Thanks for all your comments, Keith,
I doubt this will ever get passed, primarily because it would take all
power out of the hands of bankers and their backers.
What's fuzzy is whether or not the Federal Reserve members would
continue to benefit from all taxes collected if moved under the US
Treasury. I'm presuming they would, though clearly not as before. Being
retained as an important research arm implies that they (the individuals
who command it now) would be given new salaried titles, thus still able
to benefit from all US taxes collected. What is spelled out in the Act
is that accountability would be instituted, whereas under the current
system, the Reserve can and do waive all audit requests. They are quite
apart in their controls over money, and do not fall under public
scrutiny, unlike the Treasury department.
Public control of the creation of money should, with proper checks and
balances, reflect a 100% backed supply. That way, it shouldn't matter
what might be promised by any given political party. Under the current
system, it has been observed that:
18) The enactment of the Federal Reserve Act in 1913 by Congress
effectively delegated the sovereign power to create money to the Federal
Reserve system and private financial industry.
(19) This ceding of Constitutional power has contributed materially to a
multitude of monetary and financial afflictions, including---
(A) growing and unreasonable concentration of wealth;
(B) unbridled expansion of
<http://www.abovetopsecret.com/forum/thread642379/pg1#>national debt
both public and private;
(C) excessive reliance on taxation of citizens for raising public revenues;
(D) <http://www.abovetopsecret.com/forum/thread642379/pg1#>inflation of
the currency;
(E) drastic increases in the cost of public infrastructure investments;
(F) record levels of unemployment and underemployment; and
(G) persistent erosion of the ability of Congress to exercise its
Constitutional responsibilities to provide resources for the general
welfare 2 of all the American people.
As you state, this seems like an unlikely point to institute such an
ideal, but accountability must start somewhere, and was proven
inconceivable under the current system.
From the Act:
(B) AUTONOMY OF MONETARY AUTHORITY
.---The Secretary of the Treasury may not
intervene in any matter or proceeding before
the Monetary Authority, unless otherwise specifically provided by law.
6 (C) INDEPENDENCE OF MONETARY AUTHORITY
.---The Secretary of the Treasury may not delay, prevent, or intervene
in the issuance
of any regulation or other determination of the Monetary Authority,
including the determination of the amounts of money to be originated and
most efficient method of disbursement consistent with the appropriations
of Congress and the statutory objectives of monetary policy as specified
in this Act.
(2) MEMBERSHIP.---
(A) IN GENERAL.---The Monetary Authority
shall consist of 9 public members appointed by the president, by and
with the advice and consent of the Senate.
(B) TERMS.---
IN GENERAL.---Except as provided
in sub paragraph (E), each member of the
Monetary Authority shall be appointed to a
term of 6 years.
7 (C) POLITICAL AFFILIATION.---Not more
than 4 of the members of the Monetary Authority may be members of the
same political party.
So, from the above, Presidential power would come into play in
appointment of the Monetary Authority. Likely would end up the old
Reserve members. Many have described the Act as rather loose. It needs
tweaking. It has also been brought to the House before.
Natalia
On 5/6/2011 12:58 AM, Keith Hudson wrote:
At 20:18 05/05/2011, D and N wrote:
Found on Sam Smith's Progressive Review, from:
http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html
<http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html>
*Reducing U.S. Debt and Creating Jobs Through Public Control of Our
Money System *
*Stephen Zarlenga & Greg Coleridge, Huffington Post *- Be it for
ignorance or by intention, few federal elected officials have
examined how a change in the way money in our nation is created and
issued could reduce our nation's deficit and debt and, in doing so,
increase millions of vital jobs to transform our economy.
One of the few exceptions is Rep. Dennis Kucinich (D-OH), who during
the last Congressional session introduced the National Employment
Emergency Defense Act.
The basis of the bill are three essential monetary measures proposed
by the American Monetary Institute in their American Monetary Act
(AMA). The AMA's recommendations are based on decades of research and
centuries of experience; are designed to end the current fiscal
crisis in a just and sustainable way, and are aimed to place the U.S.
money system under our constitutional system of checks and balances
system.
The three essential measures include:
Moving the mostly private Federal Reserve System under the US
Treasury Department. The Fed would no longer be a virtual fourth
branch of government, unaccountable to the public. Their important
financial research functions would continue. But the Fed would no
longer make unilateral monetary policy decisions beyond the reach of
we the people.
(KH) The Fed and the US Treasury are an item anyway. Central banks
and governments always have been, whatever they may say to the
contrary. The first central bank to be created was the Bank of England
and it was only created because the government wanted a great deal of
money for warfare. In 1672, King Charles II had reneged on the debts
he owed to London gold merchants and from then on nobody would lend
money to the government. In 1694 when the government badly need money
for warfare, it only managed to borrow £1,200,000 (about US$2 billion
in modern terms) from half-a-dozen extremely rich merchants by giving
them exceptional privileges (as well as charging 8%!). These
privileges were (a) the new Bank of England would be the sole
depository for all the taxation that the government received and the
sole payer of government's bills; (b) its own promissory notes
(banknotes) would be the only ones in the country (thus outlawing the
banknotes of all the other banks -- of which there were scores of
"country" banks and 20 or so other major banks centred in London); (c)
it could print and issue (to borrowers) as many banknotes as it
wished. (This was subject to any banknote being redeemable in gold on
demand. Because banknotes are much more convenient than gold coins or
tablets in normal everyday retail or commercial use then banknotes
became the most common visible currency, and gold tended to accumulate
in bank vaults as fractional reserves against bank runs -- the BoE
having by far the largest quantity of all. During the next 200 years
the BoE accumulated more gold than any other bank or private person
the world -- probably about 80% of it [similar to the 70% of the
world's gold that the US Fed had at the end of WWII].)
Thus the BoE was a private bank (just as the US Fed is, and also all
the other State Fed banks) and its governor (chairman) and directors
were private individuals (each with their own independent wealth) who
were (originally!) genuinely running the BofE for the benefit of the
country when moral principles were more highly regarded than now.
(Obviously, they charged 8% in order to get their own original loans
back but once they were deemed to be completely safe then they
operated the bank patriotically -- though not always wisely!)
Making the power to issue money a public function -- bypassing the
current system which invited the careless and risky lending that led
to the global economic crisis. The U.S. government would be
authorized to issue dollars debt free. This power would replace the
current undemocratic and unstable "fractional reserve" system in
which money is created as debt through loans by financial
corporations who lend many more times what they possess. Banks would
no longer have this privilege to create our money supply.
(KH) The fractional reserve system is not unstable when it's 100% --
as all the original Renaissance banks were originally and many of the
major private banks of Europe were for at least two or three
centuries. But this fraction gradually sank over the following years.
In fairly modern times (1960s and 70s) the Bank for International
Settlements recommended 7% for all banks, and this sort of fractional
reserve is what is quoted in the text books. But this was largely
fictional because it had already reduced in practice to about 2% or
3%. At the time of the credit crunch the fractional reserves of most
major banks were down to 0%. In fact, they had lent out so much money
(created credit) that their fractional reserves were more like -10% or
even -20% -- and even then only on the basis that the collateral
lodged with them (mainly property deeds) were valued far higher than
reality. Since then the BISS has recommended 10-12% as being a
sensible fractional reserve and the banks -- with copious help from
governments (taxpayers) -- are now struggling to get their reserves up
to strength. But most of them are still technically bankrupt (with
negative reserves) and only one or two are now gradually getting into
the 2% or 3% region.
But as to the main point in the article above, if the issuing of money
were to become a public function then this would be even more
disastrous than now. They would simply vote for the political party
that would be the most generous -- and then we would run into
hyperinflation immediately.
Enabling the U.S. government to use its money power -- creating and
spending money into circulation -- to address pressing infrastructure
needs such as repairing our crumbling roads, bridges, rails and
highways. The government also would be enabled to invest in health
care and education.
(KH) This would be fine if governments were able to do this. But
America (and most advanced countries) already have crumbling
infrastructures, failing health schemes and declining standards of
state education. Governments only start these projects at relatively
brief periods of peak prosperity, but cannot maintain them adequately
in normal times because, in the meantime, vast bureaucracies grow and
capture an increasing part of the tax revenue.
These projects would provide a huge numbers of jobs without going
into debt and having to repay interest on debt to financial
institutions. Economist Kaoru Yamaguchi's computer model has shown
that a public-based money system and spending government money on
jobs fixing our infrastructure is the best form of economic growth.
The irony is that these three provisions would institutionalize what
most Americans falsely believe already exists: That the Federal
Reserve is public. That banks only loan money that they possess. That
the government creates our money. Wrong on all counts.
What really needs to happen at the very least is that, because money
is of importance to all, then the main items of all banks should be
available to public inspection at all times. Among these would be
fractional reserves. Gradually, competition for customers would drive
this to 100% (though it would take decades). As far as governments'
central banks are concerned we would also want to see that present and
future commitments to basic survival welfare and state pensions are
paid for out of existing invested funds and not, as now, purely
notional figures in the national accounts which have to be paid for
out of future taxation.
Keith
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/05/
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
