Tag: Economics

Banking and Insurance Reform

Our Position

Greens will overhaul the financial industries to end their culture of impunity and to prevent them from committing fraud or malfeasance so severe as to drive our nation into a massive recession or depression.

Since finance, banking, and insurance institutions occupy a privileged position of power at the center of commerce, this special advantage brings with it special social responsibilities. We must ensure that the institutions chartered for these roles take that responsibility seriously and serve the public interest.

Greens aim to reform the financial industries to eliminate usury (exorbitantly high interest rates on loans) and ensure that they meet their obligations to taxpayers and local communities.

Green Solutions

Banking Reform

Break up our nation’s largest banks and financial institutions so that none is “too big to fail.” End taxpayer- funded bailouts for banks, insurers and other financial companies.

1. Break up our nation’s largest banks and financial institutions so that none is “too big to fail.” End taxpayer- funded bailouts for banks, insurers and other financial companies.

2. Regulate all financial derivatives, ban any predatory or gambling use of derivatives, and require full transparency for all derivative trades, to control risk of systemic financial collapse. Require regulatory pre-approval of exotic financial instruments.

3. Re-enact the Glass-Steagall Act, which prohibited bank holding companies from owning other financial companies and engaging in risky economic transactions.

4. Oppose the federal government being the final guarantor of speculative investments. During a financial crisis, if the federal government and/or a central bank must provide relief, it should be given in an equal manner and at the most local level possible, so that benefits are equitably dispersed and burdens are equitably borne. So rather than pouring trillions of dollars into the banking system, they should have provided direct mortgage relief to homeowners suffering the most from the housing bubble and negotiated with lenders to provide partial loan forgiveness.

5. Ensure that low- and middle-income people have access to banking services, affordable loans, and small-business supporting capital, especially through credit unions.

6. Oppose disinvestment practices, in which lending and financial institutions move money deposited in local communities out of those same communities, damaging the best interests of their customers and community.

7. Support the extension of the Community Reinvestment Act to provide public and timely information on the extent of housing loans, small business loans to minority-owned enterprises, investments in community development projects, and affordable housing.

8. Strengthen disclosure laws, anti-redlining laws, and openness on the part of lenders regarding what criteria they use in making lending decisions.

9. Oppose arbitrary or discriminatory practices that deny individuals or small business access to credit.

10. Support development of charter community development banks, which would be capitalized with public funds and work to meet the credit needs of local communities.

11. Support the expansion of co-operative credit unions.

12. Prosecute criminal banking speculation. The Green Party of the United States stands for the reversing the U.S. government bailouts of speculators who engaged in mortgage fraud and related financial crimes. The Green Party calls for aggressive investigation and prosecution of the individuals and corporate entities that targeted families of modest means for predatory home loans, and the large-scale securitization of these loans. Penalties should include prison terms, revocation of corporate charters and confiscation of corporate and individual assets.

13. Impose a moratorium on foreclosures. An ongoing mortgage-related crime wave is occurring around fraudulent foreclosures, rushed through without proper legal clearances or documentation, often on properties which foreclosing entities cannot even prove they own. We demand a four-year moratorium on foreclosures intended to recoup losses from predatory lending. The proposed moratorium would apply to all homes used as a primary residence and valued under $350,000.

14. Access to primary, secondary, post-secondary and vocational education should be a right of all, not a privilege of the wealthy, and certainly not an opportunity for predatory lenders. It’s time to forgive all student and parent loans taken out to finance post-secondary and vocational education. The estimated $40 billion is a fraction of the bailout distributed among the predatory lenders who created the student debt crisis and would make a material difference for households across the country.

Monetary Reform (Greening the Dollar)

15. The crisis in our financial system makes it imperative that we restructure our monetary system. The present system of privatized control has resulted in the misdirection of our resources to speculation, toxic loans, and phony financial instruments that create huge profits for the few but no real wealth or jobs. It is both possible and necessary for our government to take back its special money creation privilege and spend this money into circulation through a carefully controlled policy of directing funds, through community banks and interest-free loans, to local and state government entities to be used for infrastructure, health, education, and the arts This would add millions of good jobs, enrich our communities, and go a long way toward ending the current deep recession.

16. To reverse the privatization of control over the money issuing process of our nation’s monetary system; to reverse its resulting obscene and undeserved concentration of wealth and income; to place it within a more equitable public system of governmental checks and balances; and to end the regular recurrence of severe and disruptive banking crises such as the ongoing financial crisis which threatens the livelihood of millions; the Green Party supports the following interconnected solutions:

17. Nationalize the 12 Federal Reserve Banks, reconstituting them and the Federal Reserve Systems Washington Board of Governors under a new Monetary Authority Board within the U.S. Treasury. The private creation of money or credit which substitutes for money, will cease and with it the reckless and fraudulent practices that have led to the present financial and economic crisis.

18. The Monetary Authority, with assistance from the FDIC, the SEC, the U.S. Treasury, the Congressional Budget Office, and others will redefine bank lending rules and procedures to end the privilege banks now have to create money when they extend their credit, by ending what’s known as the fractional reserve system in an elegant, non disruptive manner. Banks will be encouraged to continue as profit making companies, extending loans of real money at interest; acting as intermediaries be- tween those clients seeking a return on their savings and those clients ready and able to pay for borrowing the money; but banks will no longer be creators of what we are using for money.

19. The new money that must be regularly added to an improving system as population and commerce grow will be created and spent into circulation by the U. S. Government for infrastructure, including the “human infrastructure” of education and health care. This begins with the $2.2 trillion the American Society of Civil Engineers warns us is needed to bring existing infrastructure to safe levels over the next 5 years. Per capita guidelines will assure a fair distribution of such expenditures across the United States, creating good jobs, re-invigorating the local economies and re-funding government at all levels. As this money is paid out to various contractors, they in turn pay their suppliers and laborers who in turn pay for their living expenses and ultimately this money gets deposited into banks, which are then in a position to make loans of this money, according to the new regulations.

Source:

Green Party US. 2014. “Monetary Reform (Greening the Dollar)”. July 2014. 

Comment:

Planks 17, 18 and 19 faithfully reflect the three prongs promoted by The American Monetary Institute. For more see:  “Formulations of the Three-Point Policy Proposal for Monetary Reform“. Alpheus, 6 Feb 2018.

 

H.R. 2990 (112th): National Emergency Employment Defense Act of 2011

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

Summary

9/21/2011–Introduced. National Emergency Employment Defense Act of 2011 – Replaces Federal Reserve notes with United States Money.

Instructs the Secretary of the Treasury to originate United States Money to address any negative fund balances resulting from a shortfall in available government receipts to fund government appropriations.

Subjects to criminal and civil penalties any person who creates or originates United States Money by lending against deposits through “fractional reserve banking.”

Prohibits borrowing by the Secretary or by any federal agency or department, independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, federal savings association, or federal credit union) from any source other than the Secretary.

Requires the Secretary to begin to retire all outstanding instruments of U.S. indebtedness by payment in full of the amount legally due the bearer in United States Money.

Prescribes requirements for the entry of United States Money into circulation.

Directs the Secretary to purchase all net assets in the Federal Reserve System, including the Federal reserve banks. Requires return to any member bank in the form of United States Money of any reserves held by any Federal reserve bank.

Establishes: (1) the Monetary Authority to establish monetary supply policy and monitor the nation’s monetary status, (2) the Bureau of the Federal Reserve to administer the origination and entry into circulation of United States Money, (3) the Emergency Board to recommend to Congress when a national emergency requires the President to issue a certification of emergency for the exercise of authority by the Monetary Authority as lender of last resort, and (4) a revolving loan fund in the Treasury for relending to banking institutions.

Sets forth a conversion process to replace fractional reserve banking with the lending of United States Money.

Sets a ceiling on interest rates.

Requires the Monetary Authority to instruct the Secretary to disperse monetary grants to states for public infrastructure, education, health care and rehabilitation, pensions, and paying for unfunded federal mandates.

Directs the Secretary to make recommendations to Congress for payment of a tax-free Citizens Dividend to all U.S. citizens residing in the United States in order to provide liquidity to the banking system at the commencement of this Act, before governmental infrastructure expenditures have had a chance to work into circulation.

Prescribes requirements for federal funding of education programs, coverage of any deficits in Social Security Trust Fund account, a universal health care plan, resolution of aspects of the mortgage crisis, and a program of interest-free lending of United States Money to state and local governmental entities.

Source

Congressional Research Service. 2012. Summary of H.R. 2990 (NEED Act). 

Full text of bill at:

United States of America (2012): H.R.2990 – National Emergency Employment Defense Act of 2011 (NEED Act). 112th US Congress (2011-2012). 

Introduction.

Modern monetary reform aims at three inter-connected changes of the monetary system, which unity is essential and therefore for many non-negotiable.

This is a compilation of different formulations of essentially the same three points. Most formulations are intentionally triple-pointed and some are differently constructed even while more or less covering the same proposals. This list is of course not exhaustive and is meant to function as a very loose template for monetary reformers to pick and choose terms, formulations and sources they would be most comfortable with.

A. Short formulation on AMI-Facebook (here)

B. 32-Page AMI brochure “Presenting the American Monetary Act” (here)

C. Distelhorst’s Speech Template for Citizens Speaking on Monetary Reform (here)

D. Nick Egnatz’ article “Linking Social Justice to Monetary Reform” (here)

E. The “Greening of the Dollar” by the Green Party USA  (here)

F. As formulated by the Chicago Teachers Union (here)

G. As found on site of Bryan Witt (here)

H. Covered in six points by Rev. Delman Coates (here)

I. As formulated by Robert Poteat (here)

J. As formulated on Ulrich Kortsch’s Real Money Economics web site (here)

K. In “One Page Summary of What Hr 2990 Will Do” (here)

L. In AMI’s “The Need for Monetary Reform” (here)

M. In Dr. Lucille Eckrich’s  “Monetary Transformation and Education” (here)

N. In the “Manifesto” of the International Movement for Monetary Reform (here)

O. In Dr. Huber’s presentation “It’s a Banks’ World” (here)

P. In Jacques Jaikaran’s  1992 book Debt Virus (here)

Q. In the 2012 National Emergency Employment Defense Act (here)

R. In James Robertson’s  2012 book Future Money (here)

====

A. Short formulation on AMI-Facebook

1) Incorporate the private Federal Reserve System into the U.S. Treasury.

2) Nationalize the currency and end the practice by banks to create bank credit money when originating loans.

3) Create an independent Monetary Authority which decides the amount of money in circulation and let the U.S. Congress decide how to spend its allowance of debt-free money.

Source: Schuller, Govert. 2017. “Regarding short accurate formulations of AMI’s monetary reform proposals”.   Facebook. 3 Oct 2017.

B. 32-Page AMI brochure “Presenting the American Monetary Act”

Monetary reform is achieved with three elements which must be enacted together for it to work. Any one or any two of them alone won’t do it, but could further harm the reform process. The reform has its best chance of passage in this severe monetary crisis created by the banking system using debt in place of money! Considering that the same establishment controls our weapons systems, this may be humanities only chance for reform, to stop the now obvious slide of our middle class into slavery or some form of “Disney Fascism.”

1). First, it incorporates the Federal Reserve System into the U.S. Treasury where all new money would be created by government as money, not interest-bearing debt; and be spent into circulation to promote the general welfare. A Monetary Authority monitors the money system to be neither inflationary nor deflationary.

2). Second, halt the bank’s privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized bank credit would be converted into U.S. government money. Banks would then act as intermediaries accepting savings deposits and loaning them out to borrowers. They would do what people think they do now. This Act nationalizes the money system, not the banking system. Banking is not a proper function of government, but only government should provide the nation’s money supply!

3). Third, spend new money into circulation on 21st century eco-friendly infrastructure and energy sources, including the education and healthcare needed for a growing and improving society, starting with the $2.2 trillion that the Civil Engineers estimate is needed over the next 5 years, for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding local government at all levels.

Source: Zarlenga, Stephen. 2011. “Presenting the American Monetary Act”. Valatie, NY: American Monetary Institute.

C. Dick Distelhorst’s Speech Template for Citizens Speaking to their City Councils and Civic Organizations

1). It incorporates the Federal Reserve into the U.S. Treasury where all money is created by the government as actual money, not interest-bearing debt, and is spent into circulation to promote the general welfare; monitored to be neither inflationary nor deflationary.

2). The Act eliminates Fractional Reserve Banking in a manner that would make the Federal Government the only entity with the power to create, issue and regulate our money, as Article I, Section 8, Clause 5 of the U. S. Constitution already mandates.

3). As the “debt-money” created by the privately owned Federal Reserve and commercial banks disappears as those debts are paid, it must be replaced with real money spent into circulation. This money will be used to rebuild our badly decayed public infrastructure, which includes roads, bridges, dams, water and sewage plants, mass transit, schools, etc. This will create millions of high paying jobs. Also included in Public infrastructure is universal health care and education for all. Also a stimulus check of at least $5,000 should be sent out to start getting us out of this recession by immediately putting money back in the hands of the American people.

Source: Distelhorst, Dick. 2011. “Dick Distelhorst’s Speech Template for Citizens Speaking to their City Councils and Civic Organizations”. Valatie, NY: American Monetary Institute. http://www.monetary.org/wp-content/uploads/2011/10/City-Council-Speech.pdf

D. Nick Egnatz’ Article “Linking Social Justice to Monetary Reform”

The NEED Act is a comprehensive monetary reform which was written by the Congressional Legislative Counsel as a non-partisan bill. Its three simple, but necessary, reforms are:

1). The Federal Reserve System is federalized. It becomes part of our government, exactly what most citizens mistakenly think it is now.

2). The banks’ ability to create what we use for money is decisively ended. The banks are not nationalized, but money creation is. In the future when banks make loans, they will be loaning money that already exists, not creating it. Exactly what most citizens mistakenly think they do now.

3). New US Money is created by our federal government and spent, not loaned, into existence, debt-free, for the needs of the nation and its people as determined by our elected, representative Congress. By charter the Monetary Commission, charged with determining how much money to create, will do so in a non inflation/deflationary manner.

Source: Egnatz, Nick. 2014. “Linking Social Justice to Monetary Reform”. Alpheus. 25 Dec 2014.

E. The “Greening of the Dollar” by the Green Party USA

1). Nationalize the 12 Federal Reserve Banks, reconstituting them and the Federal Reserve Systems Washington Board of Governors under a new Monetary Authority Board within the U.S. Treasury. The private creation of money or credit which substitutes for money, will cease and with it the reckless and fraudulent practices that have led to the present financial and economic crisis.

2). The Monetary Authority, with assistance from the FDIC, the SEC, the U.S. Treasury, the Congressional Budget Office, and others will redefine bank lending rules and procedures to end the privilege banks now have to create money when they extend their credit, by ending what’s known as the fractional reserve system in an elegant, non disruptive manner. Banks will be encouraged to continue as profit making companies, extending loans of real money at interest; acting as intermediaries be- tween those clients seeking a return on their savings and those clients ready and able to pay for borrowing the money; but banks will no longer be creators of what we are using for money.

3). The new money that must be regularly added to an improving system as population and commerce grow will be created and spent into circulation by the U. S. Government for infrastructure, including the “human infrastructure” of education and health care. This begins with the $2.2 trillion the American Society of Civil Engineers warns us is needed to bring existing infrastructure to safe levels over the next 5 years. Per capita guidelines will assure a fair distribution of such expenditures across the United States, creating good jobs, re-invigorating the local economies and re-funding government at all levels. As this money is paid out to various contractors, they in turn pay their suppliers and laborers who in turn pay for their living expenses and ultimately this money gets deposited into banks, which are then in a position to make loans of this money, according to the new regulations.

Source: Green Party US. 2014. “Monetary Reform (Greening the Dollar)”. July 2014.

F. As formulated by the Chicago Teachers Union

1). The NEED Act puts back the money creation power under public checks and balances thorough their Congressional representative

2). The NEED Act puts any necessary functions of the Federal reserve under public administrations to be in alignment with the U.S. Constitution

3). The NEED Act uses the money creation powers to give millions of people at all governmental levels work to improve the infrastructure of the country

Source: Chicago Teachers Union. 2012. ”Resolution to Support: The National Employment Emergency Defense (NEED) Act, H.R. 2990”. 9 Jan 2012.

G. As found on Bryan Witt’s site

1). Abolishing the privately owned FED and creating a new, non-partisan, Monetary Authority, within the U.S. Treasury

2). Nationalizing our currency by abolishing Federal Reserve Notes and creating interest-free United States Notes

[Note: Bryan Witt is a democrat running for congress in the 27th district of California]

Source: Witt, Bryan. 2017. “Witt for Progress”.

H. Covered in six points by Rev. Delman Coates

If we are to have just society, we must have a just monetary system; a money system that

1). provides for government issued, interest-free money,

2). takes banks out of the business of money creation and restricts banking to depositing savings, and lending actual savings;

3). separates investment banking from traditional banking;

4). eliminates the moral hazard of the public bailing out banks that engage in risky investment practices;

5). invests government issued money into public infrastructure (i.e. jobs, roads, health care, education, the environment, etc.); and

6). protects the right to vote and gets money out of politics.

[Note: Points 1, 2 and 5 would constitute the core of monetary reform. Missing is the fate of the FED]

Source: Coates, Delman. 2017. “ ‘The New Abolitionism’ – Monetary Reform and the Future of Social Justice”. PDF with footnotes at “The New Abolitionism: Symposium on Money Mechanics and a Moral Economy” Oct 2017.

I. As formulated by Robert Poteat

The NEED Act would:

1). terminate the power of private banks to create credit used as money;

2). restore the power to Congress to create and spend into circulation United States money debt and interest free to maintain a stable and productive economy without inflation or deflation; and

3). the present statistical data keeping, bank regulation, and institutional knowledge of the present system would be folded into the US Treasury as a new bureau.

[Note: Robert Poteat is the current director of the American Monetary Institute]

Source: Poteat, Robert. 2013. “A Viable Solution to the Economic Crisis”. Valatie, NY: American Monetary Institute.

J. As formulated on Ulrich Kortsch’s Real Money Economics web site

Real Money Economics is an economic theory which proposes to change the current monetary and fractional reserve banking system as follows:

1). change the bank depository and payment system to a “Trust Banking System”;

2). change the bank credit system to a mutual fund system;

3). to keep price stability, change the new money creation system from a deposit creation system as follows:

a) create a new entity owned by Treasury to be in charge of this, under the control of the Federal Reserve Bank, but not owned by it;

b) increase the money supply by a modified Taylor Rule

c) grant the resulting seigniorage to Treasury thus paying off the national debt and greatly lowering taxes.

[Note: This formulation is a bit technical, but still covers the same ideas]

Source: “Answers: Fixing The Banking System For Good“.

K. In “One Page Summary of What Hr 2990 Will Do”

The “NEED” Act HR 2990 solves the problem with 3 actions

1). The Federal Reserve is dismantled and good parts are placed into the US Treasury. A Monetary Authority is created which avoids an inflationary or deflationary money supply.

2). Accounting rule changes prohibit the banks from creating what we use for money- from using debt for money – what’s known as fractional reserve banking is decisively ended.

3). The Congress originates (creates) new US Money and spends it into circulation, for infrastructure, health care and education; starting for example with the $2.2 trillion the engineers tell us is needed for infrastructure over the next 5 years. Later the human infrastructure of health care and education is added. This is estimated to create over 7 million good jobs quickly.

[Note: HR2990 was the brain child of Dennis Kucinich (D-OH) with help from Stephen Zarlenga, founder of The American Monetary Institute, and many others]

Source: “HR2990”

L. In AMI’s “The Need for Monetary Reform”

Monetary reform is achieved with three elements which must be enacted together for it to work. Any one or any two of them alone won’t do it, but would further harm the reform process. The reform has its best chance of passage in this severe monetary crisis created by the privatized money system. Considering that the same establishment controls our weapons systems, this may be humanities only chance for reform, to stop the now obvious slide of our middle class into slavery or some form of “Disney Fascism.”

1). First, incorporate the Federal Reserve System into the U.S. Treasury where all new money would be created by government as money, not interest-bearing debt; and be spent into circulation to promote the general welfare. The monetary system would be monitored to be neither inflationary nor deflationary.

2). Second, halt the bank’s privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit would be converted into U.S. government money. Banks would then act as intermediaries accepting savings deposits and loaning them out to borrowers. They would do what people think they do now. This Act nationalizes the money system, not the banking system. Banking is not a proper function of government, but providing the nation’s money supply is a government prerogative!

3). Third, spend new money into circulation on 21st century eco-friendly infrastructure and energy sources, including the education and healthcare needed for a growing and improving society, starting with the $2.2 trillion that the Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding local government at all levels.

Source: Zarlenga, Stephen. 2009. “The Need for Monetary Reform“. Valatie, NY: American Monetary Institute.

M. In Dr. Lucille Eckrich’s  “Monetary Transformation and Education”

1) First, the NEED Act . . . disentangles the Federal Reserve System . . . and reincorporates the money-creation and -monitoring parts into the U.S. Treasury where all new money will be created as money (not by banks as interest-bearing debt lent into circulation, as currently happens) and spent into circulation to promote the general welfare and public good, its supply monitored overtime by the governmental monetary authority to be neither inflationary or deflationary.

2) Second, through its accounting rule changes, the NEED Act halts banks’ privilege to create money by ending the fractional reserve system (which is the legalized mechanism that allows banks currently to create what we use as money every time they make a loan) in a gentle and elegant way. All past monetized bank credit is converted into U.S. government money, as are treasury securities as they come due, and banks are held accountable for this conversion. . . .

3). Finally, through the NEED Act, the U.S. government creates (originates) all new U.S. money in accord with democratic budgetary processes of Congress and spends it into circulation as needed . . . to build postmodern public infrastructure, including for public education, healthcare, and $3 trillion for work that the American Society of Civil Engineers (ASCE) estimates is needed over the next five years for infrastructure repair and development. . . .

Source: Eckrich, Lucille L. T. 2017. “Monetary Transformation and Public Education”. In Hartlep, Nicholas et al (Eds.). The Neoliberal Agenda and the Student Debt Crisis in US Higher Education. New York & London: Routledge, 233-250. 

N. In the “Manifesto” of the International Movement for Monetary Reform

1). All official money – be it cash, money-on-account or new forms of digital currency – is created by a monetary state authority such as the state-owned central bank, according to the needs of the economy in a transparent and accountable process.

2). Money is created free of debt, in that it is directly spent into the economy via the state by way of government expenditure or directly distributed to the citizens as an equal dividend.

3). Private banks can not create official money (national currencies) as credit. They only act as payment service providers and/or financial intermediaries by lending and investing already existing official money, which they obtain from savers and investors.

Source:  International Movement for Monetary Reform. “Manifesto“.

O. In Dr. Huber’s presentation “It’s a Banks’ World”

1). Full money monopoly

Extending the existing sovereign money monopolies on coins and banknotes to money on account, i.e. full nationalisation of the official and regular stock of money (in no way, however, nationalisation of banking).

2). Monetary authority

Conferring responsibility for the entire stock of money to an independent and impartial monetary authority, in Europe the central banks, or the ECB respectively.

3) . Phasing out bankmoney

A money reform today does with private bankmoney on account the same as was done with private banknotes in the 19th century: private banknotes were phased out and replaced with the central-bank monopoly on banknotes. Today, in an analogous way, it is about replacing bank money (demand deposits) with sovereign central-bank money.

Source: Huber, Jospeh. 2016. “It’s a Banks’ World: Functioning and dysfunctions of the present money system”. Presentation at the University of Fribourg, Switzerland, 21 April 2016.

P. In Jacques Jaikaran’s  1992 book Debt Virus

Key Elements of the “Cure”

1.a). All existing laws and codes allowing money creation by private banks will be repealed.

1.b). Privater banks, institutions, and individuals will be prohibited from creating money.

2). The government will enact a law that the national Treasury will coin, create, provide, and regulate money and money credits for all the requirements of the nation, both public and private.

3). All money needed to meet national government obligations will be debt-free.

[Note: Quoting the three important elements of a nine-point ‘cure’.]

Source: Jaikaran, Jacques S. 1992. Debt Virus: A Compelling Solution to the World’s Debt Problems. Lakewood, CO: Glenbridge Publishing. Page 201.

Q. In the 2012 National Emergency Employment Defense Act

Section 2.(b). Purposes. (1), (3), (4), & (5):

1). To incorporate the Federal Reserve System into the Executive Branch under the United States Treasury, and to make other provisions for reorganization of the Federal Reserve System.

To create a Monetary Authority which shall pursue a monetary policy based on the governing principle that the supply of money in circulation should not become inflationary nor deflationary in and of itself, but will be sufficient to allow goods and services to move freely in trade in a balanced manner.

2). To abolish the creation of money, or purchasing power, by private persons through lending against deposits, by means of fractional reserve banking, or by any other means.

3). To enable the Federal Government to invest or lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure.

[Note: Titles I – III in the bill further anchor the three proposals]

Source:  H.R.2990 – National Emergency Employment Defense Act of 2011 (NEED Act). 112th US Congress (2011-2012).

R. In James Robertson’s  2012 book Future Money

Monetary reform: separating the two functions

A simple basic reform is all that is needed to separate the two functions now confused. It has two complementary parts.

(1) It will transfer to nationalised central banks like the Bank of England the responsibility for creating, not just banknotes and coins as now, but also the overwhelmingly large component of the supply of public money consisting of bank-account money mainly held and transmitted electronically.
Having created the money, the central bank will give it to the government to spend it into circulation on  public purposes under standard democratic budgetary procedures.

(2) It will prohibit anyone else, including commercial banks, from creating bank-account money out of thin air, just as forging metal coins and counterfeiting paper banknotes are criminal offences.

[Note: Robertson’s point (1) consists of two elements making his 2 points cover all three items of monetary reform]

Source: Robertson, James. 2012. Future Money: Breakdown or Breakthrough. Totnes, UK: Green Books.

The New Abolitionism – Monetary Reform and the Future of Social Justice

By Rev Delman Coates.

Introduction by Editor.

Rev. Delman Coates, Ph.D., is the Senior Pastor of the Mt. Ennon Baptist Church (Clinton, MD) and President of the Black Church Center for Justice & Equality. He is a monetary reform activist and embraces the logic underlying the 2012 NEED Act which was formulated and introduced by Rep. Dennis Kucinich (D-OH) and was based on previous work on The American Monetary Act formulated by the late Stephen Zarlenga, founder and director of the American Monetary Institute.

Dear friends of the monetary reform cause,

Last April 25 Stephen Zarlenga, the founder and director of the American Monetary Institute,  passed away at his residence in Palatine, Illinois. He was cremated in a private ceremony at Elegy Cremation and Memorial Services, Arlington Heights, Illinois. His friends are organizing a memorial event, details of which are not yet known.

Stephen, a native of Chicago where he was born in 1941, was an insightful researcher of the history and mechanism of money and banking and he was a tireless crusader for monetary reform. In 1996 he established the non-profit charitable trust The American Monetary Institute and in 2002 he published his 700-page study The Lost Science of Money: The Mythology of Money – The Story of Power, which will have to be ranked as one of the classics in its field.

He encapsulated his research in one perceptive phrase: “Over time, whoever controls the money system, controls the nation”.

In 2004 Stephen organized the first AMI Monetary Reform Conference, which became a yearly successful event in which many academic experts, community activists and otherwise interested persons participated. The 13th Annual Conference is slated to be held at the University Center of the Roosevelt University in Chicago on September 14 through 17.

He was also instrumental in formulating and promoting monetary reform legislation for the US Congress to adopt. Democratic congressman Dennis Kucinich from Ohio introduced in 2010 the National Employment Emergency Defense Act (Need Act), which was based on an earlier version developed by Stephen, the American Monetary Act.

With Stephen’s passing the American monetary reform movement lost its most prominent and influential member and he will be sorely missed. Some big shoes are to be filled because his cause is our cause and should be humanity’s concern, because we believe that well-thought-out monetary reform legislation can have profound transformative effects on our globalized world as it can democratically redirect the power of money creation towards the formation of a more just and equitable society.

If you like you can sign his memorial guest book here. 

 

Our sister organization in Switzerland, MoMo (Monetary Modernization) and its action arm Vollgeld Initiative (Sovereign Money Initiative), have just passed the 100,000 mark in collecting signatures to trigger a referendum on the Swiss money system. They started their drive in the spring of 2014 and had 18 months time to get the required amount of signatures. The notarized signatures will be handed over to the Swiss government on December 1.

As guest author Daniel Hersheson stated on Positive Money, that

. . . should the MoMo team succeed in putting such a fundamental reform proposal to a national vote, this would be a momentous achievement for the monetary reform movement in Europe and across the globe.  All eyes would be fixed on Switzerland, because success for this small but significant player in the financial arena would inevitably have a ripple effect in other countries[1].

So far at least two dozen Swiss news outlets shared the news and was picked up by Reuters.[4] The Swiss paper Die Blick seems even moderately positive about the initiative and interviewed respectfully one of its initiators, the economist Reinhold Harringer.[2]

The text of the initiative proposes to amend the Swiss constitution such that (these are my chosen highlights and translations)

1) ” The federal government guarantees the maintenance of the economy with money and financial services”.

2) “The federal government alone creates coins, banknotes and electronic money as legal tender”.

3) “The Swiss National Bank enacts as an independent Central Bank a monetary policy which serves the overall welfare of the country; it controls the money supply and ensures the functioning of payments as well as to maintain the economy with credit to the financial service providers”.

4) “Under its legal mandate it spends newly created money debt free into circulation, either through the federal state, the cantons, or directly assign it to citizens”[3].

In the Reuters article Momo spokesman Raffael Wuethrich was quoted, stating that it might still take five years for the referendum to take place.[4]

[1] Hersheson, Daniel. “Campaign for Monetary Reform – News from Switzerland“. 18 Dec 2013. Positive Money.

[2] Studer, Rudy. “105’000 beglaubigte Unterschriften: Vollgeld-Initiative kommt zustande“. Die Blick.  31 Oct 2015.

[3] Federal popular initiative. “For crisis-resilient money: Money creation solely by the National Bank! (Full Money Initiative) “

[4] Miller, John. “Swiss group says it has signatures for ‘sovereign money’ vote“. Reuters. 31 Oct 2015.

The October 14, 2015 hearing at the finance commission of the Dutch parliament regarding monetary reform was a milestone for the Dutch and international movement. The 140 minute long hearing can be watched on-line and will soon be provided with English subtitles [1]. This momentous event was triggered by a citizens’ initiative by  the Dutch monetary reform organization Ons Geld (Our Money) and the satirical theater group De Verleiders (The Seducers), which gathered more than 100,000 signatures, comfortably over the 40,000 needed. The first panel at the hearing, comprised of members of the citizens’ initiative, gave a very clear exposition of its proposals and during the second panel, comprised of financial authorities, bankers and academics, an outstanding debate developed between Dr. Bezemer and Dr. van Egmond about the necessity of reform.

Van Egmond made some very clear and passionate points in favor of reform. He seems to be totally on board with the monetary reform agenda, which is a great boon as he is not only a respected sustainability scholar, but also a founding member of the Sustainable Finance Lab at the University of Utrecht and, most importantly, a member of the very influential Dutch advisory council De Sociaal-Economische Raad (The Social-Economic Council).

Actually van Egmond co-wrote a working paper with Dr. de Vries titled “Dynamics of a sustainable financial-economic system”[7], which presents a “dynamic simulation model” in which the recent research into the nature of bank credit money by Dr. Werner [9,10] is incorporated.

“The model provides the ‘laboratory’ setting in which the discontinuities and associated socio-economic un-sustainability of the current financial-economic system can be studied and the feasibility of more sustainable alternatives can be explored”[7].

As far as I know the paper by van Egmond and de Vries is the third one to model the sovereign money proposal after the papers by Drs. Benes and Kumhof at the IMF [6] and Dr. Yamaguchi from Japan [11]. They all come to very positive conclusions regarding the proposal.

To be complete, there does exist a very recent fourth paper by Drs. Van Suntum and Neugebauer of the Center for Applied Economics Muenster, Germany. They investigated and modeled the Swiss sovereign money proposal and concluded that it was promising way more than could be realistically expected, even stating that “[m]ost of its desired effects are either negative or wishful thinking”[8].

In a response Dr. Huber, a long-time advocate of sovereign money [2] and critic of its alternatives [3,4], challenges the assumptions on which the authors had based their model, especially their idea that sovereign money would just be added to the already existing pool of money, instead of realizing that “Sovereign money – in its original and proper meaning – is a replacement for bankmoney, not an addition to the existing quantities of bankmoney”[5].

Govert Schuller
Naperville, October 20, 2015

Sources

[1]. “Round table conversation on the money system”. 2015. Hearing at the Permanent Commission on Finance of the Second Chamber of the States General of the Netherlands. Troelstra Hall. 14 Oct 2015. https://www.youtube.com/watch?v=3TSb9gBdyVE

[2]. Huber, Joseph & Robertson, James. 2000. Creating New Money. London: New Economics Foundation.

[3]. Huber, Joseph. 2014a. “Modern Money Theory and New Currency Theory”. Real-world economics review 66, (13 January 2014): 38-57. http://www.paecon.net/PAEReview/issue66/Huber66.pdf

[4]. Huber, Joseph. 2014b. “Sovereign Money in Critical Context: Responding to criticism of monetary reform from a variety of economic viewpoints”. Source: sovereignmoney.eu/papers-and-manuscripts, Oct 2014. http://www.sovereignmoney.eu/sovereign-money-in-critical-context

[5]. Huber, Joseph. 2015. “Side notes to” van Suntum, Ulrich & Neugebauer, Tom. 2015. Link to note at http://www.sovereignmoney.eu/confronting-criticism/.

[6]. Kumhof, Michael & Benes, Jaromir. 2012. “The Chicago Plan Revisited”. IMF Working Papers 12/202, International Monetary Fund. http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

[7]. Van Egmond, N.D. &  de Vries, B.J.M . 2015. “Dynamics of a sustainable financial-economic system”. Sustainable Finance Lab Working Paper. http://sustainablefinancelab.nl/files/2015/04/SFM-working-paper.pdf

[8]. van Suntum, Ulrich & Neugebauer, Tom. 2015. “Vollgeld, Public Debt, and the Natural Rate of Interest”. Working Paper, Centrum für Angewandte Wirtschaftsforschung Münster (CAWM), June 2015. Link to paper at http://www.sovereignmoney.eu/confronting-criticism/.

[9]. Werner, Richard A. 2014a. “Can banks individually create money out of nothing? The theories and the empirical evidence”. International Review of Financial Analysis, 36 (2014): 1–19. http://www.sciencedirect.com/science/article/pii/S1057521914001070

[10]. Werner, Richard A. 2014b. “How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking”. International Review of Financial Analysis, 36 (2014): 71–77. http://www.sciencedirect.com/science/article/pii/S1057521914001434

[11]. Yamaguchi, Kaoru. 2011. “Workings of a Public Money System of Open Macroeconomies: Modeling the American Monetary Act Completed”. In Proceedings of the 29th International Conference of the System Dynamics Society, Washington D.C., USA, 2011. The System Dynamics Society. http://monetary.org/wp-content/uploads/2011/11/DesignOpenMacro.pdf

By Nick Egnatz.

Introduction.

The author is a former small businessman who has spent the last decade as an activist for peace and social justice. About five years ago he discovered that our monetary system is not what the people had been led to believe it is. More specifically:

1. The Federal Reserve System is not a part of our government, all 12 Regional Federal Reserve Banks are entirely owned by the same private banks in their districts that they were chartered to regulate. [source]

2. Almost all of what we use for money is created out of thin air by banks when they make loans. The only money created by the federal government are the coins in our pockets and our children’s piggy banks. [source]

3. While the U.S. Department of Engraving prints the Federal Reserve Notes which we commonly refer to as dollar bills of various denominations, the Federal Reserve pays the treasury only for the cost of printing them, about 5 cents for a one dollar bill and 12 cents for a one hundred dollar bill. [source]

“When a bank makes a loan it simply adds to the borrowers’ deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”
Robert B. Andersen, Secretary of Treasury under President Dwight D. Eisenhower [source]

What I concluded was that the basic unfairness of allowing private banks to have the Money Power is at odds with democracy. It certainly flies in the face of our Declaration of Independence’s statement that “all men are created equal”. Perhaps if the people in our country were experiencing prosperity, we could in some crazy way justify giving the Money Power to private banks. After all, Aristotle looked to see what worked and what didn’t work. He junked the latter and supported the former. No doubt, he wouldn’t support our current monetary system. Our country is supposedly recovering from the Global Financial Crisis, but the recovery certainly doesn’t seem to trickle down to the poor or working class. Those who use the term middle class freely admit that it continues to shrink. The basic unfairness and the horrendous results of our monetary system is why I became a monetary reformer and a passionate advocate of the only comprehensive monetary reform bill placed into our Congress — the NEED Act.

I have written several other articles supporting monetary reform and the NEED Act. It has always been my intention to write an article that anyone can understand because economists have their own language and I for one had difficulty following their reasoning. This is not meant to denigrate economists, but those academics seeking a more technical explanation are encouraged to read the NEED Act and other papers included in the references, with particular encouragement in reading German economic sociologist Joseph Huber’s “Sovereign Money in Critical Context“.

While encouraging academics to read Huber, I caution those uninitiated in economist-speak to at the very least read this article first. Huber’s sovereign money, also called new currency theory, is entirely supportive of the NEED Act, but reading and understanding his paper will be a tough slog for those outside the economics community. Indeed, the grasp of his argument will be a challenge for bankers and economists alike. Not because they are unfamiliar with the language, but because they are unfamiliar with even considering reforming the present monetary system.

Money

Money is the very lifeblood of a nation. If a nation’s money system is healthy, society and people will prosper. From a sick or diseased money system, just as the night must follow the day, all manner of ills will follow.

A healthy monetary system is one in which the money is created and issued by the national government, debt-free, and spent into existence for the needs of the nation and its people as determined by its elected, representative government, in amounts that are neither inflationary nor deflationary.

A sick or diseased monetary system is one in which the money is created by banks and loaned into existence, as debt, for those endeavors that are determined profitable for bankers, with little or no regard for the actual needs of the nation and its people.

The Lost Science of Money, Director of the American Monetary Institute Stephen Zarlenga’s tour de force book on money, examines over 3,000 years of monetary history and uses Aristotle’s sage guidance in diagnosing and prescribing the cure for the critically diseased monetary system. It is available at the AMI website monetary.org. A much shorter treatment of the subject, Linking Social Justice to Monetary Reform, is available free online at alpheus.org.

Our understanding begins with Aristotle’s statement “Money exists not by nature, but by law.” The “money by nature” Aristotle referred to was a money as a commodity monetary system in which money was gold, silver or some other commodity, the system of choice for the wealthy who held the gold and silver. Money as a commodity, rejected by Aristotle, embraced by the rich, is the foundation for the debt money monetary system of today. Early goldsmiths or bankers began to issue paper notes for gold or silver given to them for safekeeping. They soon realized that people preferred the paper notes, which were accepted as money within their community by merchants, for their convenience. Very few people turned their paper notes in for their gold on deposit. This led the banker/goldsmiths to issue more, roughly 10 times the amount, paper notes than gold on deposit. Called “fractional reserve lending” it is the philosophical justification for the present debt money monetary system. (Federal Reserve Bank of Chicago 1992 publication “Modern Money Mechanics” available at AMI website, monetary.org)

The author is fully aware that Aristotle died more than 2,500 years ago. He prized justice above all other virtues and there is little doubt that Aristotle, confronted with the basic injustice of the present day debt money system, would prescribe a system of money based on justice or law and the NEED Act (explained below) is that system.

Money: an abstract Power and Duty of the state, that acts as a medium of exchange, for the benefit of the people and society.

 The Debt Money Disease

Our present monetary system is one in which almost all (except the coins) of what is used as money is created by private banks when they make loans.  As the loans are repaid the money is extinguished on their books and no longer exists.  The problem is exacerbated because no money is created with the loan to pay the interest that we most certainly are required to pay.  (Putting aside for now the matter of justice: why should we be made to pay interest to a bank for the use of money that they were allowed to create from the ether of the atmosphere?)  Since repaying our loans with the banks erases the money, it is necessary for us to be in debt so that the system has money with which to function.  Expanding the supply of money can only come from an expansion of the level of debt with which we and our government are burdened.  This system requires us, individually and collectively through our governments, to be in debt at unsustainable levels.  This debt money monetary system (known as fractional reserve banking) is a cancer that must be removed.  

 

 

 

 

 

 

 

Of course there are apologists for the debt money system, using terms like stocks and flows, who will be quick to point out that there does not have to be enough money in the system to repay all the debts, because this has never been done. We would add, of course it has never been done because any significant repayment of the overall level of indebtedness would result in a crash of the system. The system is designed to keep us in debt, not to allow us to repay our debt. The system is designed for debt slavery, not freedom from debt.

A few symptoms of the debt money disease:

1. The nations of the world are $57 trillion in debt (Economist World Debt Clock)

2. Federal, state and local government debt: $66,000/person (USGovernmentDebt.us)

3. U.S. citizens’ personal debt: $53,000/person (USDebtClock.org)

4. Greece is but the first nation to be destroyed by the disease.

5. Estimated 9 million American families lost their homes to foreclosure (Cornell University)

6. Real U.S. unemployment rate: 23% (ShadowStats.com)

7. Increasing wars and militarism, financed by loans at interest from bankers.

8. Destruction of our environment, since the bankers can realize little profit in its care and nurturing.

9. Inability of U.S. society to fund education, $1.3 trillion student loan debt and broke local school districts.

10. Inability of U.S. society to provide comprehensive healthcare for all.

11. Yet the banking cartel responsible for the debt money epidemic has only one prescription for the people — austerity in increasing doses.

“The mistake lies in fearing money and trusting debt.”
Henry Simons, University of Chicago Economist and advocate of the Chicago Plan that inspired the NEED Act
Economic Policy for a Free Society, 1948, page 199.

The NEED Act Is the Cure

Building upon Aristotle’s empirical conclusion that money is a function of the law; and seconded by the U.S. Constitution (“Congress shall have Power To…coin Money, regulate the Value thereof…”, Article I, Section 8); the complete cure was developed by the American Monetary Institute as the American Monetary Act and put into legislative form before the U.S. Congress in 2011 by Congressman Dennis Kucinich, co-sponsored by Congressman John Conyers, as the NEED Act (National Emergency Employment Defense Act).

The 3 Necessary Reforms of the NEED Act are actually just common sense and represent what most citizens mistakenly think is actually how our monetary system works.

1. Federal Reserve System is nationalized and placed under the Department of Treasury.

2. Bank creation of money as debt, commonly called fractional reserve lending, is decisively ended. Banks will only lend money that already exists.

3. Money is created and spent, debt-free, in non inflation/deflationary amounts for the needs of the nation and its people, immediately putting 10 million people to work, at good paying jobs, by financing the rebuilding of our country’s broken infrastructure.

The NEED Act also calls for specifically funding education, healthcare and addressing the mortgage crisis.

Regarding infrastructure; the NEED Act was written using the American Society of Civil Engineers 2009 Infrastructure Report Card calling for $2.2 trillion in infrastructure repairs. The 2013 Report Card now calls for $3.6 trillion to be spent by 2020 to bring 16 categories of U.S. infrastructure up to a state of good repair. That increases the jobs that would be created from 7 to 10 million, the vast majority of which would be good-paying union jobs that would also each support 6 or 7 other jobs in local economies across the country.(source, source, source).

It is important to note that “Since 1996, the Society (ASCE) has formally recognized civil engineers’ obligation to practice sustainability by making it part of its Code of Ethics.”

“The banks got bailed out, we got sold out.” A chant that echoed throughout Occupy camps across the country. The NEED Act addresses this inequity with a people’s bail-out, called a Citizen’s Dividend, that could and should be $10,000 for every citizen. It is necessary to immediately inject money in the economy when the NEED Act begins, to avoid deflation and a deepening of the present depression. The Citizen’s Dividend instantly does so and begins to ameliorate the disastrous effects of the depression on the people. It will also provide our small businesses with what they need — you and I to have money in our pockets to purchase their goods and services.

The NEED Act stipulates that 25% of all newly created money will be given to the states on a per capita basis to use as they individually see fit for their very real funding needs. And interest free funding will be available to help local governments fund capital expenditures on schools, libraries, sewers, roads and other major projects.

While a transition to clean, renewable energy and other environmental concerns are not spelled out in the NEED Act, it provides the vehicle to fund these with the approval of Congress. All Congress will need is for a knowledgeable citizenry to make its desires clear.

The NEED Act pays off the national debt as it comes due and does so with no inflation. No one from either political party has a plan to do this. They go into crisis mode with regularity trying to agree on increasing the debt ceiling, closing government programs or the government itself. Aristotle understood that a debt money system is incapable of co-existing with a free independent people and a government free of debt.

Before the NEED Act was written, Dr. Kaoru Yamaguchi put the American Monetary Act into his advanced system dynamic computer model and concluded that the national debt can be paid off as it comes due and the ASCE infrastructure repairs (at the time $2.2 trillion, now $3.6 trillion, putting 7-10 million people to work), can be done without causing any inflation. (source)

In 2012, Jaromir Benes and Michael Kumhof, Deputy Director of the Modeling Division at the International Monetary Fund, published the IMF Working Paper “The Chicago Plan Revisited”, in which they concluded the 1939 Chicago Plan, which is the template of the NEED Act, would solve most of the problems of the current Depression.

“At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher’s claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.”

Endorse the NEED Act

The American Monetary Institute welcomes vigorous debate on monetary reform, but is somewhat perplexed by organizations and individuals that claim to work for monetary reform, while ignoring the NEED Act and the AMI.

The NEED Act is the only comprehensive monetary reform ever put forth into our Congress in ready-to-go legislative form. This was a tremendous step and as such it deserves the attention of everyone interested in monetary reform. Evading it while at the same time pushing another monetary reform agenda is similar to an environmental group that concentrates on a single issue such as fracking, Arctic drilling, or the Keystone pipeline, that would completely ignore taking a position on legislation that has been presented to Congress that provides a complete seamless transition to clean sustainable energy. You can’t claim to be a reputable environmental advocacy group and ignore proposed comprehensive environmental legislation like it doesn’t exist. The same can be said for monetary reform legislation.

Those groups that claim to want monetary reform should either publicly endorse the NEED Act or present a paper telling the nation their reasons for not supporting the only comprehensive reform ever put into the U.S. Congress that decisively ends the debt money system and provides a seamless overnight transition to a democratic money system.

It is easy to understand people being led astray by alleged monetary reform groups who think that peaceful coexistence is possible with the debt money system. Once the monstrous nature of the this system becomes known, unsuspecting individuals start looking for a cure for the debt disease. In their search they may be introduced to a group that purports to greatly empathize with their concern over the debt disease and then seemingly innocently prescribes a remedy that leaves the basic debt disease intact, while the patient is treated with the distraction of a traveling medicine show, complete with snake oil elixir that does nothing to strike at the heart of the disease.

The NEED Act diagnoses the debt money system as a cancer that can only be treated by removal. Allowing the disease to continue consigns the country and its people to a future of overwhelming debt, unable to pump the lifeblood of money into the projects most needed — good-paying jobs, clean sustainable energy, 21st century infrastructure, national healthcare for all, education for our youth, etc.

Before entrusting your health and the health of those dear to you to a monetary reform group, ask them if they heartily endorse the only comprehensive monetary reform ever placed before Congress — the NEED Act? If not, tell them you are interested in 21st Century medicine and not snake oil, while running, not walking, to the nearest door. Then join AMI at monetary.org and become part of the monetary reform solution.

Endorsements of the NEED Act should not be limited to monetary reformers. All organizations, unions, political parties, social justice groups, citizen and neighborhood groups, etc. who are interested in a sane, democratic monetary policy are invited to publicly endorse the NEED Act.

Is It Necessary to Enact all 3 Reforms of the NEED Act?

A resounding yes! Historically partial reforms have been tried before and the Money Power has always been able to overturn the partial reforms and get back to the business of amassing wealth at the top by putting us and our governments in greater and greater debt.

The 3 Necessary Reforms of the NEED Act

1. Nationalize the Federal Reserve.
2. Decisively end all bank creation of money.
3. Federal government will create and spend into existence, debt-free, US Money for the needs of the nation and its people.

All 3 Reforms must be done or the Money Power will remain with the banks.

The Bank of England was nationalized in 1946 (Reform #1). But because bank creation of money was not stopped (Reform #2), private banks now still create 97% of the UK’s money.

Presidents Jackson and Van Buren revoked the Second Bank of the U.S.’s charter, effectively ending most bank created money at the time (Reform #2). Misunderstanding the true nature of money, they failed to create and spend debt-free money into existence (Reform #3), bringing on the terrible Panic of 1837.

Debt-free Greenbacks (Reform #3) were created under Lincoln to fight the Civil War and save the nation. Because bank creation of money (Reform #2) was not decisively stopped, the bankers eventually got the upper hand and quashed the Greenbacks.

NEED Act Brings Sanity and Safety to Monetary System

Surgery for a cancer that is destroying its host is standard medical practice. The NEED Act does the surgery and brings our monetary system in line with the Constitution and what people think it should be. The NEED Act is not radical. The only thing radical is to keep the debt money system in place and to continue allowing the Money Power to reside with the bankers and not the people through our elected government.

The NEED Act provides the safe, seamless transition to a just money system that Aristotle would be proud of. Bankers have no need to fear the system. Their liquidity and income should both improve. The people have nothing to fear from the system. Under the present debt money system our money deposited in banks is not ours, but is owed to us by the banks. Under the new system, it will belong to us and be kept in a bank “safekeeping” account. This again, is what most of us mistakenly think is the presently being done.

“How the NEED Act gives an Immediate, Seamless and Non-Disruptive Overnight Transition from a Crisis-Prone Bank Debt System to a Stable Government Money System” by Jamie Walton gives an easy to understand explanation (source).

Moving the NEED Act Forward

Not a single member of the U.S. Congress or Senate has stepped forward to re-introduce the NEED Act. Kucinich is no longer in Congress and Conyers has not done so on his own.

A July, 2014 poll of 100 UK Members of Parliament by Dods Monitoring revealed that 70% mistakenly believed that money was created by the government and only 10% understood that it was created by banks making loans.

Without a reputable scientific poll of U.S. Congress Members on money creation, we must judge their knowledge by their actions. Since none of them now publicly support returning the Money Power to Congress, where the Constitution places it, we must conclude that they too are ignorant on the subject.  The personal experience of colleagues talking with bankers on the subject also brings out their confusion and ignorance.  Many bankers erroneously believing that they lend bank reserves instead of creating the money from thin air.   

It is not hard to understand why our legislators, bankers and the American public are misinformed and confused on the subject of money. Lord Adair Turner is one of the world’s most respected members of the monetary establishment, a member of UK’s Financial Policy Committee, former chairman of Financial Services Authority, Pensions Commission and Committee on Climate Change. He made the following admission in his 2013 featured lecture to the Stockholm School of Economics:

“Modern textbook assumptions. I think it’s fair to say that they make 3 assumptions which are dramatic and wrong over the best simplifications. They tend to assume that what banks do is take deposits from household depositors and lend it to borrowers. That misses the insight that banks create credit and money and purchasing power. They tend still and I have read back through several economic textbooks over the last several months to check this. They tend to say that what banks do with that money is that they lend it to businesses in order to fund those projects that have a higher return than the interest rate. That ignores almost entirely the fact that most credit extension is no longer funding business capital projects.” (source, source)

In other words, our economic textbooks have been lying to us. These concepts are not difficult to understand, we have just been lied to and misinformed by the monetary establishment for years. Those with the most formal monetary education have been duped the most. In that light, it is not difficult to understand why many of our leaders are clueless. Our job is to educate them.

If most legislators are ignorant and bankers confused, it is not difficult to understand the lack of support in Congress for the NEED Act. What our legislators will not be confused about is an aroused citizenry demanding the justice of the NEED Act. This is a matter of education. Every person we talk with, give a pamphlet or book to, every letter to the editor, every comment we make online, every article we post on Face Book, every email, phone call or meeting with our Congressman, every time we speak up at a union meeting or town board meeting, every time we invite a knowledgeable speaker from the AMI to speak: all adds up to a more informed public. As this people’s movement grows it will reach a critical mass and Congress will take notice.

Our own monetary donations to those fighting for the comprehensive reforms of the NEED Act are also vital to the cause.  Those of us that can afford to contribute monetarily to the cause should and those that are unable to can find other ways to support the movement.  

An August, 2015 Gallup Poll shows only a 14% approval rating for Congress and a whopping 82% disapproval rating. To be fair, it is because they have been given an impossible job: “promote the general welfare” of the people and the nation with a cancerous monetary system. An aroused citizenry will have the immediate attention of a Congress with these dismal ratings. People do want their Congress Members, Senators and President to work together to solve the issues and crises that confront us. The NEED Act is not a partisan bill. It was written as non-partisan legislation by the Congressional Legislative Counsel. It’s appeal is universal.

A couple hours of reading Aristotle last night left me completely comfortable that he prized justice above all other virtues.  Of course he couldn’t have prescribed the NEED Act, because he never could have imagined the degree of injustice that flows from the present debt money system. But would he prescribe the NEED Act if he were here today?  Most definitely!

Aristotle has given us insight on money, but it is our struggle now. It is a fight for our destiny. Join us. What shall it be? A free independent people? Or a nation of debt slaves?

Nick Egnatz

Nick Egnatz is a Vietnam veteran. He has been actively protesting our government’s crimes of empire in both person and print for some years now and was named “Citizen of the Year” for Northwest Indiana in 2006 for his peace activism by the National Association of Social Workers. For the last few years he has passionately fought for monetary reform.

Contact Nick OccupyNick@yahoo.com

Reference Materials

Fisher, Irving. 1935. 100 per cent Money. Works Vol. 11, ed. and introduced by William J. Barber, London: Pickering & Chatto, 1997.

Fisher, Irving. 1936.  “100% Money and the Public Debt”. Economic Forum, Spring Number (April-June 1936): 406-420.

Huber, Joseph. 2014a. “Modern Money Theory and New Currency Theory”. Real-world economics review 66, (13 Jan 2014): 38-57.

Huber, Joseph. 2014b. “Sovereign Money in Critical Context: Responding to criticism of monetary reform from a variety of economic viewpoints“. Sovereign Money Website, Oct 2014.

Huber, Joseph & Robertson, James. 2000. Creating New Money: A Monetary Reform for the Information Age. London: New Economics Foundation.

Kumhof, Michael & Benes, Jaromir. 2012. “The Chicago Plan Revisited.” IMF Working Papers 12/202, International Monetary Fund.

Lainà, Patrizio. 2015. “Proposals for Full-Reserve Banking: A Historical Survey from David Ricardo to Martin Wolf”. Economic Thought, Vol 4, No 2 (28 Sep 2015): 1-19.

McLeay, Michael & Radia, Amar & Thomas, Ryland. 2014. “Money in the modern economy: an introduction”. Bank of England Monetary Analysis Directorate. Bank of England Quarterly Bulletin 2014 Q1.

Werner, Richard A. 2012. “How to Turn Banks into Financial Intermediaries and Restore Money Creation and Allocation Powers to the State”. University of Southampton, Centre for Banking, Finance and Sustainable Development, Policy Discussion Paper, No. 3-12 (8 Nov 2012): 2-9.

Werner, Richard A. 2014a. “Can banks individually create money out of nothing? The theories and the empirical evidence”. International Review of Financial Analysis, 36 (2014): 1–19.

Werner, Richard A. 2014b. “How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking”. International Review of Financial Analysis, 36 (2014): 71–77.

Yamaguchi, Kaoru. 2010. “On the Liquidation of Government Debt under A Debtfree Money System: Modeling the American Monetary Act”. In Proceedings of the 28th International Conference of the System Dynamics Society, Seoul, Korea, 2010. The System Dynamics Society.

Yamaguchi, Kaoru. 2011. “Workings of a Public Money System of Open Macroeconomies: Modeling the American Monetary Act Completed”. In Proceedings of the 29th International Conference of the System Dynamics Society, Washington D.C., USA, 2011. The System Dynamics Society.

Yamaguchi, Kaoru. 2012. “On the Monetary and Financial Stability under A Public Money System (Revised): Modeling the American Monetary Act Simplified”. Paper presented at the 8th Annual AMI Monetary Reform Conference in Chicago, USA, Sept. 20 – 23, 2012. It was originally presented at the 30th International Conference of the System Dynamics Society, St. Gallen, Switzerland, July 22 – 26, 2012.

Zarlenga, Stephen. 2005. “Moving Monetary Reform to the ‘Front Burner’”. American Review of Political Economy, Vol 3, No. 1 (March 2005): 39-84.

Zarlenga, Stephen. 2002. The Lost Science of Money: The Mythology of Money – The Story of Power. Valatie, NY: American Monetary Institute.