"If the Nation can issue a dollar bond it can issue a dollar bill.
The element that makes the bond good makes the bill good also. The
difference between the bond and the bill is that the bond lets the
money broker collect twice the amount of the bond and an additional 20%.
Whereas the currency, the honest sort provided by the Constitution pays
nobody but those who contribute in some useful way. It is absurd to say
our Country can issue bonds and cannot issue currency. Both are promises
to pay, but one fattens the usurer and the other helps the People."
by:
Thomas A. Edison
(1847-1931) Inventor
Source:
in reference to the Muscle Shoals water power plant, built on the Tennessee River. New York Times, December 4 and 6, 1921
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Reader comments about this quote:
 -- jane      
Edison should have staid with phonographs and light bulbs.
 -- Waffler, Smith, Arkansas     
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    Hmmm....
     -- Me Again     
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    If by bill he meant a gold or silver certificate,(it being a note for gold and silver coin with the weight and value set certain) I give him high marks.
     -- Mike, Norwalk     
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    Of all people, an inventor should be most aware that ideas with the best of intentions can and will be perverted.
     -- Bryan Morton, Stuart, FL     
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    Mr Edison was right and should not have "staid" with only light bulbs and phonographs.
     -- jim k, austin     
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    Mike, Edison was referring to the fact that the US government issues Treasury Bonds which are simply promises to pay at some future date with interest. These bonds, often referred to as T-bills, are backed by nothing except 'the good faith and credit of the United States of America.' Citizens could buy these interest bearing bonds with their own money and receive a premium later. But when the government wants more money than the people are willing to lend it, they have no where to go. So the Fed was invented to be able to 'buy' T-bills with their own paper notes and checkbook currency, also backed by nothing. The only caveat was that we could no longer have a currency that could be redeemed in gold. Edison simply says that if the government can issue a bond it can issue a fiat currency (bill), too. But this sleight of hand with the Fed was written up by the founders of the Fed for the purposes of monopolizing the credit of the US. The fact that the Fed got ALL the nation's gold (!!) in exchange for these interest-bearing pieces of paper should outrage EVERYONE. Through a trick, the country has become the perpetual debtor to the Fed with no hope of ever ending that status or the constant tribute we must pay for this system with our lives, labors, and property. The result has been nearly constant war, the loss of millions and millions of lives around the world, and the subjugation of every nation on Earth. (And Waffler, if you are going to call everyone idiots in your posts, at least learn to spell words at a 3rd grade level.)
     -- E Archer, NYC     
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    Archer, thanks
     -- Mike, Norwalk     
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    WHERE in the Constitution are our misleaders authorized to issue bonds or to "issue" ANYTHING? Edison was either communist or an economic idiot or both. There are only two possible economic systems: barter and slavery. God commanded a barter system with: "Thou shalt not steal" and the Constitution mandates a bater system of gold and silver coins. Art.1: Sec. 10. This VITAL section detemines who is master and who is servant depending if it is enforced or ignored. It has been ignored for 40 years. "FREEDOM IS $LAVERY" There would be no wars if our Marxist misleaders had to pay soldiers and suppliers --- but they pretend they are paid with checks, pretend to pay taxes and pretend we have freedom,
     -- Dave Wilbur, St. Louis     
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    US Constitution, Article I, section 8: "The Congress shall have Power To ... borrow Money on the credit of the United States ..." While I agree that this power has absolutely been abused, it was granted to the Congress by the Constitution. To borrow means to promise to pay, which is a promissory note, IOU, bond, bill, security, whatever you want to call it. So until there is an amendment to the Constitution that repeals this section, or at least limits the amount the Congress can promise to pay on the backs of the People, Congress will continue to issue bonds. What isn't in the Constitution is a prohibition on legal tender -- i.e. to force the States and the People to accept promissory notes in lieu of cash. Accepting IOUs must be the prerogative of the recipient, otherwise Congress has assumed the right to counterfeit money. Even with a system of barter, the seller may choose to accept an IOU for his goods and services -- this is the right to contract, and it isn't EVER going away. However, no one can be lawfully compelled to accept a contract. So in this global world, we should be able to accept US Notes (US government fiat), Euros (European Union fiat), Pesos, Yen, gold, silver, water, etc. as long as their values are not pegged to each other and the value of each are determined by the free market. And NO ONE can compel a tradesman to accept fiat in lieu of cash (currencies backed by real commodities, precious metals being the preference). And there needs to be an ironclad amendment to the Constitution that makes this abundantly clear to all, with mandatory school curriculum that educates every child in the dangers and history of fiat currency. Every child knows about Hitler -- they should be just as knowledgeable about the enormous risks of credit (i.e., DEBT!) A nation cannot remain free if counterfeiting of the nation's money supply is 'legalized' by statute.
     -- E Archer, NYC     
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    Well stated E Archer, The majority of people need to be informed that the Federal Reserve ( A cartel of 12 private banks ) suck approximately 35-40 billion dollars from the taxpayers in the form of interest for nothing more than converting the bond orders from the treasury into the printing of the federal reserve notes or IOU's. My wish is that we nationalize the federal reserve bank cartel. That would be a positive first step. Re-instatement of the gold standard would be a nice second step but will never happen. Thomas Jefferson stated that " I believe that banking institutions are more dangerous to our liberties than standing armies. Already they raised up a moneyed aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs". When the government fears the people there is liberty; when the people fear the government there is tyranny. Good luck Mr. Obama...
     -- Stingr67, Minneapolis     
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    I think it's high time that The Fox News Channel business "experts" start telling the people the truth about the Federal Reserve System. The idea that it is good for the government to issue fiat bonds in exchange for Federal Reserve (which is no more 'Federal' than Federal Express) fiat currency (created out of thin air...there are no reserves!) is preposterous. Do yourself a favor, visit http://www.themoneymasters.com Henry Ford said that if the American people understood the workings of the country's financial system, there would be open revolution tomorrow!
     -- Joe, Doylestown, PA     
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    pretty sure it was mayer rothschilde that said that, although h. ford might have quoted him.
     -- f. black, lugoff, sc     
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    Why should government borrow money from anyone to create the pieces of paper that are circulated to represent a nations activity? The activity is already there and has always been there. Bankers create the illusion that all money that exists ( in other words all activity that exists) belong to them. All the money in circulation today has been lent into existence. This means that if it was all paid "back" with interest there would not be any money, and indeed there would not be enough money to repay the interest. It's a scam hidden behind advanced technicalities today but it was obvious in the days of Jefferson, Andrew Jackson, Louis T. McFadden (expert banker), Thomas Edison, and thousands of others who opposed the 1913 Federal Reserve act.
     -- Zid, Oslo, Norway     
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    See the documentary called "The Money Masters" and "The Secret of Oz" on the Federal Reserve. Try youtube or google video.
     -- Zid, Oslo, Norway     
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    [my response to a local station's reporting about Congress' bickering over the "debt ceiling."] This is like watching ants in a sandbox with a magnifying glass WHILE BOMBS DROP AROUND YOU ! ! ! The ACTUAL 'money creation' system is FATALLY flawed, unsustainable, mathematically inhumane YET IT NEVER GETS REPORTED ON ! ! ! The 'arguments' presented here in this article don't amount to SQUAT re: the solution to a flawed system. People know this to different degrees and yet it never gets covered. I got on the e-mail list of WILX for local news purposes. Do some real reporting and I'd consider turning the TV back on and getting a newspaper, but, alas. Many U.S. elections were MAINLY about this long fought issue of money creation power! 1892 & 1896 and in the depression are recent examples when this was in the public discourse. In short, a sovereign nation's money has been (and can be again) circulated WITHOUT DEBT. A good poker game needs JUST ENOUGH chips to play. DITTO for a good money system. "If the Nation can issue a dollar bond it can issue a dollar bill..." Edison (search it)
     -- doc, Lansing     
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    The last person to try to print debtless currency was JFK. Clinton just removed from circulation Lincoln's greenbacks a decade or so ago. Edison knew that the fed if allowed to control our money supply through debt backed currency would lead us into perpetual debt and servitude! amazing man lets print our way out of debt and reign in the money supply through cutting fractional reserve banking proportionately. less taxes and more social programs... even lennon could have imagined!
     -- J. Chase, Encinitas     
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    Thomas Edison was smart enough to understand why the rest of mainstream american opinion did not. Money has no intrinsic value. Fiat money is not slavery. Sovereign debt is not slavery. In this quote Edison is spot on, on the problem of social justice. Uttering currency and giving it to the people, the workers responsible of creating wealth, creates aggregate demand. Demand drives sales. Sales drive production. You don't eat because you've made yourself a sandwich; you made yourself a sandwich because you're hungry and you want to eat.
    A country with monetary sovereignty indebted in its own currency cannot go bankrupt. The monetary system is just a spread sheet. Basic accounting, which the ancients worked with, states that a man's surplus is another man's deficit. A man's income is another man's payments. A man's savings are another man's loans. These two elements always balance themselves out to 0.
    In the modern economy there are 3 elements: government, private sector (households and companies), and the foreign sector. All three of these cannot be in surplus at the same time. One needs to be in deficit, in order for the other two to be in surplus, and the only one able to run deficits without going bankrupt is the government.
    Government is not a household. Government creates fiat by circulating currency in its expenditures, and it destroys it via taxation. Government does need to borrow its own money first in order to spend it. Government does not borrow to "finance" its fiscal deficit. Furthermore, government does need to produce debt in order to run fiscal deficit. We're stuck with the bad habits of the gold standard era. An era of perpetual wars. And those claiming that metals can't be speculated upon/manipulated, you guys need to consult actual history to see the truth.
    A net government deficit of lets say 10 billions dollars enters the private system as excess reserves, which the banks compete to turn into loans and deposits. (Loans create deposits by the way)
    Therefore, that's the only way the private sector can save. If government works to reduce the budget deficit, then the private sector is seeing its surplus reduced. If the government achieves budget surplus, the private sector is running a deficit. That means recession. In the course of the business cycle, if the government isn't running a deficit, then the economy would stagnate.
    All recessions of the 19th and 20th centuries in the US have come on the heels of government surpluses.
    The Clinton surpluses did the same thing. The Fed back then had two options. Either do nothing, and the economy would stagnate in the short term, and contract in the mid turn, or - since it could not longer buy government debt to expand the money supply to facilitate growth - it could turn to buy private debt.
    Fiat money backed by "nothing" creates inflation. Where's the inflation in the fiat countries who produce? Can't spot it. Japan has a debt to GDP ratio of more than 220%. And you know what the chances are for Japan to go bankrupt? 0% That figure is the same for the USA.
    How lucky are you americans? The whole world wants to sell you physical goods in exchange for your paper dollars, out of which your government will never run out of.
    If you want to blame someone for the poverty inside your country, blame your government, not the chinese.
    China exported so much because it needed to defend itself. The chinese couldn't buy strategic resources and technology with the yuan. For those kinds of things you need universal accepted currency, i.e. american dollars. In the future, they'll focus on domestic consumption.
    Unlike the ancient and medieval periods, where production preceded financialization, in modern times, financialization preceded production and distribution. You contracted a credit in order to gather resources and labor, then you could start producing. All money is debt. Yet, debt isn't a esoteric thing. It's just some numbers on a spread sheet. The ancients knew how to calculate the growth of debts over time and of their payments/interest. And they knew when to expect those debts to become unbearable/unpayable. That was when they canceled them. In fact, that's what new rulers did, when they entered the office. The first thing they did was to cancel the debts of the previous administration. Allowing the people to go bankrupt, meant casting them to into servitude (slavery). That would bring with it migration, and a lack of manpower. That made the kingdom weak in the front of barbarian assaults or enemy kings/despots.
    In conclusion, unlearn all the neoliberal and austrian myths, and start researching accounting reality. Unlearn that demand curve follows the law of demand. Unlearn the myths about debt, metals, and fiat. Document yourselves about the Theory of Chartalism, which describes everything to the letter.
    If you're a citizen of a country which has monetary sovereignty, and which is indebted in its own currency, don't stand for austerity, don't stand for bs. Don't fear arbitrary ratios between debt to GDP or deficit to GDP. Inflation is the real yardstick. We can have full employment with price stability. As long as unused resources and unused labor is there to be located in society, there's no reason not to expand the fiscal deficit. In order to cover the GDP output gap. Unlike the EU, the USA has two seminal things: monetary sovereignty and a surplus recycling system.
     -- Serban, Bucharest     
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    All major Economists understand Edison, from John Kenneth Galbraith to Milton Friedman, they have all understood the scam. It's just that nobody dares oppose the central bankers. Bretton Woods was created because one understood that nations with vast amounts of natural resources would become immensely rich and before interest on their national currency issuance could take hold they would be able to escape such debt and indeed hold too much of other nations fake debt on their currency. All the idiots here suggesting Edison did not understand economy are dim-witted nincompoops who have never read or understood anything more complicated than Ayn Rand. after 25 years of economic studies every serious economists knows this one.
     -- Zid, Oslo     
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