The Solution – Labour-based Currency

Having established the fundamental problem of our current economic system, we will now present the essential principles of a viable solution – labour-based currency – and how this system would be practically be implemented. If you have not read our original essay, and don’t understand the problem of debt-based finance, then I recommend you first read Part 1 – Understanding the Problem.

Under a labour-backed fiat currency model, the money supply is expanded via the government’s expenditures for the maintenance and developing of a particular public projects, be it in the form of social and emergency services (e.g. public transportation, garbage disposal, welfare, ambulances, fire control, police and all other typical government sector related jobs) or state infrastructure (e.g. roads, energy plants, water sanitation, government housing). What should be made clear is that under a labour-backed currency production model all banking – in both central and commercial capacities – is managed wholly by the state as a non-profit organisation for the safeguarding of the individual citizen’s monetary reserves, the provision of interest-free loans and the regulation of the national money supply. All costs regarding a given government-funded project are calculated – namely essential building materials and required human labour – and prices for the purchasing of needed materials and workers are rationalised by the government (i.e. the state dictates the value of certain materials, goods and labour). The entire focus of the labour-backed fiscal model is to base a given currency, unique to a single nation, on the ability of the central government of that one nation to mobilise its manpower and material resources for the production and maintenance of essential infrastructures and services.

For the sake of relief during the Depression, the Government hired the unemployed and gave them dignity

All payments by the government to workers and collaborating private enterprises (e.g. some materials [wood, concrete, wire, etc …] to build infrastructure may need to be acquired from a private source, which is fine) is made in the form of a receipt that can be cashed in at the state-run national bank. What should be remembered from all this is that the money supply can only be expanded at the behest of the government’s ability to provide jobs to those who do not own a business or work within the private sector. The private sector will only ever be able to utilise money that the public sector produced. Where private enterprise fails to generate jobs, the government takes over. This guarantees that a significant degree of a nation’s labour pool remains in government hands for the maintenance of public welfare and not for achieving the private interests of a wealth-laden elite. A currency bound to this system also becomes inflation-proof.

Regarding private enterprise in and on its own, the state still plays a regulating role by encouraging more business to thrive in areas where the generation of privately produced essential goods and services (e.g. foodstuffs, clothing and hair salons) is deemed to be insufficient and by discouraging business in areas where there is deemed to be a surplus of unessential goods and services (e.g. makeup, perfume, iPhones and entertainment television). This prevents private enterprise from hijacking government-standardised prices by means of either purposely holding back on the production of certain essential goods and services to force a rise in value or by fabricating over-demand (namely through advertisement) for the selling of surplus numbers of unessential goods.

Since all government services to a nation are monetarily compensated by the government’s own means (i.e. the state produces the money it needs to spend), income tax becomes irrelevant, even for those working in the private sector. Since the government also regulates private enterprises enough insofar as how much they can produce and limiting them to a single facet of goods or services production, company tax also becomes unnecessary as a means to prevent unchecked expansionist urges (as if company tax ever served to cap aggressive business practices and wealth hoarding in the first place).

Under a labour-backed currency model, the government does not own the economy; rather the government directs the economy. Nonetheless certain key services for the maintenance of a modern state must never be privatised in order to prevent the private sector from eroding state authority over a population. This includes essential services such as water sanitation, media, postal delivery, electricity, public transportation, disaster relief, armaments production, both reserve and commercial banking, security and healthcare.

Accepting the reality that some nations lack the raw materials and means for producing certain finished goods to become truly self-sufficient, it becomes obvious that international trade is still necessary. The solution to minimise exploitation during such an exchange is to enforce – although never through an international body – that trade between nations be conducted in a fashion whereby the essential goods and/or resources of one nation are exchanged only for the essential goods and/or resources of another nation on terms reached by both trading parties. Here, exploitation by one nation against another is still, technically, possible, however never to the degree that the international trade of a given ‘global’ currency by one nation (as if people can eat or build houses out of a foreign currency) in exchange for base goods or resources of another nation allows for. Finally, labour must never be exported or imported in order to prevent private corporate interests from neglecting the available labour pool of their home nation in pursuit of greater profit.

Because money creation is relevant to government efficiency in hiring the citizens of a nation to play a pivotal role in maintaining and building-up the existence of their state, a given currency based on this model is freed from the hostile control of international finance which insists that the currency of one (x) nation is inferior to currency of another (y) nation – either because X has less gold reserves (as if people can eat or build houses out of gold) or simply because an established power group simply says that X’s money is of less value (this representing the so-called ‘modern’ system of ‘floating’ currencies) – and that the former is destined to be economically exploited by the latter. It should be noted that the existence of metal-based (historical) and debt-based (current) currencies in the Western civilisational tradition have only served to demonstrate how selfishly-orientated international banking interests (and the multi-national, multi-faceted corporations that collude with these interests) can hold entire populations hostage in what has become an inherently rigged, global resource-grabbing game.


Understanding the Problem – Debt-Based Fiat Currency

Amidst the endless, brain-numbing talk between the parties of the centre-left and those centre-right in any given democratic country on the issues of privatisation, ‘leasing’ (which is just privatisation in disguise), taxes and interest rates lies the inescapable existence of money. It is this object to which virtually every single politician will base their policies and arguments around as opposed to at – those who have historically chosen the latter approach turn out like John F. Kennedy or Gough Whitlam, assassinated or prematurely disenfranchised. None who are ‘representatives’ in office dare actually question this God-like tool of social power directly when discussing the issues of poverty, the wealth gap or cuts to public funding; or more specifically, the issues that money – under its present mode of usage – cause.

The current central banking practice that encompasses virtually all democratic nations of the world – and this includes Australia – is based on the ‘concept’ (as if you could really call something that is purposely flawed a concept, but for lack of a better word …) of debt-based fiat currency. The official name of this concept is immediately off-setting to perhaps nine-out-of-ten people who hear it – no one really wants to know why ‘debt’ and ‘currency’ are appearing together in a term that is meant to imply wealth generation. Here this article will explain the debt-based fiat currency monetary model for what it really is – a government-approved, privatised, self-generating debt system. This exceptionally oppressive financial paradigm is responsible for every war which has involved the United States (Banks) of America in the last one hundred years (and counting) and is at the core root of why there is more slavery, social injustice, moral depravity, political corruption and poverty in the world today than ever before in the history of mankind.

The system is simple to understand. The central (or reserve) bank of any democratic nation in the world today is a joint private-government trust. In fact, the only role the government plays is the official recognition of that said entity (e.g. the Reserve Bank of Australia) as the legal provider of the money supply. The actual running central bank is left solely to the initiative of the private aspect of the partnership. And here is how they do it …

He’s not shirt-fronting any banks

The government decides that it needs to increase the national money pool. In doing this, they (the government) establish a contract with the central bank whereby treasury bonds (meaningless pieces of paper) valued at ‘x’ amount are traded with the central bank in exchange for an ‘x’ amount of legal tender (money). However, the government bonds are only an artificial means of goodwill, the central bank actually loans the money to the government with interest attached – the government is obliged by contract to pay back the money borrowed plus interest. Since the central bank is the only source of more money, the government can never generate the interest it needs to pay without another loan from central bank, which again, comes with more interest. Hence, the government and, by extension, the nation as a whole, is constantly in debt to the central bank (which if you haven’t figured out by now, is really just a private loan sharking enterprise encompassing international dimensions). Even if a said government was to tax its citizens 100 per cent of their income, they still would not be able to pay off the debt they owe to the central bank – simply because the interest does not exist until the latter prints an additional batch of money with more new interest attached. This is how ‘debt’ and ‘currency’ go hand-in-hand regarding the term ‘debt-based fiat currency’.

Private Property and Land Ownership in the National Socialist Economy

While (unlike communism) National Socialism supports private property in the sense of land ownership, it does not (unlike capitalism) support unrestricted enterprise on privately owned land. Instead, the National Socialist state has a duty to intervene in how such land is used, so as to ensure that it reaches its folkish potential. (In other words, private landowners are at liberty to sell their land to other private buyers if they do not wish to personally participate in the state-approved use of the land; what they are not allowed to do is put the land to different use without state approval.)


We workers have awakened!

Essentially, National Socialist economy is directed by the State, but not owned by the state. This applies in both manufacturing industry as well as agriculture. Gottfried Feder sums up the Third Reich’s position quite well in regard to land ownership:

“To the right to hold property … is attached the obligation to use it in the national interest. … German land may not become an object of financial speculation, nor may it provide an unearned income for its owner. It may only be acquired by him who is prepared to cultivate it himself. Therefore the State has a right of preemption on every sale of land.” – Gottfried Feder

So essentially whereas communism involved complete ownership by the Government, and pure capitalism involves complete ownership by private individuals, National Socialism leans towards capitalism in the sense of encouraging private ownership and enterprise, but also has elements of socialism, in the sense that all private enterprise is sublimated to the national interest.

The Rescue Plan

An interesting editorial cartoon, this time satirizing capitalistic attempts at economic recovery. Also, interesting article with relevant information on alternative solutions once attempted, but never again retried!



This is an essay written by Ellen Brown, dated August 9th, 2007. It explains something of the implementation of a labour-based currency in National Socialist Germany after the Movement came into power in 1933. The original essay can be found here.

First, I would like to quote something said by Hitler in his speech to the Reichstag on January 30, 1937, four years after he assumed power, and when he presented the positive results of the past four years of his regime:

“The Volksgemeinschaft does not subsist on the fictitious value of money but on actual production, which gives money its value. This production is the primary cover for a currency, not a bank or a vault full of gold! And when I increase this production, I am actually increasing the income of my fellow citizens; if I decrease production, I decrease income, regardless of what salaries are being paid out. [-] This concerted resolution of economic issues finds its greatest expression in the Four-Year Plan. It assures that once great numbers of German workers are released by the armament industry and re-enter the labor force, these workers shall find secure employment within our economy. [-] It is quite clear that neither strikes nor lockouts can be tolerated in a sphere where such views prevail. The National Socialist State does not recognize an economic law of the jungle. The common interest of the nation-i.e. of our Volk-has priority over the interests of all its competing components. Therefore we cannot allow that any means suited for utilization in our Volk’s training and education be exempted from this shared obligation.”

Hitler's Speech before the Reichstag on January 30, 1937.

Hitler’s Speech before the Reichstag on January 30, 1937.

We see here how public works projects were the essential ingredient in building up the economy, as well as providing employment for the countless unemployed in Germany at the time. By managing projects, costing the materials and labour, and then creating currency to pay these projects, money was able to be created and infused into the national economy. This is the essence of what a “labour-based currency” stands for. Increase in production = increase in income.

So without further ado, I hope you find the essay here enlightening.


“We were not foolish enough to try to make a currency [backed by] gold of which we had none, but for every mark that was issued we required the equivalent of a mark’s worth of work done or goods produced. . . .we laugh at the time our national financiers held the view that the value of a currency is regulated by the gold and securities lying in the vaults of a state bank.”- Adolf Hitler, quoted in “Hitler’s Monetary System,”, citing C. C. Veith, Citadels of Chaos (Meador, 1949)

Guernsey wasn’t the only government to solve its infrastructure problems by issuing its own money. (See E. Brown, “Waking Up on a Minnesota Bridge,”, August 4, 2007.) A more notorious model is found in post-World War I Germany. When Hitler came to power, the country was completely, hopelessly broke. The Treaty of Versailles had imposed crushing reparations payments on the German people, who were expected to reimburse the costs of the war for all participants — costs totaling three times the value of all the property in the country. Speculation in the German mark had caused it to plummet, precipitating one of the worst runaway inflations in modern times. At its peak, a wheelbarrow full of 100 billion-mark 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. Germany had no choice but to succumb to debt slavery to international lenders.

Or so it seemed. Hitler and the National Socialists, who came to power in 1933, thwarted the international banking cartel by issuing their own money. In this they took their cue from Abraham Lincoln, who funded the American Civil War with government-issued paper money called “Greenbacks.” Hitler began his national credit program by devising a plan of public works. Projects earmarked for funding included flood control, repair of public buildings and 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. Hitler said, “for every mark that was issued we required the equivalent of a mark’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 on welfare. Germany 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: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Germany’s economic experiment, like Lincoln’s, was short-lived; but it left some lasting monuments to its success, including the famous Autobahn, the world’s first extensive superhighway.1

Hjalmar Schacht, who was then head of the German central bank, is quoted in a bit of wit that sums up the German version of the “Greenback” miracle. An American banker had commented, “Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking.” Schacht replied, “You should come to Berlin. We don’t have money. That’s real banking.”2

Although Hitler has rightfully gone down in infamy in the history books, he was quite popular with the German people, at least for a time. Stephen Zarlenga suggests in The Lost Science of Money that this was because he temporarily rescued Germany from English economic theory — the theory that money must be borrowed against the gold reserves of a private banking cartel rather than issued outright by the government.3 According to Canadian researcher Dr. Henry Makow, this may have been a chief reason Hitler had to be stopped: he had sidestepped the international bankers and created his own money. Makow quotes from the 1938 interrogation of C. G. Rakovsky, one of the founders of Soviet Bolsevism and a Trotsky intimate, who was tried in show trials in the USSR under Stalin. According to Rakovsky, Hitler had actually been funded by the international bankers, through their agent Hjalmar Schacht, in order to control Stalin, who had usurped power from their agent Trotsky. But Hitler had become an even bigger threat than Stalin when he had taken the bold step of printing his own money. Rakovsky said:

[Hitler] took over for himself the privilege of manufacturing money and not only physical moneys, but also financial ones; he took over the untouched machinery of falsification and put it to work for the benefit of the state . . . . Are you capable of imagining what would have come . . . if it had infected a number of other states . . . . If you can, then imagine its counterrevolutionary functions.4

Economist Henry C K Liu writes of Germany’s remarkable transformation:

The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.5

In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:

Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a world power in 5 years. Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took the whole Capitalist and Communist world to destroy the German power over Europe and bring Europe back under the heel of the Bankers. Such history of money does not even appear in the textbooks of public (government) schools today.

Another Look at the Weimar Hyperinflation

What does appear in modern textbooks is the disastrous runaway inflation suffered in 1923 by the Weimar Republic (the common name for the republic that governed Germany from 1919 to 1933). The radical devaluation of the German mark is cited as the textbook example of what can go wrong when governments are given the unfettered power to print money. That is what it is cited for; but in the complex world of economics, things are not always as they seem. The Weimar financial crisis began with the impossible reparations payments imposed at the Treaty of Versailles. Schacht, who was currency commissioner for the Republic, complained:

The Treaty of Versailles is a model of ingenious measures for the economic destruction of Germany. . . . [T]he Reich could not find any way of holding its head above the water other than by the inflationary expedient of printing bank notes.

That is what he said at first. But Zarlenga writes that Schacht proceeded in his 1967 book The Magic of Money “to let the cat out of the bag, writing in German, with some truly remarkable admissions that shatter the ‘accepted wisdom’ the financial community has promulgated on the German hyperinflation.”6 Schacht revealed that it was the privately-owned Reichsbank, not the German government, that was pumping new currency into the economy. Like the U.S. Federal Reserve, the Reichsbank was overseen by appointed government officials but was operated for private gain. What drove the wartime inflation into hyperinflation was speculation by foreign investors, who would sell the mark 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 German mark was made possible because the Reichsbank made massive amounts of currency available for borrowing, marks that were created with accounting entries on the bank’s books and lent at a profitable interest. When the Reichsbank could not keep up with the voracious demand for marks, other private banks were allowed to create them out of nothing and lend them at interest as well.7

According to Schacht, then, not only did the government not cause the Weimar hyperinflation, but it was the government that got it under control. The Reichsbank was put under strict government regulation, and prompt corrective measures were taken to eliminate foreign speculation, by eliminating easy access to loans of bank-created money. Hitler then got the country back on its feet with his Treasury Certificates issued Greenback-style by the government.

Schacht actually disapproved of this government fiat money, and wound up getting fired as head of the Reichsbank when he refused to issue it (something that may have saved him at the Nuremberg trials). But he acknowledged in his later memoirs that allowing the government to issue the money it needed had not produced the price inflation predicted by classical economic theory. He surmised that this was because factories were sitting idle and people were unemployed. In this he agreed with John Maynard Keynes: when the resources were available to increase productivity, adding new money to the economy did not increase prices; it increased goods and services. Supply and demand increased together, leaving prices unaffected.

1 Matt Koehl, “The Good Society?”, (January 13, 2005); Stephen Zarlenga, The Lost Science of Money (Valatie, New York: American Monetary Institute, 2002), pages 590-600.
2 John Weitz, Hitler’s Banker (Great Britain: Warner Books, 1999).
3 S. Zarlenga, op. cit.
4 Henry Makow, “Hitler Did Not Want War,” (March 21, 2004).
5 Henry C. K. Liu, “Nazism and the German Economic Miracle,” Asia Times (May 24, 2005).
6 Stephen Zarlenga, “Germany’s 1923 Hyperinflation: A ‘Private’ Affair,” Barnes Review (July-August 1999); David Kidd, “How Money Is Created in Australia,” (2001).
7 S. Zarlenga, “Germany’s 1923 Hyperinflation,” op. cit.

Ellen Brown, J.D., developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown’s eleven books include the bestselling Nature’s Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.

The Ivory Tower of Interest

When it comes to economics, on one hand we have the increase that comes through the creative labour of men, which although slow and steady, at least amounts to something of benefit to their fellow man in society.

Simple economics that everyone understands

Simple economics that everyone understands

In diametric opposition to this, International Bankers can sit aloft their Ivory Tower of money earned based merely on the interest rate and time, living a life of ease seemingly set apart from the affairs of the real world.

Ivory Tower

The Ivory Tower of Interest-Capital Seems Impenetrable

Whereas the simple creative labours of the workman requires a direct connection to the physical realm, the endless income and increase gained by interest is almost diametrically opposed to real life. Whereas the devastation of war and oppression would hinder the increase of labour-based capital, the omnipotent money powers rub their hands in glee, knowing that the suffering their contemporaries are experiencing only lend aid to line their pockets.

Feder pointed out the vital necessity of not allowing this chicanery to go on:

“We must break away from the notion that loan-capital, unaffected by worldly deeds and misdeeds, should be able to sit enthroned above the clouds, unaffected by transitoriness, unaffected by the forces of destruction, unaffected by the shots of our giant guns.”

Whereas nations are devastated in their economies by the effects of war, somehow these International Powers rise in power, unaffected.

“For, should even houses and huts, railroads and bridges shattered by shells sink into dust and ash, the mortgages will still exist; the railroad bonds and public certificates of indebtedness are not thereby erased. Should villages and cities, entire provinces fall victim to the insane destruction of war, what is the result? New certificates of indebtedness are what it means. With eyes flashing greed the Gold International enthroned above the clouds watches the mad rush of humanity. And not long distant is the time when all humanity finally shall serve only as interest-slaves to Mammonism.”

This is the essential aim of the Masters of Mammonism (a condition only increasingly encouraged in the masses, which we will identify and speak more of in later posts): to cause all the nations to become their slaves, manipulating men’s creative labours in such a way that with their debt-based economy, they can live off other men’s sweat.

This is what the Abolition of Interest-slavery seeks to bring an end to, before the prophetic statements of Feder would see their fulfillment in the negative.