U.S. Federal Government need to be given back authority to create money

[whistle]

...in otherwords RESTORING SEIGNIORAGE, based on a new report by Huber and Robertson

<snip>
CREATING NEW MONEY
A monetary reform for the information age
Joseph Huber and James Robertson

“The privilege of creating and issuing money is not only the supreme
prerogative of government, but it is the government’s greatest creative
opportunity.”
Abraham Lincoln, 1865.

<snip>
The reform we discuss in this report is different from those <above>. It is not
directly linked to them, but is a wider issue. It is a reform of the
mainstream monetary and banking system. It reflects the values of a
democratic civil society and the need for economic and financial stability.
It is in tune with the Information Age.

It is basically simple. It is in two parts.

1. Central banks should create the amount of new non-cash money (as
well as cash) they decide is needed to increase the money supply, by
crediting it to their governments as public revenue. Governments
should then put it into circulation by spending it.

2. It should become infeasible and be made illegal for anyone else to
create new money denominated in an official currency. Commercial
banks will thus be excluded from creating new credit as they do now,
and be limited to credit-broking as financial intermediaries.

<more>
http://www.jamesrobertson.com/book/creatingnewmoney.pdf

[razors edge]

1. They never lost the authority,

just gave it away. The last president to win the fight against private central banks is my avatar, mainly for that reason.

Kennedy was killed a few weeks after signing an executive order that would print dollars backed by silver, that is some coincidence don't you think?

That executive order still stands but no president has acted upon it.

[whistle]

2. Uhmm, I never realized that and of course Richard Nixon in 1971

...gave the authority to the private banks to print money, have government borrow that money and the tax payers then would pay interest on it. The ultimate welfare state for the wealthy bankers. The U.S. economy since that time has actually been moving toward state corporate fascism with George Dubya and Dick Cheney being the il Duce and Führer und Reichskanzler respectively.

I have to believe that the people of the United States can take back the power of government to direct the country's economic and political destiny for the common welfare as it states in the U.S. Constitution.

[razors edge]

5. We are up against some heavy hitters.

And they have been at this for a very long time.

Jefferson spelled it out about as clearly as it gets...

JEFFERSON’S OPINION ON THE

CONSTITUTIONALITY OF THE BANK

February 15, 1791

(The Writings of Thomas Jefferson, ed. by H. E. Bergh, Vol. III, p. 145 ff.)

The bill for establishing a national bank, in 1791, undertakes, among other things,--

1. To form the subscribers into a corporation.

2. To enable them, in their corporate capacities, to receive grants of lands; and, so far, is against the laws of mortmain.

3. To make alien subscribers capable of holding lands; and so far is against the laws of alienage.

4. To transmit these lands, on the death of a proprietor, to a certain line of successors; and so far, changes the course of descents.

5. To put the lands out of the reach of forfeiture, or escheat; and so far, is against the laws of forfeiture and escheat.

6. To transmit personal chattels to successors, in a certain line; and so far, is against the laws of distribution.

7. To give them the sole and exclusive right of banking, under the national authority; and, so far, is against the laws of monopoly.

8. To communicate to them a power to make laws, paramount to the laws of the states; for so they must be construed, to protect the institution from the control of the state legislatures; and so probably they will be construed.

I consider the foundation of the Constitution as laid on this ground--that all powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states, or to the people (12th amend.). To take a single step beyond the boundaries thus specially drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition.

The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States by the Constitution.

[NightWatcher]

3. If the government took back the power of creating money would they use any standard

like a gold standard? Or, would they just keep spitting out worthless paper everytime that they needed to boost the economy. I've read that money has been so drastically devalued by the creation of the federal reserve (private bank) that we'd fall into an immediate depression if the total amount of money (USD) in existence were known. The fed has not released the total of money in circulation for a while now and just keeps printing more and more.

also read, "The Creature from Jekyll Island" it is about the creation of the fed

[whistle]

4. That is exactly what the report addresses beginning with the basic

....concept in Chapter 2.1 Methods of Issuing New Money through how it is to be spent, lent, taxed and controlled.

Right now the authors claim that our money and banking system is completely broken, with private banks controlling both the creation of money and how it is to be used adding usury fees at each step of the way. By restoring seigniorage to government, private banks will be prevented from creating money and having a free ride to charge usury interest rates and engage in high risk speculation with nothing but air to back them up. Here is an article that pretty much summarizes how private central banking from 2000 forward got us into the mess we now are in. The author places the blame on aggressive and reckless hedge fund and credit derivatives speculation:

<snip>
How the Fed Lost Control of Money Supply
Axel Merk, Feb 6th 2007

The world is awash in money. This money has flown into all asset classes, from stocks to bonds, from real estate to commodities. In a world priced for perfection, should we enjoy the boom or prepare for a bust? Let us listen to Wall Street’s adage and “follow the money.”

After the tech bubble burst in 2000, policy makers in the U.S. and Asia set a train in motion they have now lost control over. In an effort to preserve U.S. consumer spending, the Federal Reserve (Fed) lowered interest rates; the Administration lowered taxes; and Asian policymakers kept their currencies artificially weak to subsidize exports to American consumers.

These policies have lead to one of the longest booms in consumer spending ever – U.S. consumer growth has not been negative since the early 1990s. However, it was credit expansion, rather than increased purchasing power, that has fueled the growth. Until about a year ago, consumers took advantage of abnormally low interest rates to print their own money by taking equity out of their homes. This source of money is drying up as home prices no longer rise and sub-prime lenders (those providing loans to financially weak consumers) are facing difficulties. More prudent homeowners have not yet been affected as they buy their home based on longer-term interest rates; until December these interest rates have stayed abnormally low. In recent weeks, these rates have ticked up significantly, and we may see the next and more severe round of pressure being exerted on the housing market. In this phase, we will see monetary contraction: money that has subsidized not only the real estate market, but also consumer spending, stocks, bonds and commodities may dissipate.

Why is it that asset prices have continued to soar despite the stall in home prices? Consumers have not been the only source of money creation. Corporate America is creating its share of money as cash flow positive businesses are piling up cash; but corporate CEOs seem to prefer to invest abroad, providing only limited stimulus to domestic money supply.

A massive source of money supply growth is purely of financial nature, it is volatility, or better: the lack thereof. Volatility in major markets was at or near record lows last year. With volatility low, risk premiums are low; when risk premiums are low, investors have an incentive to employ more leverage and still be within their risk comfort zone. What may seem like an abstract concept has propelled financial markets to the stratosphere.

Two groups that have been most aggressive at taking advantage of this are hedge funds and the issuers of credit derivatives. Take as an example, a report from the Financial Times last December: the paper reported that Citadel Investment Group, a manager of hedge funds, had $5.5 billion in interest expense on assets of only $13 billion. The hedge fund group routinely borrows as much as $100 billion. Note that this is only the leverage visible on the financial reports; the instruments invested in may themselves carry yet further leverage.

<more>

http://www.merkfund.com/merk-perspective/insights/2007-02-06.html

[razors edge]

8. This guy is like

the rude pundit of the financial world today, kind of a fun read.

http://www.kitco.com/ind/Daughty/mar142007.html



By Richard Daughty Printer Friendly Version
" The Mogambo Guru"

March 14, 2007
www.dailyreckoning.com

While Total Fed Credit was down by a miniscule $1.7 billion last week, the Federal Reserve managed to buy up, for themselves and their Treasury co-conspirators, $1.3 billion of U.S. government securities. Not much, to be sure, but this slimy tactic is called "monetizing the debt"; the government wants to spend money, but doesn't have any, so it creates and sells some bonds, and the Federal Reserve (to its everlasting shame) dutifully creates the money to buy them, and then actually buys the bonds with the money!

This is, in essence, the government buying its own debt by creating the money (increasing the money supply) for the purpose! This is absolutely crazy! And while there are plenty of those of you who correctly say that the Federal Reserve is a private bank and is not a part of the government at all, I will agree that, yes, it is a private bank, but their website address suffix of ".gov" says it all for me about the supposed independence of the Federal Reserve, partly because I am so paranoid and distrusting, mostly because the Fed has done such a pathetically poor job of preserving the value of the dollar, but also with Very Damned Good Reason (VDGR), as the economic history of the results of central banks colluding with governments is bleak, bleak, bleak indeed.

And if you don’t think that this monetization of debt is an economic horror, I will note that 1) this means that you have never uttered such nonsense around The Mogambo or you would still be carrying scars to remind you of your folly, and 2) this kind of monetary crap does not appear anywhere, in any book on economics, except as an illustration of how an economy was horrifically destroyed by its government acting like idiots and debasing the currency, which set off a war, or revolution, or something. Never anything good.

But foreigners slurped up another huge $15 billion load of government and agency debt last week, so we still have "selling ourselves to foreigners" going for us, purely as a stopgap scheme, you understand; we are assured that a blessed miracle will appear shortly. One never has appeared before, but this time, they say, it will, for some reason that they can't say. Right.

[originalpckelly]

7. It's not worthless as long as we agree to use it in the exchange of goods and services.

I call it the "good standard". It's backed up by whatever we need/want. That's a hell of a lot better standard than some metal who's only worth is electronics or to sit there and look pretty.

[razors edge]

9. It is not worthless.

It has made slaves of the masses for centuries, so it definately has a value to those interested in profiting from slaves.

Fiat currency has never brought any country anything but misery when it ultimately fails.

But as we are too deeply indebted to this this system to pull out now, we will have to suffer through the inevitable collapse.

Precious metals are a know quantity, they are not manipulatable for personal interests. One pound of gold is one pound of gold, short of polluting the metal and that is detectable.

Unless I take one pound of gold and sell ten shares at $10 each and you buy one share, you own one tenth of a pound of gold. But if I continue to sell shares to others from the same pound of gold with each investor having equal claim, you have just been screwed. That is fractional reserve banking and inflation. Your dollars (receipt for your investment) is a piece of manipulatable paper and I still hold the gold. The gold didn't change in value.

We really don't even have that any more, as there is nothing to back our money other than the ability to tax the labor of citizens in the future. If the state loaning the money on that promise decides we can not produce anything to tax and pay back the loan, they will cash in the chips (bonds) as fast as they can, since they don't want to get caught without a chair when the music stops.

[originalpckelly]

10. However, you assume that there must be a fractional problem with our currency.

When we use the good standard, we can simply produce more goods to accommodate the increased money supply.

[razors edge]

11. Not if

the manufacturing base is moving offshore, as well as the heavy investor class.

We have reached the point of diminishing returns for the wealthy.

[sendero]

12. I agree..

.... somewhat that our economy could have never achieved what it acheived using something like the gold standard. However, fiat money is a tool, and like any tool it can be used or it can be abused.

I don't think you'll find many reasonable, knowledgable people who don't think our currency system is being seriously abused. And there will be an ultimate price for this abuse, as sure as the laws of thermodynamics are true.

[razors edge]

13. Rubber checks

only stretch so far. I guess it comes down to what is more important, short term profitability for the rich, or long term stability for the many.

[originalpckelly]

6. What we need to do is break up the power of the bankers in setting the currency...

and allow a real free market to control it. People should choose to use any currency they please, no government and no bank should control it. Only we the people.

When we hand the responsibility off, we hand off the power as well, because responsibility is power.