Web of Debt
The Treaty of Versailles had imposed crushing reparations payments on the
people, who were
Is this also Australia?
expected to reimburse the costs of the war for all participants — costs totalling
three times the value
of all the property in the country. Speculation in the currency had caused
it to plummet, precipitating
one of the worst runaway inflations in modern times. At its peak, a wheelbarrow
full of 100 currency
banknotes could not buy a loaf of bread. The national treasury was empty,
and huge numbers of
homes and farms had been lost to the banks and speculators. People were living
in hovels and starving.
Nothing quite like it had ever happened before - the total destruction of
the national currency,
wiping out people's savings, their businesses, and the economy generally.
Making matters worse,
at the end of the decade global depression hit.
The country had no choice but to succumb to debt slavery to international
Or so it seemed. The Parliament, that came to power in 1933, thwarted the
banking cartel by issuing their own money. In this they took their cue from
who funded the American Civil War with government-issued paper money called
The Parliament began a national credit program by devising a plan of public
Projects earmarked for funding included flood control, repair of public buildings
private residences, and construction of new buildings, roads, bridges, canals,
and port facilities.
The projected cost of the various programs was fixed at one billion units
of the national currency.
One billion non-inflationary bills of exchange, called Labor Treasury Certificates,
were then issued
against this cost. Millions of people were put to work on these projects,
and the workers were paid
with the Treasury Certificates. This government issued money wasn't backed
by gold, but it was
backed by something of real value. It was essentially a receipt for labor
and materials delivered to
the government. It was said, "for every currency note that was issued we
required the equivalent of
the currency's worth of work done or goods produced." The workers
then spent the Certificates
on other goods and services, creating more jobs for more people.
Within two years, the unemployment problem had been solved and the country
was back on its feet.
It had a solid, stable currency, no debt, and no inflation, at a time
when millions of people in the
United States and other Western countries were still out of work and living
The country even managed to restore foreign trade, although it was denied
foreign credit and was
faced with an economic boycott abroad. It did this by using a barter system:
commodities were exchanged directly with other countries, circumventing the
This system of direct exchange occurred without debt and without trade deficits.
experiment, like Lincoln's, was short-lived; but it left some lasting monuments
to its success,
including the world's first extensive super highway.
It was revealed that it was the privately owned central bank, not the government,
that was pumping new currency available for borrowing into the economy.
Like the U.S. Federal Reserve, the central bank was overseen by appointed
but was operated for private gain. What drove the wartime inflation into
speculation by foreign investors, who would sell the currency short, betting
on its decreasing value.
In the manipulative device known as the short sale, speculators borrow something
they don't own,
sell it, then "cover" by buying it back at the lower price. Speculation in
the currency was made
possible because the central bank made massive amounts of currency available
The currency that was created with accounting entries on the bank's books
and lent at a
profitable interest. When the central bank could not keep up with the voracious
demand for the
currency, other private banks were also allowed to create them out of nothing
and lend them at interest.