Rigged Money: The Third U.S. Experiment with a Central Bank

By Detlef Gloge

Dollar bills may wear out, but they don’t disappear.

So why can banks add trillions of new dollars to the existing ones without asking anybody’s permission?

In this unique disclosure of the spoils of money creation, economist Detlef Gloge reveals how each dollar created by banks is a dollar of wealth seized from society&m

• Language: English
• Publisher: TOPLINK PUBLISHING, LLC
• Release date: Aug 25, 2017
• ISBN: 9781947620766

Detlef Gloge

Dr. Detlef Gloge is provocative and incisively honest. This short biography cannot do proper credit to him or his extraordinary books. An economist by trade, he worries about wealth inequality, economic stagnation, and the growing crescendo of public frustration. He has spent decades observing the worsening monetary conditions and researching how banks' regressive tax creates irrevocable wealth disparity by harming the most vulnerable members of society. Despite his twenty years as an economist, Dr. Gloge has maintained an uncompromising independence from the dissonance and confusion of the economic field. His common sense and independent mind-set probably stem from his experience as an engineer and a mathematician. Six dozen publications and patents bear his name. The Bell Laboratories team that he led deployed the first prototype internet links. He is a fellow of engineering and scientific societies in the United States. These successes have shaped Dr. Gloge's desire to repay his country by joining those who openly express their concern for its future and recommend changes. The themes that he highlights in this book emerged in his earlier books, How Not to Make Money and Money Forensics. This third book, Rigged Money, is his most unreserved, candid exposition of the surreptitious harm and inequity practiced by today's creators of money. This work is an important contribution to the realm of new economic thinking, which many economists consider fundamental for meeting the needs of the modern age.

Book preview

Rigged Money

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The Third U.S. Experiment with a Central Bank

Detlef Gloge

Copyright © 2017 by Detlef Gloge.

Paperback: 978-1-947620-75-9

eBook: 978-1-947620-76-6

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any electronic or mechanical means, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

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Printed in the United States of America

Contents

Preface: Enlightened Hubris

Part One: The Money Game

Chapter 1: Historical Absurdity

Chapter 2: Going for Broke

Chapter 3: Pretense for Printing Money

Chapter 4: Trillion-Dollar Transfer

Chapter 5: Money Deluge

Part Two: Honest Money

Chapter 6: Age of Prosperity

Chapter 7: Bankers’ Windfall

Chapter 8: Corrupted Markets

Chapter 9: Structural Damage

Chapter 10: Harmful Cycles

Part Three: Money Wars

Chapter 11: Race to the Bottom

Chapter 12: Regional Diversity

Part Four: Time to Act

Chapter 13: Fiduciary Duty

Chapter 14: Losing Control

Chapter 15: End Game

Chapter 16: Return to Sanity

Postscript: The Blame Game

Bibliography

Notes

Disclaimer

This book details the author’s opinions about economic subjects. The author is not a licensed financial consultant. The author and the publisher make no representations or warranties of any kind with respect to this book or its contents. The author and the publisher disclaim all such warranties of financial advice for a particular purpose and do not warrant that the information accessible via this book is accurate, complete or current.

Please consult with your own Certified Public Accountant of financial services professional regarding the suggestions and recommendations made in this book. Neither the author nor the publisher will be liable for damages arising out of or in connection with the use of this book. This is a comprehensive limitation of liability that applies to all damages including (without limitation) compensatory, direct, indirect or consequential damages; loss of data, incomes or profit; loss of or damage to property and claims of third parties.

You understand that this book is not intended as a substitute for consultation with a licensed financial professional. This book provides content related to topics of finance and economic living. As such, use of this book implies your acceptance of this disclaimer.

To my wife Christa

About the Author

Dr. Detlef Gloge is provocative and incisively honest. This short biography cannot do proper credit to him or his extraordinary books. An economist by trade, he worries about wealth inequality, economic stagnation, and the growing crescendo of public frustration.

He has spent decades observing the worsening monetary conditions and researching how banks’ regressive tax creates irrevocable wealth disparity by harming the most vulnerable members of society.

Despite his twenty years as an economist, Dr. Gloge has maintained an uncompromising independence from the dissonance and confusion of the economic field. His common sense and independent mind-set probably stem from his experience as an engineer and a mathematician. Six dozen publications and patents bear his name. The Bell Laboratories team that he led deployed the first prototype internet links. He is a fellow of engineering and scientific societies in the United States.

These successes have shaped Dr. Gloge’s desire to repay his country by joining those who openly express their concern for its future and recommend changes. The themes that he highlights in this book emerged in his earlier books, How Not to Make Money and Money Forensics. This third book, Rigged Money, is his most unreserved, candid exposition of the surreptitious harm and inequity practiced by today’s creators of money.

This work is an important contribution to the realm of new economic thinking, which many economists consider fundamental for meeting the needs of the modern age.

Preface: Enlightened Hubris

Anyone can create money. The problem is getting anyone else to accept it. That is Hyman Minsky’s succinct summary of banking. When the United States was young, banks had a tough time peddling their individual banknotes to the public. Across the Atlantic, the Bank of England printed notes with royal imprimatur that English banks proudly lent to enthusiastic borrowers.

The Bank of England is to money as St. Peter’s is to the Faith, J. K. Galbraith observed.¹ Money rests on faith and trust. The founders of the United States knew that banks tend to abuse trust. They wanted U.S. Congress, not a banking cartel, to manage the country’s money. Let bank clients beware of the risks of holding banknotes!

Most of the founders or their ancestors had come from a country in which sovereigns once had owned all precious metals and reserved the right to mint coinage. The profit from that activity—the value of the coins minus the cost of minting them—is called seigniorage. It financed wars and impoverished the citizenry. Anyone else who dared to create money was convicted of counterfeiting, a crime listed next to treason in even the U.S. Constitution.

Apart from their differing legality, money creation and counterfeiting are identical activities and generate profit in the same way.

But too much money creation debases the currency. To avoid that effect, sovereigns also borrowed and levied taxes. When King William III of England exhausted all of these options, bankers bailed him out in exchange for his seigniorage right, which they deemed the most potent and covert of his three means of seizing wealth. They established the Bank of England, issued banknotes, and made King William III endorse the banknotes as legal tender of the realm.

The Bank of England became the central bank of a banking cartel whose legal and mutually supportive structure provided flexibility in managing the currency’s gold backing. The cartel was instrumental in financing the British Empire and making sterling the reserve currency accepted throughout the world.

The flip side of the abundant note issuance was poverty at home. Yet this consequence of money creation was not recognized for what it was—exploitation permissible in a bygone era. Instead of abolishing money creation, the Age of Enlightenment attempted to eradicate poverty by dictating new precepts for human interaction.

Never mind that markets and money have their own laws, which have developed over the course