“From Democracy to Oligarchy” is title of chapter 18 of the Micahel Hudson book Killing The Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

I think the point is that it is private bank created debt that is a far more serous threat to us all than is federal government “debt”.

Here is an excerpt from near the end of the chapter.

The popular media distract attention from how it has been possible for the Federal Reserve to create what is now more than $4 trillion in Quantitative Easing without spurring price and wage inflation. Morally, why have the banks’ large uninsured depositors, bondholders and gambling “counterparties” been bailed out in a period of debt deflation for the rest of the economy? Why did the Fed not create this credit to pay off the debts? Why were the debts left in place, leading to foreclosures that destroyed entire neighborhoods while the largest banks were rescued to resume their extravagant bonuses and dividend payouts?

Selling out voters to campaign contributors promoting pro-One Percent policies has led both major U.S. political parties to be distrusted by large swaths of the electorate. In view of how the Occupy Wall Street demonstrations won worldwide emulation by catalyzing awareness of how big money has corrupted our government and our economy, it seems remarkable that no Democratic or other would-be left coalition has sought to mobilize the widespread rejection of today’s pro-bank policy. Advocacy of truly socialist policies might stun the beltway class with its popularity, as Syriza has done in Greece (described in Chapter 24 below).

The Tea Party (and libertarians with roots in the anarchist tradition) fail to realize that only a government strong enough to tax and regulate Wall Street can check today’s financial and rentier power grab. Attacking “big government” without distinguishing between Big Oligarchy and a Progressive Era mixed economy – what used to be called socialism – dilutes efforts to regulate and tax wealth, and ends up being manipulated to support the vested interests, Koch Brothers-style.

I am learning some nuances about Modern Money Theory that had escaped me up till now. The economic difference between FED created money and private bank created money is that private bank created money entails debt and interest payments to the private banks that created the money whereas FED created money spent into the private sector does not produce any personal debt to the members of the private sector.

Federal government debt, unlike private, personal debt, does not require any person or corporation in the private sector to pay back that debt. The government sector debt created by deficit spending will be paid with money created by the FED.