Economic Error #1: Governments Should Get Out of Debt by Printing Paper Money.
Ellen Brown writes that governments can print money and buy whatever they need without going into debt to banks.
If governments everywhere are in debt, who are they in debt to? The answer is that they are in debt to private banks. The "cruel hoax" is that governments are in debt for money created on a computer screen, money they could have created themselves. [Web of Debt, p. 6]
How is it possible to get out of debt with paper money? By defrauding creditors. They loaned money with purchasing power of one money. They are paid off by paper money.
Why don't they just refuse to accept the worthless money? Because the government that prints it passes a law making it illegal to turn down the money when a debtor pays. This is called legal tender.
Legal tender is money that must legally be accepted in payment of debts. It is "as good as gold" in trade, without bearing debt or an obligation to redeem the notes in some other firm of money later. [Web of Debt, pp. 36-37]
So, by forcing people to take paper money, governments create wealth as good as gold. This is something for nothing: wealth as good as gold out of pieces of paper and some ink. Government is magic. This is like alchemy: turning lead into gold, but better, because ink and paper are cheaper than lead. And only government can do this. A miracle!
Her book is based on this magic. Only it is not magic. It is theft by government.
She says debt is owed to bankers. It in fact is owed to private citizens who buy savings bonds, Treasury bills, and money market funds that buy Treasury bills. She is calling for the impoverishment of Americans through hyperinflation, as I show in subsequent responses in this department.
For a detailed critique of Ellen Brown's economics, go here://www.garynorth.com/public/department141.cfm