"Back in the 1700's the American Colonies were doing rather better than was expected for a backwoods land. No one paid income tax, yet prices remained stable with no inflation. There was not a single unemployed man, no poor and no vagabonds. When Benjamin Franklin was asked how he could account for all this new found prosperity he replied:
"That is simple. In the Colonies we issue our own money. It is called Colonial Script. We issue it in proper proportion to the demands of trade and industry to make the products pass easily from the producers to the consumers.
In this manner, creating for ourselves our own paper money, we control its purchasing power, and we have no interest to pay to no one."
Breaking all the modern conventions of economics, the Colonies continued to prosper producing their own unbacked interest free money, until the production of Colonial Script was made illegal by the Currency Act of 1764. 1
This was an act pressed into law by the Bank of England fearing the production of Colonial Script would put them out of business.
This act forced the Colonies to pay taxes in the form of gold and silver to the British Central Bank and, as a result, the Colonies effectively handed back control of their economy to old world interests who, for the most part, would never see the new world as anything more than an entry on a balance sheet.
The effect of losing the Colonial Script on the Colonies was disastrous, bringing a rapid end to their prosperity as economic depression set in." (http://www.xat.org/xat/alternative.html)