Money and Banking Myth #1... “Only the Federal Government can create money”. Gov. Schwarzenegger fell for this one -- it is costing California big time. Here is what he is quoted (in TIME) as saying“I understand that these cuts are very painful and they affect real lives. This is the harsh reality and the reality that we face. Sacramento is not Washington – we cannot print our own money. We can only spend what we have.”
– Governor Arnold Schwarzenegger quoted in Time, May 22, 2009

If the Governator helped establish Community Banks in 100 good-size cities in California, under the plan at
<< http://www.primeronmoney.com/communitybanks.html >> -- those 100 banks can generate a total profit of more-than $16 Million / bank -- for a total of $1.6 Billion for the State each year. That profit figures out to have a Present Value of about $40 Billion -- using 4% as a rate-of-return That money can be spent on any worthwhile project(s) that would benefit the people of the State.

See “http://www.webofdebt.com/articles/but_governor.php” by Ellen Brown. It tears this myth to shreds.
We think this myth arises because of a faulty reading of the American Constitution which gives the “right to create money and regulate the value thereof to Congress”. In Article I, Section 10, Under “Powers prohibited of States” -- the Constitution does prohibit States from creating state money -- but it in no way prohibits States from owning and operating banks and creating Federal Money through those banks. Ellen Brown has reminded us recently that the State Of North Dakota has operated a money-creating bank for almost 100 years.

Also see Amendment 10 - Powers of the States and People. Ratified: 12/15/1791. “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” This has been taken to mean the people and the States have the right to own and operate banks as long as they create Federal Money and not State or Private money. This power also logically extends to groups of people such as corporations, cities, social and charitable organizations and such. In fact, most, if not all. states insist that all banks be formed as corporations and are therefor subject to corporate law and state issued charters.

Money and Banking Myth #7 ... "There is a need to funnel money to banks". NOT TRUE -- banks have the right to make whatever money they need to make prudent and sensible loans -- it is all part of our Sovereign Right to create whatever money we need.

See http://www.primeronmoney.com/moneyfactsannotated.html -- items 1 to 4 -- reproduced below. This is by Wright Patman in his "Money Facts", a supplement to his "A Primer On Money" (a .pdf).

1. Who has the right to create money in the United States? Under the Constitution, it is the right and duty of Congress to create money. It is left entirely to Congress. ...
2. To whom has the Congress delegated this money creating right? (in the 1913 "Federal Reserve Act - mrc) To the banking system, that is, to the Federal Reserve System and to the commercial banks of the country. ...
3. Why is the money-creating power important? Because, by creating money, banks provide the exchange media which the economy needs to prosper and grow. Since the growth and proper functioning of the U.S. economy require increasing amounts of money over the years, those who control the amount of money exercise great power over business activity, the incomes people earn and economic strength.
4. Why was the banking system given the right to create money? The reasons are mainly historical. Still the banks do perform a service in creating money. For once the money and credit is created someone must decide whom to give the money and for what purposes. This the banks do. And bank earnings are the return for wise and proper placing of the money supply.

Money and Banking Myth #11 -- Confusion about Fiat Money -- Even the world's most famous economists appear to ne confused as to what "Fiat Money" means. Some people use the term "fiat money" as a derogative phrase -- meaning (a) it can't be converted to gold or silver and (b) it has no real value. Others realize that fiat money is money that has been formally and lawfully defined as "Legal Tender" and it is the best money of all because it is backed by the laws and power of the issuing country and useful in most markets within the most prosperous countries of the world. If you are serious about money -- it is probably best if you use the term properly. If you want to send a derogative message, we suggest you use quotation marks ("fiat money") and omit the quotation marks when you simply want to refer to money that is recognized as legal tender.

Also see Fiat Money -- A Ph.D. dissertation by someone who has studied the subject.

Money and Banking Myth #12 to 14 -- are all related -- (12) -- All money is created by debt. (13) -- If all debts were paid, there would be no money. (14) -- All debts can never be paid because banks create the money to pay the debts, but not the interest. These three myths flow from a general ignorance of money creation and are very hard to respond to because they are so goofy -- but I will nevertheless try to address each in turn. (12) -- Whenever the goverment buys goods and services, it pays cash, most of that cash is received as taxes. None of that money is ever created as a debt. (13) -- Money saved by the general public from their pay is not created as debt. (14) -- Money made as profits by manufacturers and service providers does not come from debts -- nor does money made as profit by prvate investors. All of that money would be available if all debts were paid and that money would also be avaiable to pay the iterest on bank loans. There is a lot more to our economy than debt. Wealth always comes from the combination of (a) invested capital and (b) human labor -- neither of those two commonly come from debt. These three myths are encountered regularly. Google those three myths to prove that assertion.