How would you like to get rid of all of that unconstitutional debt the Federal Reserve System has created in the name of the American people?
Just as the concept of State Banks is a partial solution to the ever-increasing debt load borne by the American people (and the rest of the world carries a similar and equally illegitimate burden), the concept of odious (or immoral) debt is a partial solution.
Just a thought… if we keep finding partial solutions to the complex political and economic problems so much a part of America today, we will eventually end up with a full set of teeth. “They” have created these problems in a way that requires “partial” solutions to them. Everyone looks for a simple solution – “Impeachment will solve the problem!” No. It will not. The problems – including our misbegotten Congress – were there before Obama and they will be there after he leaves.
This isn’t a terribly complex concept but it does require some reading to understand its value. Most important things require a little effort. You need to know the history behind odious – or immoral – debt. I began writing about it more than two years ago and have been investigating it ever since.
On December 6, 2008, Ecuadorian President Rafael Correa exposed a great weakness in the world financial system. Correa didn’t make a scheduled interest payment on private bonds. Ecuador had defaulted in 1998 when going through a financial crisis. South and Central American Governments sometimes do not take debt – or illegal immigration of their people to the U.S. – very seriously (Argentina is currently at it again). This time, however, was different. Correa told the world that his small nation was not going to pay “obviously immoral and illegitimate debts.”
Ecuador’s gross domestic product (GDP) is close to 50 billion Euros and its “immoral debt” is about 11 billion Euros. It’s a small country. But that isn’t the point. The “immoral debt” point made by Rafael Correa, was announced on television on December 12, 2008.
Ecuador’s President said immoral and illegitimate debts violate the Constitution of his country and oppressed his people. He refused to pay. If that is the standard by which we define “immoral debt,” this information is of critical importance. It may present to the American people a strategy for getting rid of a lot of debt… immoral debt.
You may say “What does an action taken by a small nation in Central America have to do with a nation like America that has a GDP of $17 trillion and debt of $18 trillion?” You may scoff. “The United States would never do such a thing!”
If that is your response, you may want to sit down before reading further because the United States Government has used the odious debt escape clause twice… once quite recently when President George W. Bush refused to pay the debts of Saddam Hussein when our military removed him from power.
The question becomes: What debts are “odious” or “immoral,” and which are not? What is an illegitimate debt?
President Correa related the Ecuadorian “immoral debt” to violations of that nation’s Constitution. Since the Rule of Law flows from the Constitution, that sounds lawful and correct.
In America, can we look at mortgage-backed derivatives and millions of unlawful foreclosures and come to the same conclusion? How about the debts and the government funds loaned to the banksters that created them and who got bailed out by additional funds from the pockets of American citizens via the Federal Reserve? A good case can be made that they are “immoral” or “odious” debt.
What else might represent “immoral debt?”
Well, if it’s anything that is unconstitutional, can a claim be made that the entire Federal Reserve System is “unconstitutional?”
Article One, Section 8 of the United States Constitution says “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States;” Section 8 also says Congress has the responsibility “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;” that sounds pretty clear… no law degree required.
There is a lawful way to change the Constitution of the United States. It involves both the House of Representatives and the Senate. Each must approve by a two-thirds super-majority vote a joint resolution amending the Constitution. The joint resolution does not require the signature of the President but is sent directly to the States for ratification. Once ratified by the American people, the Constitution is lawfully amended. That is the process put in place by our Founding Fathers.
As anyone who is familiar with the history of the Federal Reserve Act of 1913 knows, this procedure was not followed. Instead, politicians who wanted a central bank (which America had for 20 years on two occasions until 1913) told their opponents to go home for Christmas on December 23rd and proceeded to pass this act unconstitutionally. Not only was there no super-majority, there probably wasn’t even a majority around for that vote. The Congress cannot, under its own limited powers, change the Constitution of the United States. The Federal Reserve Act and the banking system that evolved from it have never been constitutional.
Should foreign nations, the International Monetary Fund, the World Bank, etc., beware? Are they are doing business with an unlawful agency… one that could be found in violation of the Constitution and not qualified to create debt in the name of the people of the United States of America? If so, doesn’t that make it “immoral” or “odious” debt?
What other debt might be unconstitutional? Isn’t it true that only Congress has the constitutional (moral) authority to declare war? Could that mean that any debt from non-declared wars represents “immoral debt?” It appears one could certainly make that argument!
As applied to nations and states, immoral debt occurs when the purpose of debt does not serve the best interests of the nation or the state for which debt was incurred. Such debts, says international law, are the personal debts of “the regime that incurred them and not the debts of the state.” In other words, the newly-formed state that replaces the old nation state is not responsible for the criminal behavior of the old nation state.
Think of the old Soviet Union’s monetary failure and the new Russian Federation. The new Federation was not forced to carry the debts of the old Soviet Union on its newly opened bank accounts. Actually, when viewed from that perspective, the failure of the USSR was a tremendous economic blessing to Russia and the other nations of the old Soviet bloc.
Fraud in the inducement is one way to interpret immoral debt. Think of it as an invalid contract… invalid because a signor was either coerced (or was lied to) to gain his or her signature on a contract or an agreement. Fraud in the inducement occurs when one person is given faulty information about the intentions of another party to the agreement or contract and signs on the dotted line based on that lie. The more serious is the resultant injury to the defrauded person, the more serious are the potential consequences.
The concept of immoral debt comes from a Russian legal theorist and is based on Mexico’s refusal to pay the debts of Emperor Maximilian’s government.
On two occasions, the United States refused to repay debt incurred through the coercive behavior of other nations.
1) The first precedent of claiming odious debt on behalf of the United States was when America seized control of Cuba from Spain. Spain insisted that Cuba repay Spanish loans made to Cuba and the U.S. refused to pay. We said the debt served Spain’s, not Cuba’s, interest. We said the debt was imposed on Cuba by force of arms… it was odious debt.
The precedent was upheld by international law in Great Britain v. Costa Rica (1923) when money was put to use for illegitimate purposes and the lenders knew it. The debt was deemed “odious” and went unpaid.
2) President George W. Bush refused to pay much of the debt incurred by Saddam Hussein because it was “odious debt.”
There was a lot of disagreement about Bush’s debt denial – the Gulf countries claimed money was owed to them by the U.S. when we removed Hussein from power. Iraq said the Gulf States made grants to assist the deposed Iraqis in the war with Iran. “Grants” rather than “loans” were made because of threats from Iran. European and Middle East Governments and banks that made loans to Iraq during its war did not want Iran’s wrath if Iraq lost the war… so they made “grants” which, they said, were really loans… though no loan documentation existed. The U.S. Government refused to pay because this was “odious debt.”
The Russian legal theorist who created the concept of odious debt is Alexander Nahum Sack. His 1927 treatise on the subject says:
“When a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, to suppress a popular insurrection, etc, this debt is odious for the people of the entire state. This debt does not bind the nation; it is a debt of the regime, a personal debt contracted by the ruler, and consequently it falls with the demise of the regime. The reason why these odious debts cannot attach to the territory of the state is that they do not fulfill one of the conditions determining the lawfulness of State debts, namely that State debts must be incurred, and the proceeds used, for the needs and in the interests of the State. Odious debts, contracted and utilized for purposes which, to the lenders’ knowledge, are contrary to the needs and the interests of the nation, are not binding on the nation – when it succeeds in overthrowing the government that contracted them – unless the debt is within the limits of real advantages that these debts might have afforded. The lenders have committed a hostile act against the people; they cannot expect a nation which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the ruler.”
The next important question is: Can it be proven that the American government has acted in a despotic manner? Do illegal immigration and treaties like NAFTA and CAFTA serve or harm the needs of the nation? Did they help destroy our manufacturing base? Is the government refusing to seal our border? Is there an Ebola outbreak that could easily be brought into this nation by those willing to blow up themselves or their children if it gains them access to Islamic heaven? Would carrying the Ebola virus into America rather than a bomb around their chests be a blessing to them?
Are our laws being selectively enforced? Have journalists and world leaders had their communications targeted? Have weapons been sold to Mexican drug cartels in violation of our laws? Is it constitutional for the IRS to discriminate against Tea Party conservative groups? Are facts about Benghazi being withheld from the Congress which has oversight responsibility? When things like this happen, is Government acting with reckless disregard for the Constitution and the American people?
If so, debt incurred because of such behavior may represent immoral/odious debt.
Can the concept of odious debt be put to work in our efforts to retake our nation? It is established, it has been used and upheld internationally and it has been used by the United States.
The precedent is there and when the current federal system follows the historic footsteps of the Soviet Union and fails, the newly-formed American government has a strong legal precedent when it refuses to pay the debt of its predecessor.