Out of the Mouths of Babes: Twelve-Year-Old Money Reformer Tops a Million Views … The youtube video of 12 year old Victoria Grant at the Public Banking in America conference last month has gone viral, topping a million views on various websites. Monetary reform—the contention that governments, not banks, should create and lend a nation's money—has rarely even made the news, so this is a first. Either the times they are a-changin', or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it. − Web of Debt blog

Dominant Social Theme: Public banks are better.

Free-Market Analysis: The intrepid and charming Ellen Brown has scored again with the one-year-old Public Banking Institute that filmed 12-year-old Victoria Grant speaking about the benefits of public banking.

The video of the beguiling young woman has gone "viral" with well over a million views. In the video, Ms. Grant explains her support for public fiat-money printing, which is what the current crop of public-private central banks do now.

The Public Banking Institute is apparently the brainchild of Ms. Brown and seems to include at least one advisor with ties to the United Nations. Ms. Brown is also a big backer of "Occupy Wall Street" that has received funding apparently from George Soros who is an integral part of what we call the power elite.

The elites surely love the idea of public banking. They are trying to move the world toward global governance via mercantilism. It matters not to them whether they control governments via public/private central banking or "pure" public central banking.

Ms. Brown these days is hard to pin down on exactly what she means by public banking. (She now argues for state creation of money, apparently.) But going by past statements, it would seem ultimately that she wants a fully comprehensive public central bank printing monopoly money.

This would be a disaster – no less than the current system. However, Ms. Brown is hugely influential and her views – as we have long predicted – will continue to carry weight. Her popularity is based on a book called Web of Debt. It has been extensively debunked by hard-money economist Gary North, but Ms. Brown and the book carry on.

In it, she made the point that central banking was a private excrescence and that public banking would be much better. This is the nub of her argument. The trouble with making the case for government is that government doesn't work very well and over time has a predilection for mismanagement, general abuse and even genocide.

It has been estimated that up to 150 million died in the 21st century as the result of government actions of one sort or another. And the misery caused by over-the-top taxation, regulation and all-around economic ruin is incalculable. This is a historical fact and has nothing much to do with the current globalist conspiracy.

Human action, the idea that people can take care of themselves, is not a new one but within the historical context it is an obviously convincing one – though not often noted. It is the reason laws and regulations almost never work as they are not rooted in natural law. When "the law" contravenes what nature intends, nature inevitably wins. The free market itself is part of natural law.

What Ms. Brown and Ms. Grant are arguing is against natural law. It is the idea that government bureaucrats can manage monopoly fiat-money printing better than the current crop of private-public bureaucrats and bankers.

The argument is that private central banks are what we have now and if the "people" were in charge of central banking – and money printing – current problems would right themselves.

This is the larger argument regarding public money generally. If Money Power is removed from the hands of the power elite then the entire illegitimate current system would magically transform into something utile and beneficial.

The argument is expanded by a critique against interest. The idea is therefore twofold: Purely public bureaucrats can manage Money Power better than the current mercantilist system and, second, the provision of public money to private interests would somehow reduce bankruptcy and end "interest slavery." Here's some more from Ms. Brown's article:

Basically, her message was that banks create money "out of thin air" and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.

She said her own country of Canada actually did this, from 1939 to 1974. During that time, the government's debt was low and sustainable, and it funded all sorts of remarkable things. Only when the government switched to borrowing privately did it acquire a crippling national debt.

Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for these bonds is ultimately created by private banks. For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:

Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.

Towers was asked, "Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?" He replied, "If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament."

This is surely a beguiling argument but it doesn't address the issue of monetary inflation. There is absolutely no way that public bureaucrats would know how much money to print – and thus as is currently the case too much money would inevitably be printed.

This would lead to inflation and perhaps, eventually, hyperinflation. Ms. Brown addresses the argument with a logical non sequitur as follows:

[The final] argument [is] that borrowing from the government's own bank would be inflationary … Let's see. The government can borrow money that ultimately comes from private banks, which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill; or it can borrow from its own bank, which also creates the money out of thin air, and avoid the interest. Even a 12 year old can see how this argument is going to come out.

So because it is being done badly currently, it ought to be done in a purely public manner. Say what? In fact, Ms. Brown and others that we call "Brownians" have no answer to this issue of over-printing money.

There is none. The only system that REALLY works (and has been proven historically) is a private money system with competing currencies. The market itself can decide whether there is too much money in circulation and the value of various monies would rise or fall depending on volume and popularity. Within this context, we believe gold and silver would find their rightful place, as they have historically.

Monetarists like Ms. Brown simply have no answer to the issue of "how much money to print." She and others who espouse such views want us to believe that human beings can provide a judicious substitute for market forces.

The history of humankind is replete with such hubris. Human judgment cannot replace supply and demand. It is unreasonable in our view to advance the argument that it can.

Even when such rhetoric is offered by cute, smart children.