about when they speak of the US-led world order whose rules they no longer want to play by:
America projects power thanks to its fortunately located continent away from other world powers in Europe and Asia (who have other competitive nations very close to them).  They have control over much of the Earth’s maritime shipping routes with strategically placed Naval bases and keep the close nations located in the Americas from retaining the wealth of their natural resources, thereby keeping them more impoverished and, consequently, weaker.  See this brief Caspian Report video on how the US geologically projects power:[Foundation of American Dominance].  While Cuba and Venezuela remain thorns in their side, much work is surely being done (as it has been accomplished already in its numerous interventions in its own backyard [7 Fascist Regimes Enthusiastically Supported by America]) to wrest away the profits of Venezuelan oil for American multi-nationals.  Venezuela’s ability to keep the wealth generated from its vast oil reserves within its own national government has made it a target for regime change. [Venezuela, Regime Change, and the Hidden Hands of US Capitalism].  The Venezuelan government headed by Maduro is now claiming to have foiled a coup attempt by military officials on the anniversary of the student protests [Opposition Leaders Issued a Statement to Signal the Launch of the Foiled Coup].
But the real crux of American global dominance is performed via money and debt.  In the system of global trade and finance, there is no standardized unit of account that levels-off the panoply of currencies engaging in importing and exporting with each other like the gold standard once did.  Nixon took the US off of the gold standard in 1971, when Vietnam War expenditures rose so high that its gold reserves were rapidly being depleted.  Currencies were left to float against each other or be pegged to one another, but US dollars were still needed by-and-large because America was by far the most productive economy and a trading partner to many nations.  The US dollar gained the status of ‘reserve currency‘.  Countries would still need dollars in reserve to buy oil and to cover losses from speculative raids, seeing as it is that the foreign exchange market (ForEx) allows currency holders to trade currencies at will and for speculative profit.  The phenomenon of ’short selling’ is a major weapon that speculators use to devalue an entire nations economies by conspiring to lower the value of its national currency.  Countries can peg their currency’s value to the dollar, but can still see capital flight and their doliar reserves depleted if they don’t set the peg exactly right.  Basically everybody needs dollars to buy oil (thanks to the US/Saudi “Petrodollar” deal: [Confessions of an Economic Hitman]) and make sure their foreign and economic policy won’t lead to those dollars fleeing their own central banks, which usually means they must export more to the US than they import.  The imperative for economies to “grow” by producing consumer goods and exporting them is largely an effect of debt payments they must meet and dollar reserves they must hold onto.  For a more detailed analysis, read Ellen Brown’s Web of Debt, chapter 21, ’Goodbye Yellow Brick Road: From Gold Reserves to Petrodollars’.  [Web of Debt]
The excess of imports into America means that US balance of payments is always negative, hence the US national debt perpetually rising at an astronomical rate.  But the large US national debt is not a hindrance;  since countries are required to hold dollars for oil purchases, other countries must export their goods to the US and usually import oil.  With all of these dollars in circulation, central banks end up buying US treasury bills to get a return on those dollar reserves.  This ensures that dollars are continually “recycled” back to America, with the US Treasury making its minimum debt payments on those bills and bonds as the total debt climbs ever higher.  Thanks to the Federal Reserve system, the US Treasury must borrow from this private central bank in order to print its own national money.  All of this ensures that demands of debt (as well as oil) are met at almost every step of the way: whether by countries who must accept onerous loans from the IMF to protect their own currency/dollar reserves to buy oil, or a US government that turns the global need for dollars into more debt of its own.  Though, all together, the system is drastically beneficial for the US (that is, until people realize that its debt will never be completely payed off): it gets excessive imports and situates itself as a middle-man (via the dollar) between nations and their energy needs.
This video from Storm Clouds Gathering explains the Petrodollar system well: [The Geopolitics of World War III]
Now, this nefarious system is not accepted happily by those who understand it and feel the pressure it exerts upon them.  The BRICS Bank enters as a challenger to Dollar Hegemony for its ability to offer development loans similar to the IMF but in currency besides the US dollar.  Here is a Cursory overview of the BRICS Development Bank: [BRICS Set Up Bank to Counter Western Hold on Global Finance], and an Al Jazeera segment about the goals and motives of the BRICS alliance[Empire: BRICS: The New World Order] .  With such a massive tool at their disposal, countries could break the need for dollars in purchasing oil, as Russia has tried to do with its currency swap deal with China: [Russia and China: The Dawning of a New Currency System].  Russia stopped trading their oil for dollars over a year ago and, if using dollars is absolutely necessary, they will immediately take those dollars and exchange them for gold – the value of gold being pushed down at a low price thanks to central bank policy.  A more detailed look at Putin’s scheme to get around the petrodollar, by using artificially devalued gold and rubles: [Grandmaster Putin’s Trap: Russia Is Selling Oil and Gas in Exchange for Physical Gold].
I also highly recommend watching this debate between Michael Hudson and Leo Panitch about the significance of the BRICS Bank, where geopolitical and international banking dynamics are contrasted with a downer, “you’re either a Capitalist or a Socialist economy”, analysis: [Is The New BRICS Bank a Challenge to US Global Financial Power] and here is my take on the debate: [The BRICS Bank and Dollar Hegemony: The Importance of Geopolitics].
“Neoliberalism is not simply an economic philosophy. It’s interwoven with American foreign policy.” -Hudson.
According to Ellen Brown, Russia and other BRICS countries have a greater diversity in banking methods that would put them fundamentally at odds with Western private banking elite.  She cites this article that glosses how the Russian banking system has changed its ways towards public financing following the 2008 financial crisis:[Financial Crisis Alters Russia Banks].  A vast network of smaller, state controlled banks offering low-interest rates puts Russia and the BRICS at odds with private banks of the west, who lend primarily for profit and operate at the behest of maximizing the returns to their shareholders.  According to Brown, the unsung hero of China’s rapid growth in industry is its banking system that operates as a public service rather than as a parasite.  The entire first section of her book, The Public Banking Solution is devoted to juxtaposing private and public banking models and how the BRICS nations exemplify the necessary measures that need to be taken to ward off the wealth siphoning machine of onerous debt and interest.
Speaking of financial tensions, there is also the lingering memory in Russia of the American intervention during the transition form communism to capitalism.  Aid, support, and advice were continually given to Yeltsin, who in turn attacked the Russian parliament building, rammed through neoliberal shock therapy, and made sure a potential democracy became an oligarchy instead.  I encourage everyone to read or reread Naomi Klein’s chapter 11 in The Shock Doctrine titled ’Bonfire of a Young Democracy: Russia Chooses the Pinochet Option’ in light of current events.  Just a few excerpts:
“To provide ideological backup for Yeltsin’s Chicago Boys, the U.S. Government funded its own transitions experts whose jobs ranged from writing privatization decrees, to launching a New York-style stock exchange, to designing a Russian mutual fund market.  In the fall of 1992, USAID awarded a $2.1 million contract to the Harvard Institute for International Development, which sent teams of young lawyers and economists to shadow the Gaidar [the head of Yeltsin’s economic reform team] team.  In May 1995, Harvard named [Jefferey] Sachs director of the Harvard Institute for International Development, which meant that he played two roles in Russia’s reform period: he began as a freelance adviser to Yelstin, then moved on to overseeing Harvard’s large Russia outpost, funded by the U.S, government.” (p.281)
“Despite the fact that Russia’s Constitutional Court once again ruled Yeltsin’s behavior unconstitutional, Clinton continued to back him, and Congress voted to give Yeltsin $2.5 billion in aid.  Emboldened, Yeltsin sent troops to surround the parliament and got the city to cut off power, heat and phone lines to the White House parliament building.” (p.294)
He would eventually order Russian troops to burn down the parliament building, their own White House.
“… several of Yeltsin’s ministers transferred large sums of public money, which should have gone into the national bank or treasury, into private banks that had been hastily incorporated by oligarchies.  The state then contracted with the same banks to run the privatization auctions for the oil fields and mines.  The banks ran the auctions, but they also bid on them – and sure enough, the oligarch-owned banks decided to make themselves the proud new owners of the previously public assets.  …the Russian people fronted the money for the looting of their own country.” (p.294)
“…he [Sachs] now sees that there was something else at work: many of Washington’s power brokers were still fighting the Cold War.  They saw Russia’s economic collapse as a *geopolitical victory*, the decisive one that ensured U.S. supremacy.” (p.315)
Putin has echoed this sentiment, proclaiming that the fall of the Soviet Union “was the greatest *geopolitical catastrophe* of the century.”.  Seen from this geopolitical perspective and not the ideological one in which it is usually viewed, one major national power was crippled with the help of another major national power through military force and disastrous economic reforms.  The oligarchy reigning in Russia (similar to the one reigning in America, as this scientific study found [US Is an Oligarchy not a Democracy, Says Scientific Study]) was fostered and supported by American neoliberals and is not simply the product of its own vague tendency for corruption.
Then there’s the New York Times running an article by Thomas Friedman openly questioning if the recent plummet of oil prices was not a ploy between US and Saudi Arabia to cripple Russia’s oil and gas economy [A Pump War?].  This would line up perfectly with the US tactic of weaponized financial mixed with control over oil markets.
During the Maidan protests as well, evidence has been accumulated that the US has been directly involved with putting known fascist party members into power.  This video from Storm Clouds Gathering goes into this in detail: [The Ukraine Crisis: What You’re Not Being Told].  The hard evidence of leaked phone calls between US assistant secretary of state Victoria Nuland laying out the exact people she wants to see in power for the new post-coup Ukrainian government is tough to deny.  The right sector leader in Kiev has been documented as rejecting the recently signed peace-deal: [Neo-Nazi Leader of the Right Sector Rejects Ukraine Peace Deal].  To top things off, fake pictures of Russian troops in Eastern Ukraine were brought before US congress as war propaganda last year by a US Senator: [US Senator Used Old Photos to Push Ukraine War Propaganda].  They have since been debunked.
On the financial hegemony side, we don’t have to go very far to see the negative effects of IMF’s monetary policy, it is apparent right there in the Ukraine.  To finance Ukraine’s war with the separatists, the IMF has granted it loans that demand it privatize public sector industries and undergo austerity, even though the IMF is not allowed to give loans to countries at war. Here is Michael Hudson talking about Ukraine’s coming financial crisis: [Has the IMF Annexed Ukraine?].  Now Joe Biden’s son has even been appointed to the board of a Ukrainian oil and gas company with tremendous power in Ukraine.  The $17 billion IMF loan to Ukraine is alleged by Hudson to be a New Cold War Loan meant to wrest away debt payments owed to Russia by Ukraine [Losing Credibility: The IMF’s New Cold War Loan to Ukraine].
So, facing all of this evidence that US power is in trouble and has been stirring up aggression right on Russia’s border, how can we go along with the narrative of Putin the aggressor, the demon?  Russia invaded the formerly Ukrainian territory of Crimea and annexed it, which has been denounced ad nauseum as an act of aggression.  Right after the event, a referendum was conducted in which the Crimeans voted overwhelmingly for annexation by Russia, with over 90% in favor.  Recently, another poll was held by the Ukrainians themselves in which this sentiment was upheld, with ~93% in favor of Russia [Annexation of Crimea to Russia. Opinion Poll].  But the inflammation of this great geopolitical chess game is the consequence of no mere diplomatic misunderstanding or idle hands in the military-industrial complex, Russia is the greatest threat to the interest of the US because it is leading the way in establishing an alternative to the debt-based monetary policies that cripple nations and bolster US power around the Earth.  An alliance of BRICS countries with a new development bank not under control of the IMF/World Bank/Bank of International Settlements is a threat to the hierarchy of order that has settled internationally, with the US on top.  But we not simply side with the BRICS be their cheerleaders, there is a public banking movement going on in the US which is spreading the model at home.
In America, public consent is required (for the most part) before war is waged and the battleground of public opinion is crucial in determining how the military decisions will be made by the president.  It is important that these fact of the US’s involvement in Eastern Europe be distributed and understood before we head into what would be a horrifying and devastating war to protect an order that already impoverishes so many people and nations as a whole.  The private banking cartel that rules Washington with its revolving door of financiers and politicians keeps the vast majority of people from wealth, while ensuring that a few (the 1%, if you will) continue to profit off of assets that are already held like stocks, shares, property, and large businesses.  Public banking models threaten the stability of the wealth generating machines that wealthy elites will fight tooth and nail to keep in motion, with the BRICS alliance raising the biggest alarm.  There is no guarantee that the BRICS Bank will operate on a more benign model than the IMF does now, but the history and composition of public banks in those countries suggests they would be far more likely to restructure and cancel debts, make cheaper loans, and not apply harsh conditionalities that lead to austerity policies and privatization.  Although, to be quite honest, we need a shake up of the dominant forces of the Earth in any case, and detaching the most important element from an economy (money: what we need to have and earn in order to survive more than any other thing in the present day) from oil (the thing most threatening to a flourishing planet when burned) would be a good start.  Simply put, without the Petrodollar system, there is a whole lot more that countries could do.
I highly recommend looking into the idea of public financing and dig into the way monetary policy shapes the international composition of forces.  Since you’ve made it this far, please check out all of the links I have provided in this essay to get the bigger picture.  With an informed public, war and ecological devastation can be prevented and our present situation need not continue indefinitely.  A new development bank headed by large capitalist nations isn’t exactly as glamorous as the notion of a global grassroots revolution, but these developments signify that the greatest powers at work on the surface of the Earth are facing an uncertain future.  Understanding how these forces are deployed, who benefits, and who loses will allow us to more effectively withstand the on-coming media shocks.