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by Rickey Gard Diamond
This post first appeared in Vermont Woman, (Holiday, Nov/Dec) 2014. 

I remember when I decided I had to get my college degree: A working mom with three kids at the time, when I graduated I would owe about $8000, or in 1980, the equivalent of what I might pay for a car. I decided to invest in me, knowing the degree would open doors that would stay shut otherwise.
Remarried, about five years later I got bad news; my husband’s job was eliminated. We contacted all our creditors and arranged partial payment plans while he looked for employment. Everyone was understanding and nice—except one.
The ironically named People’s State Bank that held my student loans was nasty. I had faithfully all but repaid, but in response to my story, their man refused any half-measures and threatened penalties, or else. We paid them somehow the next few months.
And I still remember the satisfaction I felt, placing my last check payment inside an envelope I addressed to: The People’s State Bloodsuckers. Ever since, we’ve made it our practice to use local, community banks and credit unions.

How Much, Too Much
People’s State Bank became Pinnacle Bank became Civitas Bank became Citizens Bank of MidAmerica and is now the absurdly named Fifth Third Bank. Our era has given us overly complex bank upheavals.
And student bank loans have gotten much bigger and been used by an increasing number of students. A recent Senate hearing heard testimony that about eight banks dominate that market—shades of too-big-to-fail? Student debt nationwide now outranks our nation’s credit card debt for the first time, at over $1.2 trillion. A trillion is a thousand billions, each billion a thousand millions.
With universities running themselves like profit-seeking corporations, and more importantly with the nation’s state governments encouraging the trend by reducing state education funds, college costs for students have skyrocketed. The national college boards publish tuition trends at their website, and from 1990-91 until 2013-14, national tuition costs on average more than doubled. Family incomes did not.
Here in Vermont, 63 percent of our students now need loans. Part of that might have to do with UVM’s ranking seventh in the top ten most expensive state schools (U.S. News & World Report, Oct. 28, 2014). This year’s in-state tuition costs $16,226. (University of Pittsburgh came in first at $17,772.) Board members at UVM and your local legislator need to drive some back roads in Vermont and look around.
This year’s average Vermont student debt is $28,299. We rank #13 in debt amount nationally, and not all students finish. The Project on Student Debt says the national average debt of graduates is $29,400, and from 2008 to 2012, average debt of combined government and private loans grew by 6 percent a year. Since Vermont’s tuition is relatively high, we should assume future state grads will be looking at considerably more, not less, than the state average most recently reported.

Loan Zombies
The mean fellow I met at People’s Bank years ago might have gone on to work in Washington, D.C., because by 2005 the bankers’ lobby had successfully changed the bankruptcy law to make banks’ student loans “non-dischargeable.” Bankruptcy, the last-ditch chance that people have when bad things happen—when their health fails, or the economy crashes—goes back to ancient times and literal slavery or “jubilee,” the forgiving of debt. In modern times, debtor’s prison was replaced by a court of law that could find debts impossible to repay. But since 2005, declaring bankruptcy in court will not free you from student loans: Not even your death will free your poor co-signers from your debt obligation.
I think maybe this explains the appeal of all those zombie movies. You can’t kill these loans. You can’t buy a home or start a business with these loans. They turn you into the walking dead.

Equal Output
The American Association of University Women (AAUW) came out with a new study in July, adding new light to the issue for women, saying: “Although women and men pay the same tuition for higher education—and tend to take out the same amount in loans—women are more burdened by their student loan debt after graduation. Just one year after graduation, women are paid on average 82 cents for every dollar their male counterparts are paid,” an 18 percent wage gap.
Even controlling for factors like chosen major, type of job, number of hours worked each week, AAUW still found a 7 percent wage gap, no matter the field. They invited Sen. Elizabeth Warren (D-MA) to their study’s press conference, and she called it “a one-two punch…. Women take on big debts to go to college, but they have less money to pay off those debts.”

That’s not even mentioning what happens later, should a female graduate be foolish enough to want to start a family. Without paid family leave or help with childcare costs, she’ll be a debtor further handicapped.

A Different Approach
But if we’ve been persuaded that banks lending money is the only way forward for education, then at least let it be the lending of our own money, set at an interest rate with terms we can control.
The only bank in the country now capitalized by its own state tax revenues, (and aimed at supporting local banks and employment) The Bank of North Dakota began offering state students a refinance rate of 5.34 percent fixed, or 1.73 percent variable (with interest not varying more than 1 percent a year). For students locked in at higher rates, refinance was a godsend.
But BND also sponsors and talks freely about four loan deferment programs, including for economic hardship and unemployment, and three loan forgiveness programs, the latter encouraging debt-reduced careers in teaching and STEM.
They offer scholarships awarded to the top fifth of their high school students who qualify and choose to attend school in North Dakota. Comparatively speaking, North Dakota’s tuitions are a bargain at $7,265 in 2014—at least partly because the BND returns dividends to the state’s general fund.
Quick. Somebody tell AAUW and Elizabeth Warren. Student debt is a woman’s issue—and public banking gives states a chance to revive education and a future. Local legislators should look to this state solution.

Rickey Gard Diamond is editor of Vermont Woman and is on the board of The Public Banking Institute.

Eros was Gaia's sexy counterpoint in the beginning, not baby Cupid. Gaia created the earth, said the Greeks.

Eros was Gaia’s sexy counterpoint in the beginning, not baby Cupid. Gaia created the earth, said the Greeks.

I’ll  be presenting my Eros theory of the economy at the Gross National Happiness Conference at UVM in Burlington, Vermont, on May 29 & 30. I’m one of many dozens of presenters, and it looks like two (or four) great days focused on creating a movement. Learn about economics for passionate people and the planet. And then visit the Discover Jazz Festival in Burlington, a short walk away.

My workshop aims to empower those intimidated by economics. I devised a basic primer during my work with adult students as a professor of liberal studies at Vermont College; while my training is in writing and literature, I was concerned about language that shapes our thinking about economics, while mystifying it.

Literature’s powerful stories are often entwined with changing perceptions of value and money. As a journalist I have frequently written about economic policies and the persistent poverty of women; I’ve published a novel, Second Sight that examines the uses of violence, including economic violence, to control us. Women in particular tend to be intimidated and avoid economics. Yet few of either gender relishes admitting to what isn’t understood in a climate of experts’ mystifying language.

Gross National Happiness as a counter to the Gross National Product had long been part of my presentations at colleges and conferences. I’m excited about Genuine Progress Indicators recently being added to Vermont’s measures of how we’re doing, and the development of public banking. There’s much to celebrate when you understand what’s at stake and how many are already proposing new paths to a happier future.

Using images,  I’ll show blind spots in male-dominated economic thinking, especially one big omission—biology—ours and the earth’s. I love to deconstruct economics, and have fun unlocking the subject through language and story.

For instance, the earliest creation story of the Greeks said the goddess Gaia created the earth and its life. And next came Eros whose ability to inspire passion and love assured life would continue.  The ecological Gaia theory is now widely recognized: we have “green economists.” But  I argue that Eros must not be forgotten as Gaia’s counterpart.

Eros is defined in the dictionary as sexual and creative drive, but also as “the sum of all instincts for self-preservation.” What might Eros mean to Gaia and our monetary economy? How might we reshape conversations about the economic realm? Is the economy really a war? Or, like our planet Gaia, a complex, self-regulating organism engaged in many sexy exchanges—our actual lives the real bottom line?

Check out the schedule for a two full days of learning–and have fun doing it. Come help build a movement, along with other terrifically happy and inventive, passionate people who care about our planet and all of its lifek–including yours! Here’s the link to what’s happening–register and please pass the news along.

The great feminist Andrea Dworkin put it this way in 1981. “Money speaks,” she said, “but it speaks in a male voice.” We know this better than ever since 2008. As the financial fog begins to lift on the fraud and gobbledygook of economic Wall Street and Washington, it feels a little like walking in uninvited on a jack-ass frat party. Eeee-ooooh. You actually do that?! How can anyone be so stupid??!!

Feminists aren’t the only ones to notice how male-dominated this crisis has been. Ken Hirschhorn, a trader at Long-Term Capital Management, a prominent hedge fund whose collapse in 2000 foreshadowed 2008’s melt-down, told Sheelah Kolhatkar of New York Magazine, “I don’t think greed is gender specific. But if you ask me whether Long-Term Capital Management would have blown up if there were more women involved in the decision-making process? A woman might have said, ‘Let’s not assume we’ll never be wrong.’ ”

Kolhatkar also talked to Joe Herbert, a neuroscientist who studies finance at Cambridge University. He said, “The banking crisis was caused by doing what no society ever allows, permitting young males to behave in an unregulated way. Anyone who studied neurobiology would have predicted disaster.”

The question is what to do about the reeking mess left behind. How do we prevent another monetary jack-ass crisis? Growing numbers of critics agree we cannot continue to do more of the same. But how can women make a difference?


Financial headlines in September sounded an alarm about the small ranks of women in high places shrinking even further. When Sallie Krawcheck, CFO at Bank of America, left without explanation, Nathaniel Hopper at The Los Angeles Times, wrote: “Krawcheck joins a string of other top female bankers to leave the upper echelons of financial companies in recent years. Other notable exits include Heidi Miller, who in June stepped down as one of two women serving on JPMorgan Chase & Co.’s operating committee…Citigroup Inc.’s Terri Dial last year stepped down as head of the company’s consumer banking operations; former Morgan Stanley co-President Zoe Cruz resigned from the investment bank in 2007; and Lehman Brothers Chief Financial Officer Erin Callan was pushed out just before the firm collapsed.” In another corporate story in September, New Yahoo CEO, the respected and outspoken Carol Bartz, got an unprecedented surprise, fired by her board on the phone. Bartz responded to reporters with rare candor: “These people f***ed me over,” she said.

Nor do Washington women fare better. In a late-September interview with Terry Gross on Fresh Air, author of Confidence Men, Ron Suskind of The Washington Post, reported a “hostile environment for women” in Obama’s White House and “not just on economic matters.” Christina Romer, who stepped down as chair of Obama’s Council of Economic Advisors in August of 2010, told Suskind there were alternative views (like hers), not listened to. Elizabeth Warren, head of FDIC who expected to be placed at the head of the new consumer protection agency she designed, instead got run out of town. She’s now running for the Senate from Massachusetts.


Overly influenced by a testosterone-ruled Wall Street, Washington appears too polarized to work and too moneyed to represent most women. Last year’s Supreme Court “United Citizens” ruling monetized speech in our political process; that’s as good an explanation as any for Occupy Wall Street’s move to give the 99 percent a voice. It is hard to discover how many women number among the protestors, but clearly many are reaching for change. (See Occupy sidebar.)


While protests happen, real economic solutions for preventing another crisis are being offered by two unlikely women, neither of them economists: lawyer Ellen Brown of California and city planner Gwendolyn Hallsmith of Montpelier, Vermont. Both women propose creative and local solutions, which are exactly the kind of economics that women can most easily access. Their ideas promise a common meeting place closer to home, and big economic changes that could provide greater security and a role for revitalizing state democracies.

To introduce Brown and Hallsmith’s ideas, it’s important to understand that both women critique our current method of creating money. You may not have realized it, but none of the world’s governments now directly issues its own currency—including our U.S. dollars. Instead, a global system of central banks (like our privately owned Federal Reserve) trade in government bonds with global investment banks. (For more on this, see the September/October issue of Vermont Woman for “Dollars on the Make,” or

Government bonds create loans to our nation’s Treasury. The Treasury then authorizes the issue of Federal Reserve notes, essentially IOUs, or the dollars in your wallet. Banks also create dollars when they loan to businesses, mortgagees, states or municipalities. Dollars are created by banks and backed by the Fed – but only through debt.

The Fed would argue this is a good thing. They call it “the multiplier effect.” A bank need only hold cash (or Federal Reserve deposits) equal to about 10 percent of its total customer deposits; the rest can be loaned. Thus, each dollar soon becomes $9. However, as Charles Eisenstein recently wrote in Reality Sandwich, “[I]n the last decade various kinds of non-bank lending have skirted the margin reserve requirement through the alphabet soup of financial instruments you’ve been hearing about in the news. The result is that each dollar of original equity has been leveraged not to nine times its original value, as in traditional banking, but to 70 times or even more.”

Both Brown and Hallsmith argue this financial gaming has little to do with the real economy where you and I live. Money based on leveraged air creates a currency and financial debt-products, essentially a pile of IOUs. Everyone must pay the principal and somehow find added interest. This demands the economy constantly grow until it collapses. Periodic crashes are inevitable with this kind of scheme. Numbers grow exponentially without limit, yet the planet and human beings cannot. As Hallsmith said to me recently, “The trouble with this system is that it requires some people to lose.”


Ellen Brown had written a number of books about health before she wrote about our money system. Confronting a corporate healthcare industry seeking profits introduced her to economic realities here in the U.S. “There can’t be anything more inefficient,” she said in a recent interview. “You’re going to private hospitals, private doctors, using profit-seeking drug corporations, and they all have a vested interest in sickness.”

Brown’s most recent book, Web of Debt: The Shocking Truth about our Money System and How We Can Break Free,makes money an understandable subject. Her protagonist is a young girl we all know, Dorothy from Frank Baum’s Wizard of Oz. Brown’s illustrations from Oz help to make monetary history and theory both readable and inspiring.

While Brown knows the history of the Federal Reserve System’s behind-closed-doors secrecy, and while she outlines long-term reforms, she is after efficiency. She envisions a more immediate way to circumvent debt. In 2011, she founded the Public Banking Institute. Its goal is to persuade states to better utilize the existing banking system for the public good.

During her research, Brown had discovered a surprising exception to the rule of Wall Street. The nation has only one state-owned bank, the Bank of North Dakota (BND), founded in 1919, about the time when the Wizard of Oz and monetary issues were both popular. BND’s existence has made all the difference to North Dakotans.

What difference exactly? The only state in the union to maintain a continuous budget surplus since the 2008 Wall Street crisis is North Dakota. While other states like Minnesota and California suffer near-bankrupt crises, and 48 states, including Vermont, suffer shortfalls, profits from BND have contributed more than $300 million to North Dakota’s state coffers during the past ten years. That’s a sizeable amount for a state with only 25,000 more people than Vermont.

Brown reported recently in The Huffington Post, “[North Dakota’s] balance sheet is so strong that it recently reduced individual income taxes and property taxes by a combined $400 million and is debating further cuts. It also has the lowest unemployment rate, lowest foreclosure rate and lowest credit card default rate in the country, and it hasn’t had a bank failure in at least the last decade.” North Dakota does produce oil, but she says a study done by the Center for State Innovation, from 2007 to 2009, revealed the BND added nearly as much money to the state’s general fund as oil and gas tax revenues did.

Brown says, “North Dakota is a conservative red state, not the sort you would expect to be engaging in government enterprise. But the conservative justification for a state-owned bank is that it preserves state sovereignty, allowing the state to be independent of Wall Street and the Feds. The BND is not a business competitor of the local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state.”

Not only does the BND return its profits to the state’s general fund, it helps to build the state’s tax base by funding local businesses and the infrastructure that attracts and supports them. Brown explains. “Among other resources, it has a loan program called Flex PACE that allows a local community to provide assistance to borrowers in areas of jobs retention, technology creation, retail, small business, and essential community services. The BND also furnishes a credit line to the state itself, one that is effectively interest-free, since the state owns the bank.”

Typically, credit lines get extended in times of emergency or whenever state department budgets or municipalities face unforeseen circumstances. Vermont’s recent budget deficit and the flooding due to Hurricane Irene would be good examples. Having a credit line to the state’s own bank allows state and local governments to avoid exorbitant rates on Wall Street and answers pressures to privatize or reduce services in order to avoid downgrades from rating agencies.


Brown’s vision is to help establish a network of state and local publicly owned banks, which can create affordable credit and provide a sustainable alternative to the current high-risk centralized private banking system on Wall Street. Such a network, she says, would act in the public interest to stabilize credit crises like our current one. It would also resist asset devaluations, build infrastructure, and fund expansion of critical industrial-productivity capacity – most importantly, education and local jobs, which could be adopted as bank mandates.

Her most recent research examines a network of state and municipal public banks in Germany. These were created in the shadow of post-World War II economic devastation and are credited with helping Germany make its remarkable recovery. In 2010, while the rest of Europe staggered, Germany reported a 3.6 percent increase in its economic growth. Its exports led the world until 2009, when China (population 1.3 billion) narrowly overtook Germany (population 82 million.) How was Germany able to do this?

Brown writes, “One overlooked key to the country’s economic dynamism is its strong public banking system, which focuses on serving the public interest rather than on maximizing private profits. After the Second World War, it was the publicly owned Landesbanks that helped family-run provincial companies get a foothold in world markets.” Municipal banks administered by state banks are all part of this system.

Thanks to growing interest in public banking, Brown’s own state of California just passed a bill to study the feasibility of a state-owned bank like North Dakota’s. California’s economy is the largest in the nation and surpasses all but eight countries. A California State Bank in the public interest would have huge influence nationally. Governor Jerry Brown vetoed the bill, preferring to use the existing legislative committees on banking, rather than establish another “blue ribbon” commission. About this Brown says, “I think it’s a good thing. Commissions are where ideas go to die. We don’t need a study, we need a public bank.”

Fourteen other states have submitted bills to create banks similar to North Dakota’s, and Brown monitors them all. You can learn more about public banking and legislative developments, and imagine its potential for the people of Vermont, at

Gwendolyn Hallsmith


Gwendolyn Hallsmith of Montpelier has worked on environmental and sustainability issues for more than 20 years. Working with citizen-action groups and Greenpeace, she began to realize protesting wasn’t enough. “We had to have a concrete, alternative way to do things,” she said to me recently. Her books, The Key to Sustainable Cities: Meeting Human Needs, Transforming Community Systems and the workbook Taking Action for Sustainability, draw on substantial local and international work experience. At their core is the idea that systems can either integrate or disintegrate communities unaware of their power.

Hallsmith had long struggled to understand economics in her sustainability work. She came to see it as a global system only recently, while living and working overseas. “I actually lived through the currency crash in Kazakhstan,” she says. “I was still getting paid in U.S. dollars, so it didn’t have the same effect on me as it had on my neighbors. We were working closely in neighborhoods and the woman next door saw her pension – which had been enough to cover her rent and her heat and her food – become enough for a loaf of bread. It was devastating.”

Hallsmith’s most recent book, Creating Wealth: Growing Local Economies with Local Currencies, tackles economics more directly. She met her co-author for this work, the Belgian economist who helped create the Euro, Bernard Lietaer, when organizing a national sustainability conference. Lietaer objected to an imposition of a 20-minute time-limit on his talk; it would take him much longer to explain why our monetary system cannot help but undermine sustainability. Hallsmith later asked if he would explain it to her. “He paused, and I could hear him sigh,” she recalls with a laugh. Then he proposed she commit to monthly hour-long phone conversations for at least six months. She agreed.

Lietaer recently told me he believes women will be key actors in redesigning a more livable economy. “Right now the economic structure is hypermasculine,” he said. “But that doesn’t mean it has to remain that way. Women can change it.”

It was during those mentoring sessions with Lietaer that Gwen learned about money creation. “Debt-money” is their name for the dollars we take for granted as national currency. In their book, Hallsmith and Lietaer propose several currencies that could work in partnership with dollars, depending on a community’s needs. Wealth, they explain, can be created locally by developing and supporting real resources, such as small business systems, energy systems and food systems in communities, by setting up asset exchanges, electronically tracked.

One currency they discussed at a recent presentation at Montpelier’s City Hall is called a Commercial Credit Circuit, or “C3.” It confronts small business owners’ most pressing problem, cash flow. Small businesses invest in products or services, yet when a sale occurs, payment from a vendor may not come for 90 days. C3s utilize invoices, insured and tracked by a bank, as cash. The invoices can be converted to dollars whenever needed, but a supply chain paid by this currency need not wait for payment. This creates money without debt, rewarding small business initiatives. Uruguay and Brazil are already successfully using C3s; recently Uruguay even moved to accept C3s as payment of taxes.

Another business currency they discuss is the 75-year-old Swiss WIR, which means “we” in German. The WIR enables businesses to freely exchange goods and services, helping each other to thrive, instead of only competing. In 2008, the value of WIR trades among its 65,000 members amounted to $1.58 billion.


Creating Wealth is not an easy read from cover to cover, but its ideas can be sampled depending on your interests. Each area seems well supported by real community endeavors put into practice by Hallsmith and others. This isn’t so much economic theory as application in action. The authors discuss food currencies to support local food production and farmers, an arts currency to underwrite creative endeavors and even an educational exchange that enables young students to gain money for college tuition through tutoring younger students.

Hallsmith’s work in Montpelier has already helped to create two time banks—dollar-free exchange systems in which services are measured according to the time they take to render. The Onion River Exchange in Washington County ( has more than 400 participants who have traded 6,000 hours of service in 75 different categories. Coordinator Allison Underhill said she couldn’t easily translate those hours into dollar amounts because the services range so widely, from legal advice to sewing, from house-painting to childcare.

The other time bank is more specific: the REACH Care Bank (, administered by the Coalition of Vermont Elders (COVE), allows for the exchange of eldercare services. Hallsmith, whose father is an enthusiastic new member, points out that time currencies supply difficult-to-value human connections that people need to be healthy and happy. One member’s testimonial reads, “I gained not just the hours I banked, but I also met two wonderful people.”

The underlying philosophy here counts people as assets and assumes everyone has something to offer. It redefines caring work as beyond price and still values reciprocity. Hallsmith has succeeded by valuing networks and helping others to understand systems.

Most recently she has put together a monetary policy group for Vermont intended to develop concrete recommendations for Governor Shumlin and the legislature. The committee, which includes a legislator and well-known business leaders, will explore state banking in the public interest; complementary currencies that Vermont communities might be wise to develop; the possibility of moving deposits to local Vermont banks; and financial innovations successfully used in other strapped states. Monetary reform of the Federal Reserve is another of the committee’s concerns.

Hallsmith takes the crisis in our monetary system seriously. While she values a diversity of approaches, she also works with a sharp sense of humor: “I’ve got a set of metaphors that describes different monetary strategies: Moving your money from Wall Street to a local credit union is a little like rearranging the deck chairs on the Titantic. Public banking is a way of cashing in on a portion of the Titantic’s ticket-sales, but creating local Vermont currencies? That’s like making ourselves life-rafts.”

First published by Vermont Woman, Nov-Dec 2011



Public Banking Institute

Bank of North Dakota

Germany’s Public Banking

Reach Care Bank, Montpelier

Onion River Exchange, Montpelier

Creating Wealth: Growing Local Economies with Local Currencies

Shadow BankingIf you’d like an informed woman’s view of Wall Street history and culture, but can’t stand to read all their blather, I urge you to visit Eva Chrysanthe’s website, Just click on the link to her site, listed to your left. I love all of her work for its serious economic fun.

My Life in Shadow Banking tells Eva’s personal New York encounter with the repeal of Glass-Steagall, a bill established post-Great Depression to separate the contradictory aims of banking for protection and the stock market’s risk-taking. Mixing the two had led to the 1929 Crash and Glass-Steagall ended the temptation of a bank’s overselling certain worthless securities because of “compensation.”

That bill was skirted by the Federal Reserve under the leadership of Alan Greenspan, who had been a director for J.P. Morgan just before he got on board at the Fed in 1987.

Banking lobbies had failed at getting Congress to repeal Glass-Steagall, but after two years under our Uncle Alan, the Fed’s board narrowly decided to double the original limit on revenues banks could earn selling securities. Neatly done—and without pesky legislation. In 1990, J.P. Morgan became the first bank granted permission to underwrite securities, so long as it didn’t exceed 10% of revenues. Coincidence, huh?  The door was opened. The pigs came into the kitchen. You can see all their shit on Frontline, which names names, if you’ve the stomach for it.

But first go to Eva’s site for a mean laugh at our naivete and Clinton’s. Whether it’s Endless Desire, her brief history of luxury, or her sassy accounts of Adam Smith and Milton Friedman, you’ll get some relief from economic dyspepsia. For instance, about Godfather Poppa Friedman and his era of “Greed is good,” (a view shared by Uncle Alan), she says:

Like the biblical fall of man in reverse, Milton Friedman allowed us to bid our shame goodbye because, as we learned from Friedman and the Chicago School of Economics, the pursuit of our own wealth could be good for our fellow man. It was like finding out that french fries were “slenderizing.

Adam Smith, of course, is the most important demi-god of economics. He wrote The Wealth of Nations the same year the Declaration of Independence was signed by our founding fathers. But as Eva reminds us, he was no god, but a man who lived with his mother. She says few who quote him today have read his 620-page mind-numbing tome. Milton Friedman, Reagan and Bush’s economic advisor, who resuscitated Smith’s “invisible hand,” left a lot of his other parts dead and buried. His contemporaries thought he was dangerously liberal. Smith believed in government regulation.

Eva Chrysanthe is an accomplished artist and writer at work on a graphic novel whose working title is Adam Smith: An Economist Falls in Love with the Universe.

I love Obama, yet it’s disappointing to hear about his new economic plan—namely putting some regulation back in place to protect the status quo for the biggies. Okay, he is creating a new agency for protecting financial “consumers,” which I suppose is a nicer term than “debtors.” Still, why not call it a Citizen Protection Agency?

Worse, he now seeks more responsibility be given to the Federal Reserve. Hey, wasn’t the Fed and its board busy meeting behind closed doors the whole time our economy “approached the brink?” For years?

For those millions of Americans losing their jobs, the economy has already gone over the brink and down a dark hole. Economist Paul Krugman, who seems controversial because he’s at least aware of this, told PBS NewsHour June 17 he wanted a stronger plan, especially on financial compensation schemes. He was countered, in the ping-pong style that often poses as “objectivity,” by a banking lobbyist.  Yet as writer Cynthia Kouril at FireDogLake points out, they agreed on one item, something I noticed, too:

Ms. Casey-Landry [the lobbyist] repeatedly made the point that major features of the financial crisis were not caused by regular banks or savings and loans, but rather by unregulated mortgage companies, or what she called “shadow banks,” and by the role of players like AIG, and by what she called “systemically significant institutions” (which I took to mean anybody deemed “too big to fail”).

See Cynthia Kouril’s article and links at

It’s “systemically significant institutions” closely tied to the Fed to worry about. This system weighs most of us and the nation with debt impossible to pay. Who will regulate the biggest boys, who still bet on and play volatile games with currency values in international hedge funds?  They “systemically” bring nations to their knees, only “normally” it’s been other nations. (If those are any example, hyperinflation will come next.)

Kouril thinks millionaire Democrat and Speaker of the House, Nancy Pelosi, is right. We need a big investigation. Now that S.386 has passed, write to your elected representatives and help make them do it right.

While you’re at it, check out bill H.R. 1207, The Federal Reserve Transparency Act, first proposed by Ron Paul, a Republican millionaire on the far right.

I’ve yet to see how Paul’s retro ideas about re-establishing a gold standard for money-creation would help women “consumer” citizens, who are now being urged in TV ads to cash in their gold jewelry to pay bills. But holding the Fed accountable is a first step toward a financial housecleaning we badly need to have.

The Fed board now needn’t report out to the public what they decide at their board meetings or even who they loan billions to—given they are not really a government agency, but a system of private banks, posing as one. They create money as debt notes out of thin air. Paul wants audits at least.

On that note, William Grieder, a courageous writer, one who makes economics readable, has been critiquing a financial aristocracy for decades. He says he’s felt like “a bag lady out on the street corner, waving a placard to passing crowds.” So, hey, he relates. But now he has a new book—out from Rodale, not a NY publishing house. He believes this may be the crisis to wake us up from our slumber. If you find yourself feeling cynical and hopeless, William Grieder feels your pain, but says, Get up off your butt!

We’d better, before the thieves go on to the next robbery. Read an excerpt here and then go get Come Home, America.

newwayfoward-protest1This is one of the posters being distributed by A New Way Forward, an organization calling for a national day of protest against CEO and Bank Bailouts on April 11th. Their website will help you discover what is happening in your area. Go out into the streets with your pitchforks and rolling pins!

I chose this poster,  designed by Eva Chrysanthe, because it’s so rare to see a female figure in the Investment Banking Bailout scandal.  Her No and  Section 382 refers to a tax law that was illegally overthrown last year by then-Treasurer Paulson, in a memo providing a tax windfall for his banking buddies who were already getting $700 billion from TARP.

I love the poster’s aside, commenting on women’s disadvantage: “Paulson played Defensive Lineman at Dartmouth, 1967. You: Did not.” Women aren’t at the top of the insider-clubhouse of the nation’s nine biggest banks, or at AIG and their ranks  on Wall Street are shrinking.

It’s easy to decide the crisis has little to do with us. So why then do women always get the short end of the financial stick? (or is that dick?)

If women educated themselves about the Wall Street Meltdown and the finance culture of male one-up-manship, we might get the structural reform on Wall Street and in Washington we so badly need. Without women’s voices pressing for big change,  Obama won’t have what he needs to accomplish it.

A recent Bill Moyer interview, which I very much recommend,  presented a lawyer-banking regulator who worked on the Savings and Loan debacle back in the 80s, William K. Black. Black said the nation needs a high-profile Congressional Investigation, as happened after the Great Depression–ideally one headed by an elected woman, he added.

Another recent radio interview of the author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street, William Cohan, asked this former Bears and Stearn investment banker, Did he think this would have happened if some intelligent women had been part of their management team? (I missed the male interviewer’s name, but loved his asking.)  Cohan laughed and houseofcardsanswered the culture was definitely one of Alpha males gone wild.

What if a million women asked the Fed and the Treasury and all their Wall Street game-playing line-men–what on earth were you thinking? Get real!

One of my favorite readers wrote to pose this excellent question. Where does our money come from? Who owns the dollar? We the People-or those Chinese we keep hearing about?  Few of us really understand our dollar isn’t just issued by our government and then printed at the U.S. Mint. It is financed as a debt by the Federal Reserve System, a Banking system, and when you learn about its function and its history, you can hardly believe it. So I’ve created a new page on the subject.

In the meantime, though, take a look at your dollar bill. What does it say? Issued by the U.S. Mint? Nope. It is signed by the Treasurer of the United States, not to be confused with the second signature, the Secretary of the Treasury. Huh?  My page on the Federal Reserve explains this.


Note the dollar is labeled a Federal Reserve Note. The Treasury goes to the Federal Reserve and says, hey, we need this much money to pay the nation’s bills. The Federal Reserve then writes a check whose account is never reconciled, like yours and mine, and prints up these debt-notes. Every dollar we use costs Americans a dollar plus interest, the reason for inflation and rising prices.

We pay a growing percentage of interest each year in the federal budget-and to whom? To private financiers, including some nations’ banks, who “buy” U.S. bonds, auctioned off internationally by the Federal Reserve. Like many financial terms, the “buy” part of this is misleading. These buyers are actually “loaning” us money, at an interest price determined by the Fed, a private banking system in touch with world bond and currency “markets.” How much will the market bear? How long will the Fed keep writing us checks and running up the Treasury’s credit card?

If big money, behind even Central National Banks and the IMF, is buying anything, it’s buying a piece of us. Americans are being sold into debt-slavery, similarly to other nations’ citizens who have been auctioned off before us. (See Naomi Klein’s Shock Doctrine.) What fascinates me today about currency and monetary issues is the way only the far edges of our political spectrum, both left and right, have picked it up. I can’t believe my page on the Federal Reserve recommends you watch a lecture delivered to the John Birch Society! I’m a leftie!

But in this political climate, with this media framing the issues, we must not stay confused. To Americans any “socialism” is bad, except when the rich owners of corporations or banks benefit. Yet some on both sides of the aisle are talking about the same systemic problems, however different their approaches.  Shouldn’t American women citizens understand this conversation?

Meanwhile, mainstream politics continues to leave the Federal Reserve issue completely alone. Why? Maybe because potentially, it’s incendiary.

We women, who have been encouraged not to worry our pretty little heads about the nation’s budget and big finance, are the very ones who might bridge this political gap between the far left and the far right and promote public education about the usury that threatens to bankrupt the nation. All the candidates for President in the last election were millionaires, with the exception of one, which might explain why this present system doesn’t seem to bother too many of them.

Do you know the one non-millionaire who ran?  The answer is in the middle of my new page, About the Federal Reserve. Check it out!

This review of SHOCK DOCTRINE originally appeared in the April 2008 issue of Vermont Woman under my byline  At the end of my review here, you’ll find links to Naomi Klein and her views on economics since publication, and a video of her if you haven’t got time to read her astonishing book.naomikleinpaperbackweb

Canadian writer Naomi Klein strikes lightening at dark corners of contemporary U.S. history with her new book, The Shock Doctrine: The Rise of Disaster Capitalism. Her work, while not easy to read, brings cathartic relief. She makes terrible sense of the worst pictures of recent America: the Twin Towers, Abu Ghraib and New Orleans’ Katrina. She lights images flashed world-wide over the past generation, ranging from the fall of East Germany’s wall to Tiananmen Square, from Walesa’s solidarity vault over a fence in Poland to the overthrow of Russia’s “White House,” from the end of apartheid in South Africa to Africa’s impoverishment.

All have economic bullying in common, an element seldom reported. Klein connects the dots between “free-market” economics and a foreign policy underpinned by the CIA and outsourced military forces, both of which exploit poverty to guard global financial interests, joining terror with yet more terror.

If this begins to sound like a conspiracy theory-it is. But it’s one the perps themselves acknowledge. These are the men who manage international trade, leverage currencies and develop economic policies of governments world-wide. They meet in the cabinet backrooms of presidencies and dictatorships around the world and apply pressure from The International Monetary Fund and the World Bank to enforce private takeovers world-wide. Klein follows this fraternity’s mind-meld, dancing in their macro-economic circles.

Klein’s tale reads like a mystery, linking two influential thinkers: the first an American psychiatrist, and the other, an economist, both with grandiose views of humanity’s need for their radical makeovers. Both were “professionals,” who used remarkably ruthless means.

Klein begins the tale with a cold war scenario close to Vermont. Former president of the American Psychiatric Association, Ewen Cameron, began experiments in the late 1950s. His institute, associated with McGill University in Montreal, sought to remake human personality, wiping the slate clean to recreate a new, improved person. An epigraph from Orwell’s 1984 aptly describes his aim, which was funded by the CIA. “We shall squeeze you empty, and then we shall fill you with ourselves.”

Cameron used electric shock methods, but far more intensely than his peers. He combined this with sensory deprivation to prevent patients from knowing time or space, as well as hallucinatory drugs, disruption of sleep patterns, messages played over and over, loud noises or padded silences. Patients were stripped of clothing or any reminders of identity and memory.

They and their families had no idea Cameron was experimenting on them. His patients “regressed” to a dependent and malleable state, transformed into frightened children. They suffered terrible long-term harm and trauma-induced physical symptoms. By the 1970s, patients and their families had exposed Cameron’s secret and brought a lawsuit against the CIA. News in the Canadian press, this case was aided by the Canadian government and finally settled by the CIA, quietly, in 1988.

The CIA got their money’s worth. Cameron’s methods became part of the agency’s KuBark manual for interrogation, which is still in use. It ultimately found its way to military training facilities and to Abu Ghraib. Wherever KuBark went, electrical wires and psychological shocks showed up.

Meanwhile in another realm, a “free-market” economist named Milton Friedman, sought to wipe more slates clean, this time to remake economics.  Friedman preached one idea for over 30 years: “Only a crisis-actual or perceived-produces real change.”  He called his economic strategies “shock treatments.”

Friedman’s methods also called for quick jolts, rapid-fire transformation: tax cuts, no-holds-barred “free trade” for international corporations, privatized contracts to replace government functions, cuts to social spending, deregulation, and increases in military budgets. The last was essential. A charismatic teacher, Friedman ultimately headed the economics department of the University of Chicago and charmed an elite male following. His students included Donald Rumsfeld, who twice became Secretary of Defense, both times under Presidents Bush. Rumsfeld called his strategy for the Iraq war, “Shock and Awe.”

Friedman’s followers called themselves “The Chicago Boys.” Like Cameron and the CIA, Friedmanites were comfortable with erasing identities, even national ones, to remake the world in their image. Economic shocks administered by governments they counseled commonly roused terror in the public, resulting in a regression similar to the patients in Cameron’s care. Strip a nation of business-as-usual, its currency, its livable livelihoods, and people regress, becoming fearful, more malleable.

Klein doesn’t say this, but I was struck by their nickname for themselves in the context of coming to power in the 1970s. The Chicago Boys seems an affectionate nickname, until you remember women’s protests of the good-old-boys-network in those days and the male-only clubiness that patronized women-as-children. Collectively American women were making grown-up demands. They wanted to be involved in economic decisions that affected their lives. They wanted a social safety net, child care and maternity leave, and government involvement in alleviating women’s poverty.

The leading economist back then, the one Friedman eventually displaced, John Kenneth Galbraith, was a Keynesian mixed-economist, who thought government should take an active role in the economy. Galbraith encouraged Marilyn Waring’s important economic critique: Who Counts: Economics as if Women Mattered. She argued reproductive and caring work of family and community, as well as Mother earth’s work reproducing clean water and air, needed to be included in our GNP (Gross National Product). It wasn’t. It still isn’t.  Macro-economists use a national accounting system that counts weapons-making an economic plus, while weapons-use and war’s destruction never counts as a minus. Wasn’t this insane, Waring asked?

The Chicago Boy’s economic methods eschewed all such questions. Weapons contracts and weapons-use became the baseline of their operations. When Friedman had his first opportunity to apply his economic shock treatments in 1975, it was no accident it happened  in Latin America, where mixed economies had been thriving, though resisting U.S. control  Who was Friedman’s first client? A military dictator named Pinochet, who had overthrown the elected President.

Friedman’s work in Chile erased economic protections and compounded the misery of Pinochet’s prisons. Yet Klein notes this first project of his was barely mentioned in any of the obituaries lauding his reputation when Friedman died in 2006. More Latin American writers understood Friedman’s “Chicago Revolution” went  hand-in-glove with the torture of protesters and their “disappearances,” and administered first in Chile, then in Argentina, Bolivia, Uruguay, Brazil and Guatemala. As Claudia Acuna, an Argentine journalist, told Klein, “Their human rights violations were so outrageous, so incredible, that stopping them became the priority. But while we were able to destroy the secret torture centers, what we couldn’t destroy was the economic program the military started and continues to this day.”

Thirty years later, Iraq would fall to a similar two-pronged shock, military and economic. I won’t attempt to describe here those more recent events but instead urge you to read the economic details yourself.

Friedman ultimately led Reaganomics’ trickle-down theories. His free-market ideology was revered by both Bush presidencies and influenced Bill Clinton in between. It’s worse than ironic that Friedman won the Nobel Prize in economics the same year that Amnesty International won it for their work with growing numbers of the tortured.  Only a few witness-writers linked the economic violence of The Chicago Boys with government killing and jailing, but the result was a “free” market enjoyed by only a few, coupled with terror for the many.

“Torture is sickening,” Klein admits, wishing she hadn’t found this connection. “It is often a highly rational way to achieve a specific goal; indeed, it may be the only way to achieve it,” the reason robbers carry guns, she remarks. Klein’s shocking claims are made the more shocking by her careful documentation.

For the Chicago Boys, elections serve as useful distractions, whatever the political theater, wherever the country, as long as economic decisions about peoples’ fates get decided by their decidedly small group. That group continues to be dominant in the global economy, having evolved to become “The Washington Consensus.” Friedman’s free-market ideologues refined their method of moving in quickly on crises and human misery, finding opportunities for shock treatments and radical change. Simply translated, their methods transferred enormous national treasuries, and the decisions about it, from the many to the few.

Near the end of his life, when Katrina had wiped out New Orleans’ infrastructure, Friedman quickly proposed (and George W. Bush quickly funded) millions of dollars be used to replace the city’s public schools with privately run “charter schools.” To Friedman, a state-run school system reeked of socialism and its overthrow was a good thing. It is highly doubtful, however, such a clean wipe of the slate for New Orleans’ schools would ever have happened in any open, democratic debate. Shocks, like Katrina and a FEMA that showed up too late, and too little, overwhelmed state and local governments to compliancy.

The Chicago Boys’ record, the Washington Consensus and its record, the global policies of the IMF and the World Bank and its statistics, all show us a world where growing numbers grow poorer and a very few grow very rich. Yet Klein ultimately ends her book on a positive note. World-wide, there’s growing resistance to the free-market’s shocks, a reason for us to hope for a better future-but only if we hold American bully-boys accountable, and only if we educate ourselves about our nation’s budget and policies.

We’ve been upset the past few weeks by Treasury Sec’y Paulson’s dashed-off request to Congress for $700 Billion to bailout investment banks “too big to fail.” But as an article in the International Herald recently pointed out, we hear no discussion by either Presidential candidate of the  $700 Billion forked over to the Pentagon year after year, to maintain its humongous global operations. Any Democrat’s mention of any cuts to their bloated budget leads to accusations of being unpatriotic or even not-real.

Excuse me, but $700 Billion here, $700 Billion there, it begins to add up. Can we really afford to police the world? Should we?  Money can’t make up for smarts and frequent reality-checks.

Americans didn’t die for the privilege of taking on the role of policeman.  Freedom and democracy go hand-in-hand with peace-making and enabling others’ empowerment. This is a legacy we can all celebrate, especially our soldiers–but not without the support of courageous and skillful diplomacy. We need an adequate State Department budget and the political will to use it, as Ed Carroll points out–and also checks and balances on those secret budgets of the CIA, which Carroll doesn’t mention here.

Most of us are bored by economics, or scared of it. Our eyes glaze over at the abstract language. When we can’t understand, we feel stupid. We turn away or get angry.

Getting angry may be the healthier response. Americans have gotten angry lately, learning about mortgage frauds and the financial wizards who sold these around the world with obscure language no one was sure they understood. Who benefits form complex financial schemes? Not you and me. We just got stuck with another $700 billion bailout for investment banks, demanded by the same Wall Streeters whose political party rails against “socialism.”

Here’s some enlightening graphs that show the phenomenal increase in the net worth of millionaires and billionaires since 1983, about the time when conservative economist Milton Friedman first influenced “neo-liberalism” worldwide. Pay special attention to the long blue bar on the right.

The weathiest 2% now own nearly half the world’s wealth, thanks to a so-called free market that favors the “redistribution” of money upward. Friedman’s ideas influenced Reaganomics here over 20 years ago. In the days of kings, neo-liberalism used to be called laissez-faire economics. Both reject regulation and interference with the rich. However, now that the richest banks are in trouble, these same neo-liberals run to us taxpayers. Those of us who believe in a more democratic economy (like Paul Krugman, I hope) think this is a good idea–but not with a continued sense of royal privilege for CEOs and speculative investors.

Here’s a link to a quote from John Maynard Keynes, an early 20th century economist whose ideas were overthrown by Friedman: “Words ought to be a little wild, for they are the assaults of thoughts on the unthinking.”