Wealth Equality

The Optimum Quantity of Money 
Monetary theory is like a Japanese garden.  It has aesthetic unity born of varietyan apparent simplicity that conceals a sophisticated reality; a surface view that dissolves in ever deeper perspectives. Both can be fully appreciated only if examined from many different angles, only if studied leisurely but in depth. Both have elements that can be enjoyed independently of the whole, yet attain their full realization only as part of the whole. Milton Friedman, American Economist

Our globally centralized bank monetary system is fundamentally flawed because the legal tender of the United States was designed for the settlement of goods and services sold on credit.  When credit is used for direct purchase of goods and services then legal tender is used to settle the outstanding credit balance debt owed by the debtor to the creditor, it was not designed for direct purchase of goods and services.  "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE."

The system has two components:  The international Petrodollar System and the domestic Federal Reserve Bank System.  The Petrodollar system generates artificial demand for US dollars at the expense of the purchasing power of other currencies in the international market. The Federal Reserve Bank System creates debt based issued currency that erodes the purchasing power of the citizens of the United States in the domestic market.

In the Petrodollar system sixty-two percent of the world central bank reserves are held in US dollars and eighty-seven percent of all foreign exchanges deals initiated involved the dollar on one side. The Petrodollar system has proven tremendously beneficial to the US economy.  In addition to creating a marketplace for affordable imported goods from countries who need US dollars, there are more specific benefits.  In essence, the US economy receives a double loan out of every global oil transaction.
  1. Oil consumers are required to purchase oil in US dollars
  2. The excess profits of the oil-producing nations are then placed into US government debt securities held in western banks.

The petrodollar system provides at least three immediate benefits to the United States:
  • It increases global demand for US dollars
  • It increases global demand for US debt securities through Petrodollar Recycling
  • It gives the US the ability to buy oil with a currency it can print at will

In the Federal Reserve Bank System ninety-seven percent our money supply is put into circulation as debt by private for-profit banks, who control where that money first enters our economy. The vast majority of money flows toward housing and financial services when created by these banks as loans, bypassing the productive economy that provides essential livelihoods, goods, and services to communities.  And once some of these Federal Reserve notes find their way into our communities, they tend to flow back out again through taxes and profits to out-of-town corporations.  

Wealth Inequality in America is one of the world's highest rates.  Currently ninety-three percent of monetary wealth is owned by just twenty percent of the US population.  We are now in violation of and out of balance with the 80/20 rule in its connection with population and wealth in the United States. According to the Italian economist Vilfredo Pareto research he noticed that eighty percent of Italy's land was owned by twenty percent of the population. He then carried out surveys on a variety of other countries and found to his surprise that a similar distribution applied. A chart that gave the inequality a very visible and comprehensible form, the so-called champagne glass effect, was contained in the 1992 United Nations Development Program Report, which showed the distribution of global income to be very uneven, with the richest twenty percent of the world's population controlling eighty-two percent of the world's income.
World Distribution of GDP, 1992
Quintile of populationIncome
Richest 20%82.70%
Second 20%11.75%
Third 20%2.30%
Fourth 20%1.85%
Poorest 20%1.40%

To reverse the champagne glass effect the State of California has joined 47 other US states that already have currency creation laws and revised a provision in its state constitution called the Alternative Currencies Act, AB 129, in order to provide the ability to create private forms of exchange and lawful currency that:

As part of a larger strategy to reform our monetary system, community currencies can make our local economies much more resilient to economic volatility, effectively empower economically marginalized populations with an inclusive and accessible form of exchange, and contribute to the movement for economic democracy by giving communities the power to design and issue their own currencies.