Why Gold and Silver are NOT the answer - - Stephen Zarlenga

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Why Gold and Silver are NOT the answer - - Stephen Zarlenga

This is part 2 of our series with Stephen Zarlenga where we look deep into the fundamental concepts of money: What is money and how is it defined? What is the difference between money and credit? What is the history of money? How does it tie to religion, government and private business? Is nationalizing the money system socialist, and does this concept of money ignore "the libertarian issue"? What is FIAT money? Is there a difference between private versus nationalized banks and how they operate? Has there ever been a society on the gold standard that did not fall to slavery or serfdom? And why is any of this important for YOU to understand, and how could it possibly affect YOUR life? Stephen Zarlenga is the founder of the American Monetary Institute (AMI) - the leading American monetary think tank for monetary history, theory and reform. An economic historian and author, Zarlenga provides us the clearest picture of how money and monetary systems work in his incredible 2002 tome The Lost Science of Money, and he's also the author of the American Monetary Act, submitted to congress by Dennis Kucinich in March of this year. If you have not already read his book, it is an absolute must read. So don't attack the messanger, instead go out and buy the book and learn for yourself exactly how and why those who promote the gold standard are lying to you. As a prerequisite to this show, please listen to episode #41.  http://gnosticmedia.podomatic.com/

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Stephen Zarlenga interview  - Mars, 2009

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[Christopher Marlowe]

very informative talks. I was curious about why he put down the notion of state banks. His critique did not go very deeply. He didn't mention Ellen Brown by name, but I gathered that was the person to whom Zarlenga was referring. Otherwise, those two go hand in hand.

He talks about eliminating fractional reserve lending, and the government spending money into existence. The method of the former was mentioned in the "Money Masters" video. I don't see the problem with having state banks spend the money into existence. My problem with central banks is that the power would be centralized, which always leads to trouble.

Overall, his criticism is bang on. e.g. He says that so much of what we hear is just propaganda repeated. I try to explain this banking system to people and they say: If the government creates money that will cause inflation.
-->But we have had terrible inflation under the private federal reserve system. That fact has a hard time making it through the brainwash.

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My problem with central banks is that the power would be centralized, which always leads to trouble.

Yes, we can say that ALL centralized systems (herarchical pyramidal systems) are the favorities forms that the Empire prefers using to control the Power, so decentralization is KEY and with the future in mind, cooperation via distributed ways and other kind of systems are not, of course, out of the question.



Stephen Zarlenga was interviewed by  Dave vonKleist's radio 2007 and Dennis Kucinich supports AMI Monetary Reform, so, nobody is perfect :

Dennis Kucinich addresses AMI Monetary Reform Conference Participants 2009
http://www.youtube.com/watch?v=v8OjgN-3ZDA

The Power Hour with Dave vonKleist Monday August 6 2007
http://video.google.com/videoplay?docid ... V1LzbCw&q=


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Coffee with Joe 11-16-09

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Presenting the American Monetary Reform - PDF Text

http://www.monetary.org/amacolorpamphlet.pdf



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[§N9sh2bj]

The colonies didn't have gold and silver. Script was put into circulation depending on the needs of the economy, and everyone was employed. The revolution was not over a tea tax - it was over the demand of the Bank of England (rothschild et al) to pay the debt in gold or silver; with the express intent of destroying the tremendously successful economy of americans.

... founded on the good faith and credit...

Notice it does not say 'founded on the gold and silver'.

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Presenting the American Monetary Act

http://www.monetary.org/amacolorpamphlet.pdf

Presenting the American Monetary Act (as of July 18, 2009)
©2009 American Monetary Institute, P.O. Box 601, Valatie, NY 12184
http://www.monetary.org
AMERICAN MONETARY INSTITUTE © 2009 and earlier

Background

The World's greatest problem, besides poor spiritual values, is that the governments of the World do not create
their own money, but have allowed private banks to usurp the special privilege to lend their credits into
circulation in place of actual money. Whether a nation has a private or a governmentally owned central bank the
private bank loans function as money within the world's economies. Two major problems arise:
First the obvious interest cost which the banks receive when they create money out of thin air. This costs the US
government about $400 billion per year in interest charges on the national debt – about 18-20 % of the annual
federal budget. Not to mention the interest the banks also charge against all the private borrowings. So the private
creation of fiat money acts like a private tax on all of society, to the benefit of those with the privilege to create
such money. This has spread poverty and has concentrated wealth to obscene levels!
Societies might survive even with such a ball-and-chain around every producer's leg, but the second problem is
even worse: It's the bankers, not the society, who decide the direction of the nation – what gets funded and what
does not. Will money go into fixing New Orleans levees and Minneapolis bridges, or into real estate bubbles and
Wall Street gambling, and warfare?

Understanding The Nature of Money

Mankind can survive under all sorts of political systems from democracy to dictatorship, but the best systems will
be those in harmony with the nature of man. Likewise all sorts of things can be used as money; but the best will
be that in harmony with the nature of money. Therefore evaluating what constitutes proper monetary reform
requires us to examine the nature of money.
In 1718, John Locke wrote: "Observe well these rules: It is a very common mistake to say that money is a
commodity... [but] Bullion is valued by its weight...money is valued by its stamp." America's great Ben
Franklin agreed, writing: "Silver and gold...(are) of no certain permanent value...We must distinguish between
money as it is bullion, which is merchandise, and as by being coined it is made a currency; for its value as
merchandise, and its value as a currency are two different things..." (LSM, Ch. 14*)

The Aristotelian Concept of Money – a legal fiat

Both Locke and Franklin echoed Aristotle's concept of money as an abstract legal power, a fiat of the law,
summed up in Aristotle's phrase "Money exists not by nature but by law." (Ethics, 1133) To Aristotle money
isn't a commodity that comes out of a mine or a farm. It comes from "nomos" - the law or binding custom, and
the Greek name for money was "nomisma." Aristotle makes the supreme distinction between money which is
abstract, and wealth which is tangible. He is the creator of the "science of money." (Ch.1)
The history of ancient systems shows a pattern of Aristotle's science of money being discovered; used to build
the society; corrupted and then lost; and again rediscovered over the centuries.

American Colonial Development

Massachusetts rediscovered the science of money in 1690 when she issued "bills of credit," the first paper money
in the West. She spent them into circulation paying for colonial expenses. In 1723 under Franklin's guidance
*Chapter notations are to chapters of The Lost Science of Money book containing the information.

Founding Father Ben Franklin, the great scientist (early work
with electricity) and statesman (guided the Continental Congress;
convinced France to support our revolution) was a monetary
genius. His 1729 essay The Nature and Necessity of a Paper
Currency summarized the ideas he used to help Pennsylvania
with its money system in 1723 rescuing her from a prolonged
usury crisis. Franklin told the world: "Experience, more
prevalent than all the logic in the World, has fully convinced
us all that paper money has been of the greatest benefit to the
country"- thereby also identifying good thinking methodology.
Pennsylvania loaned such money into circulation and used the interest earned for colonial expenses. The colonial
fiat currencies dramatically improved life in the colonies, facilitated the building of real infrastructure, reversing
the flow of emigrants who for decades had been moving back to England.
Such American "nomisma" -the Continental Currency- helped us win our independence. The Continental
Congress authorized $200 hundred million in Continentals and issued $200 million (plus replacement notes).
They have been smeared as inflation money, and while the British counterfeiting billions of them eventually
destroyed the Continentals, still they carried us over 5 ½ years of warfare to within 6 months of final victory.
They gave us a nation! Later the Greenbacks let us keep it. $450 million Greenbacks were authorized and
$450 million were issued. Eventually they exchanged dollar for dollar with gold coins, but few people bothered to
exchange them. Examining the real facts surrounding government money creation, a very different picture
emerges than from the propaganda on them.
Why does this concept supporting government "fiat money" seem alien to investors and economists today?
The answer was given by the great monetary historian Alexander Del Mar in 1905:
"As a rule political economists...don't take the trouble to study the history of money; it is much easier to
imagine it and to deduce the principles of this imaginary knowledge."
Thus there is a mythology – a reigning error – that government always issues money irresponsibly. But this is
the result of centuries of propaganda sponsored by those benefiting from privately issued money. The Continental
Currency is attacked, without discussion that the British counterfeited untold $ billions. They did the same for the
French Assignats – the details became public when the counterfeiters sued each other in the English courts. The
German hyperinflation is cited by the private money promoters without pointing out that the German Reichsbank
was privately owned and controlled, and that the hyperinflation began the month that all governmental influence
over it was removed on the insistence of the allied occupiers. The hyperinflation ended when the German
government re-asserted its control over the money system. These and other cases are detailed in The Lost Science
of Money book, which all statesmen must read.

Tom Paine, Father of the Revolution, praised the Continental
Currency:
"Every stone in the bridge, that has carried us over, seems to
have a claim upon our esteem. But this was a corner stone, and
its usefulness cannot be forgotten."
"...But to suppose as some did, that, at the end of the war, it
was to grow into gold or silver, or become equal thereto, was to
suppose that we were to get 200 millions of dollars by going to
war, instead of paying the cost of carrying it on." (Ch. 14)
Dutch and English laws forbade sending money to the colonies.
By necessity we became a monetary laboratory trying
everything from agricultural and metallic commodities to 'land
banks.' Finally Massachusetts issued paper "bills of credit,"
spending them into circulation. They were not a promise to pay
anything, but were a promise to receive them back in payments
to the colony. It turned life around, building real infrastructure
in the colonies. Right from the earliest days we have been a
nation of fiat paper money. Without it there is no United States
of America.

This Battle to Control the Money Power has raged for millennia over the same dividing line: will the money
system be privately controlled by the few, to favor the few; or will it be publicly controlled by government,
potentially for the common good.
How a society defines money determines who controls it. Define money as wealth, and the wealthy will control.
Define it as credit, as is done today, and the "lenders" will be in control. Define it as Aristotle did - an abstract
legal power - and government can control it to promote the general welfare. Despite the prevailing prejudice
against government, historical case studies show much better results from publicly controlled money systems,
than privately controlled ones. (see The Lost Science of Money book)
This battle is summarized as Aristotle's science of money vs. Adam Smith's metallic view of money. Smith's
definition (Wealth of Nations, 1776) obliterated the concept of money in the law: "By the money price of goods it
is to be observed, I understand always, the quantity of pure gold or silver for which they are sold, without any
regard to denomination of the coin." He took the concept of money back to metal by weight (ponderata), where it
had been before the Romans arrived in England. (Ch. 12)
What was Smith's motive? We're not mind-readers; however we note that his Patron's family (The Scottish Duke
of Buccleugh) had recently intermarried with the English House of Montagu, which was the power behind the
private Bank of England. We also note that Smith's Wealth of Nations book came out in 1776, the year after the
American Continental Congress began issuing our Continental Currency which enabled us to fight and win the
revolution against England, then the world's strongest military power. (Ch.12)

Was it ever Feasible to Use Gold for Money?

Aside from going counter to the true nature of money as an abstract legal power, there is a very practical matter
that supporters of Gold money can't address: There is never enough supply of gold sufficient for such a money
system. The Gold supply has not kept pace with the growth of population and commerce. This periodically
increased the real value of gold.
Money systems usually solved this problem by cheating – pretending to be operating a gold based system but
really mixing private bank paper into the money supply, pretending it was convertible; leveraging the amount of
gold in the system through fractional reserves of one type or another. Because this bestowed great power and
unearned wealth onto bankers, there has never been a shortage of apologists for such mixed systems - we call
them "economists!"

The Bank of Amsterdam – A Gold Deposit Bank

The greatest growth rate ever recorded in gold supplies occurred from 1500 to 1600 as centuries of gold
accumulation was stripped from the Central and South American Indians at gunpoint. Spain did the bloody work
on the ground, while English and Dutch Navies intercepted much of the loot in the Atlantic. Thus the value of
gold and silver to fall 80% from about 1500 to 1650 as the metallic reserves of Europe rose over 400% and so did
prices. But industry thrived during this period as money became much more plentiful and more widely distributed
sparking what's been called the "Renaissance of the North."

"Adam Smith vs. Aristotle"
summarizes the battle to control
the Money Power. Whether
money should be tangible wealth
and thereby be privately controlled
to benefit the wealthy (Smith), or
be an abstract legal fiat power
publicly controlled to promote the
general welfare (Aristotle). To all
Goldbugs: Fiat money is not the
problem – the private issue of fiat
money is the problem, which is
like a private tax on all society.

Andrew Jackson & Martin Van Buren Attack the "MONEY POWER"

The only attempt at a true metallic money system in America was made by Presidents Jackson and Van Buren in
the 1830s. Jackson paid off the entire US debt in 1835. He took the private 2nd Bank of the U.S. out of
government affairs. Van Buren set up 15 branches of the U.S. Treasury to handle government payments. But this
real move to metallic money caused the worst deflation and depression crisis in the nation until then. Van Buren
quickly introduced government issued money in the form of U.S. notes. (Ch. 15)
Such notes had earlier been carefully issued from 1812 in various denominations. A total of $60.5 million had
been authorized, but only $36.7 million had actually been issued. Government error, if any, was on the side of
taking great care, not recklessness. The note issuing process was not abused by government. (Ch. 15)

The Civil War Greenbacks from 1862

The Greenbacks provided a daily lesson in the nature of money. Greenbacks were eventually redeemable one for
one with gold coin, but they were so convenient that hardly anyone bothered to redeem them. (Ch. 17)
A brief summary of developments since the Greenbacks:

The National Banking System

From 1864-1913 the National Banking Act shifted bank charters from the state level to the national level. It
required more capital and reserves, and removed much petty corruption that plagued banking. But it formalized
institutional corruption in allowing a form of fractional reserves, where banks were able to create money based on
reserves (Ch. 17-18) It culminated in the Panic of 1907, which then led to establishing the "Fed."

Presidents Jackson and Van Buren acted to
end special bank privileges. In the late 1830s
They removed government funds from the
private 2nd Bank of the United States and
refused to accept inconvertible state chartered
bank paper for land purchases from the
government. But while cutting off bank created
money, they neglected to provide government
created money in its place, thereby causing the
worst deflation seen up to then in America.
The Bank of Amsterdam (1609-1815) was owned by the
city. It was supposed to be a classic gold "deposit bank"
holding deposits and transferring them from account to
account. No interest was paid and no loans were to be
made, except to the city of Amsterdam. But it did extend
large secret loans to the Dutch East India Company,
making it a "covert" bank of issue. Even during this
greatest period of growth in the European gold supply,
taken at gunpoint from the America's, it wasn't possible to
base a money system on metal alone, though if there was
ever a time when that could be done, it was then. (Ch.9)
The Greenbacks were created by our Government and spent into
circulation interest free and debt free. $450 million were
authorized and $450 million were issued, and they couldn't be
counterfeited. Greenbacks didn't promise to pay something else –
they were the money. Being printed, not borrowed, they didn't
create any more national debt or interest payments. Thus they
were called "The best currency that ever a nation had." (Ch. 17)

The Federal Reserve System

In 1913 the Federal Reserve System was surreptitiously created by America's banking "elite." (Ch. 19). In
summary, the Fed is "ambiguous" – it's not a part of the Judicial, the Executive or the Legislative Branches. *It
oversees itself. *It gets its own budget from its money operations *The 12 regional Fed's shares are owned by the
member banks in their district.*It is not owned by the Rothschild's, or the Morgan's, etc, as rumored. *The U.S.
President appoints the Chairman for 4 years and the 5 member Washington board for 14 years. *There are no
"shares" in the Washington Board. *It is controlled by the banking "fraternity" and delegates powers to private
bankers that should always remain under our constitutional system of "checks and balances."

The Great Depression

By December 1932, it's been only 20 years since the establishment of the Fed, but in that brief time the Federal
Reserve System had wrecked and taken America down to its knees:
*Farms were wrecked with huge debt and falling land prices; *factories were closed; *banks were closing;
*exchanges were destroyed; *the economy collapsed – people couldn't find work and many were hungry.
From 1929 to 1932: National income dropped 52%. Industrial production fell 47%. Wholesale prices fell 32%.
The real value of debt rose 140%! Unemployment rose 329% from 3.5 million to 15 million people. Over a
quarter of our workforce was unemployed. All that destruction in less than 20 years! (Ch. 20)

The "Chicago Plan" Solution

Clearly changes in the monetary system were called for, but most economists were useless, and J. M. Keynes
merely entrenched the problem, advising that government must borrow money that they allow the banks to create
out of thin air, instead of doing the right thing and creating the money itself. What nonsense!
Then Henry Simons and Paul Douglas, great University of Chicago economists, correctly diagnosed the problem:
"The mistake lies in fearing money and trusting debt." Simons' elegant solution, called the "Chicago Plan,"
would substitute money for the debt in circulation as bank loans. It was supported by great economists across the
country (Irving Fisher of Yale; Frank Graham and Charles Whittlesley of Princeton; Earl Hamilton of Duke; to
name a few). This brilliant plan nationalized the Federal Reserve System and stopped the banks from creating
any part of the money supply (The American Monetary Act incorporates these 2 elements).
Though Keynes' advice dominated, yet some good but minimal banking reforms, such as the Glass-Steagal laws
curbing speculation were enacted with the expectation that something more comprehensive like the Chicago Plan
would follow; but once the crisis devolved into WW2, it was ignored. The main good achieved out of the horrible
and deadly Great Depression was the Social Security System, America's most important anti-poverty legislation.

Deification of Free Markets and Removal of Regulations

A most destructive part of the late 20th century was the continued transformation of economics into a clandestine
religion, which deified markets, and demanded de-regulation for unproven theoretical reasons: Don't try to pass
laws over the market – it will crush your puny laws (Omnipotence). Don't try to dictate results to the market, it
has the input of millions of participants and will always know more than any regulator (Omniscience). Do the
right things and the market will reward you; misbehave and you will be punished (Benevolence). Clearly the
economists are defining a GOD, not a mere mechanism for buying and selling.
Unfortunately, Libertarians considered Ayn Rand's novels promoting capitalism, as historical evidence. One of
her followers was Alan Greenspan, Federal Reserve Chairman for 20 years, and the person most responsible for
de-regulation of markets. He allowed the banking system to run amok, and bring down the world economy.

Plutocratic Abuse and Criminal Activity Have Dominated

Faced with the horrendous effects of his actions and inactions, Alan Greenspan, in late 2008, did admit his error
in trusting financial leaders to act in the long term interest of themselves and their shareholders. What Greenspan
missed was that sometimes in the short term it is possible to grab so much loot that these villains will not care
about the long term. No one else has admitted this error! Interestingly, this same mistake underlies all free
market theology. When one appreciates it, the structure falls.
Substantial regulation is always required, but substantial reform needs to be enacted first.
Our apologies for cramming so much history into so few pages. The Lost Science of Money covers all this and
much, much more, in detail, in 736 pages. It's strongly recommend for your permanent family library.

Reforming Our Monetary System *

Monetary reform is as old as money itself. And while Money plays such a crucial role in our lives
and civilization that we couldn't function without it, how few of us have given it the attention it deserves!
Not just to make more – but to understand how the money system works; the institutions and regulations that
determine what is money; how it's introduced or removed from circulation; who controls these decisions for
what purposes. Who benefits, who loses?
We want to live in a world of growing freedom and opportunity, but have we done enough to assure
that society's money system is operated to advance our civilization? Evidence grows that the money power
instead has become oppressive. Lets see which changes are called for.
Why does reform become Necessary? A century ago the great monetary historian Alexander Del Mar
wrote: "The money system is society's greatest dispenser of justice or injustice." A good system functions
fairly, helping to create values for life. A bad one, such as the present system, obstructs the creation of
values; gives special privileges to some and disadvantage to others; causes unfair concentrations of wealth
and power; leads to social strife and eventually warfare and a thousand unforeseen bad consequences.
Because great power is exercised through money, power-hungry elements from ancient times to the present
pursued the political ambition to dominate through the Money Power. This requires societies to periodically
reform corrupted systems. The main weapon in this battle has been the manipulation of language and
thought, where definitions serve as heavy artillery. Those benefiting from the corruption fund university
economics departments and finance "professionals" (we call them economists) to promote their viewpoint
through economic theories. That's why this corrupt system has continued for so long despite its abysmal
performance.
Why is reform urgent now? Financial abuses of the world's money systems are pervasive and selfevident.
Dominant companies focus on usury instead of production. Globalization harms helpless third world
nations – and even the Planet! Action on monetary reform has become urgent as we enter the 3rd
millennium.

How does reform proceed? It must start with an understanding of the nature of money; that money
is not a commodity; that money and credit are two very different things.
If society defines money as a commodity (as wealth) then the wealthy will control the system. In our
system money and credit have been confused. If society defines money as credit, as the present system does,
then the bankers will control the system. Define money in the proper Aristotelian sense as an abstract legal
power, and control over money and society can then be under our constitutional system of checks and
balances.
The Lost Science of Money book presents the historical chain of the concept of money from Aristotle
forward to arrive at our concept of money:
"Money's essence (apart from whatever is used to signify it) is an abstract social power embodied
in law, as an unconditional means of payment." (LSM, p. 657)
Confusion, Complexity and Dishonesty Serve to "Protect" America's Nightmare Monetary System
Unfortunately explaining exactly how the credit circulating in our society is created is like walking into
quicksand, because the process itself is so unjust and so counter intuitive and so harmful to good public
policy, and full of poor banker terminology. We'll present it here and see whether readers like this full
explanation or instead would prefer a shorter summary, for the next printing.

Modern Money Mechanics – The Chicago Fed's guidebook.

Modern Money Mechanics (published and republished 6 times from 1961 to 1994 by the Chicago Federal
Reserve Bank) is the most reliable and readable description of the Fed's money creation operation. This
process is a "moving target," with elements potentially superseded recently by the Bank for International
Settlements so called Basel agreements, but it continues to be a system of fractional reserves as discussed
below; and remember that this process and practices keep shifting with increasingly horrendous results.
*Special thanks for this section to Dick Distelhorst; Robert Poteat; Steven Walsh & Jamie Walton.

Money is a crucial part of modern society – But Where Does Our Money Come From?

Most people think our money is issued by our government and indeed money should be created and issued
by government and used for the benefit of all by spending new money directly to promote the general
welfare. That is what passage of the American Monetary Act will do. However, this does not happen. In our
present system, the Federal Reserve Bank of New York, one of the 12 private Federal Reserve branch banks,
begins the process by creating money out of thin air. Then using this money as a reserve base, the rest of the
banks create about ten or more times that amount of money out of thin air by what's called "fractional
reserve banking." The required "reserve" varies, ranging from 0% on the first few million loaned; then 3%
and then to 10% for larger sums.

How Does the Federal Reserve System Create Money out of thin air?

This chart and its explanation are often used to explain fractional reserve banking because it was published
on a number of occasions by the Federal Reserve Bank of Chicago. The following is an admittedly
simplified description used for brevity. Besides giving an excellent graphic reference showing how the
money supply expands, it also helps explain how money is created.
Source: Federal Reserve Bank of Chicago, "Modern Money Mechanics" (1962; rev. 1968; 1971; 1975; 1982; 1992; 1994)
There are really two stages in money creation; the first is by the Federal Reserve, the second by the various
banks. Notice in the bottom left corner the "initial" deposit of $10,000. This deposit was made by the
Federal Reserve itself. The Federal Reserve created this money as a liability onto itself. Or, in other words,
it paid for it with its own bookkeeping entries. Its "checks" can't bounce.
This first process involves the government borrowing money. Congress and the Executive need to spend
more money on social security, health care, education, infrastructure and sadly, war, than they raise in taxes
or other revenue streams. To acquire this money the Treasury sells 'securities'. These Treasury IOUs come
to maturity in three time periods; up to one year the security is called a "Bill," from one year to 10 years it is
called a "Note" and over ten years it is called a "Bond."
Treasury securities are sold mostly to domestic and foreign banks, and thus Treasury gets its operating
money for government expenditures.
The money creation process starts with the Federal Reserve buying these securities, not usually from the
government, but from Treasury securities dealers representing banks, and from banks themselves. The Fed
pays for these securities by notifying the dealer's bank to credit the dealer's account for payment for the
securities sold to the Fed. At the same time the Fed credits the same amount to the bank's account at the Fed.
That is simply recorded on an account ledger as a liability - an amount the Fed 'owes' that bank.
The following example shows this new Fed liability from an accounting perspective when the Fed purchases
$10,000 in securities from Bank A.
Federal Reserve Bank Bank A
Assets Liabilities Assets Liabilities
Treasury Securities Reserve Account Reserve Account Dealer's Account
+$10,000 +$10,000 +$10,000 +$10,000
This double-entry accounting system is described in Modern Money Mechanics. (That forty page, 8.5 x 11
booklet is available from the AMI at $25 per copy)
Under the Federal Reserve Bank, the Assets column has increased by $10,000 because the Federal Reserve
now owns the actual Treasury securities with the face value of $10,000 (plus the interest it earns).
Under the Federal Reserve Bank, the Liabilities column has increased by $10,000, which was the cost of
purchasing the security. The Federal Reserve is able to make these purchases with mere bookkeeping
entries, only because of accounting rule privileges sanctioned by our government.
Under Bank A (the bank that has the Treasury securities dealer's account), its Assets column is increased by
$10,000. This is the first moment that this 'reserve' money has come into existence – while at the same
time the Fed now holds the Treasury Security.
Under Bank A, the Liabilities column represents the payment by the Fed to the Treasury securities dealer of
$10,000 (banks call their customer's deposits liabilities).
Summarizing the above: The Federal Reserve at the time of purchase took those Treasury securities, IOUs,
and gave securities dealer money and Bank A reserves. This money the Fed gave the securities dealer was
simply done by creating a liability on paper, and by doing this the Fed created money. Now that we have
an understanding of the initial creation of money by the Fed, we are ready to learn about the second stage –
fractional reserve banking.

The Second Stage – How Fractional Reserve Banking Then Creates Money out of thin air:
Let's assume for illustration purposes that the $10,000 deposited into Bank A, received for the account of the
dealer, for the sale to the Federal Reserve, stays in Bank A's accounts. Using the account ledger from
earlier, under Bank A's liabilities is the $10,000 in the dealers' account, balanced by assets of $10,000 in
Bank A's reserve account at the Fed.
As an asset, Bank A can use those reserves of $10,000 to create new money in the form of loans or
investments up to at least 90% of that amount (with the accounting rules now in effect). Therefore, about
$9,000 of new money can be created and lent out by Bank A. If Bank A loans Arthur $9,000 to buy a used
tractor from Bill and Bill deposits the $9,000 in Bank A (or any other bank), the fractional reserve lending
can continue. After Arthur's loan, Bank A can see that its asset column has just increased by $9,000. After
Bill's deposit, the bank receiving the deposit (if not Bank A) can see that its liability column and asset
column has just increased by $9,000. The second bank can now create 90% of that amount, or $8,100 of
additional money, and loan it out to Carl to build a porch onto his house. The contractor who gets this job
deposits the $8,100 into some other bank and that bank can now loan out 90% of that amount, or $7,290.
Banks call the money they receive from other banks when a customer from one bank makes a payment to a
customer of another bank "reserves" and the amount of this which they can loan or invest "excess reserves."
What's important is that the original deposit by the Fed of $10,000 can expand: $10,000 + $9,000 + $8,100 +
$7,290 + $6,561 ... with each addition being a new loan of 90% of the previous loan (after it gets deposited
somewhere). The original reserve of $10,000 (the new money the Fed initially created) can continue to
expand deposits with each new bank loan, to eventually become $100,000, or ten times the original deposit.
This is graphically presented in the diagram from the Chicago Fed. The above are some wholesome loan
examples. But most of the loaning went into overpriced real estate transactions, and stock market gambling
and takeovers!
The interest earned on $90,000 of this new money goes to the banks. Morally, the first use of this money
should belong to everyone through our government for there to be justice. If the bank does not receive the
interest plus any principal payments, from its borrowers, the bank can foreclose and take any collateral that
the borrower has pledged.

Here are Three Problems with Fractional Reserve Banking:

First, it's immoral. It takes from the whole society and gives to a privileged few, apart from their not doing
anything to deserve it. They get it for cleverly manipulating accounts, without creating any values useful for
life. This has concentrated wealth to obscene levels in our society.
Second, the interest on money created along with debt creates an unnecessary initial cost on all money in
circulation. This is like a ball-and-chain on the leg of every person working to create values for living.
Third, whoever controls the money system controls the direction of society; if it's government, then in a
democracy citizens can decide what to do with it, and it will function under our constitutional system of
checks and balances. If it's banks, then only bankers will decide what to do with it, most likely in their own
interest.
In practice this has funded ridiculous bubbles on Wall Street, or incredible real estate bubbles. They did not
fund the levee repairs around New Orleans or bridge repairs in Minneapolis, or the $2.2 trillion the engineers
tell us is needed to make our infrastructure safe!

The American Monetary Act corrects and reforms the system with three elements:

First, the Federal Reserve system becomes incorporated into the U.S. Treasury. This nationalizes the money
system, not the banking system. Banking is not a proper function of government, but control and oversight
of the money system must be done by government.
Second, the accounting privilege banks now have of creating money through fractional reserve lending of
their credit is stopped entirely, once and for all. Banks remain private companies and are encouraged to act
as intermediaries between their clients who want a return on their savings and those clients willing to pay for
borrowing those savings, but they may no longer create any part of the nation's money supply.
Third, new money is introduced into circulation by government spending it into circulation starting with the
$2.2 trillion the engineers tell us is needed for infrastructure repair and renewal. In addition, health care and
education are included as human infrastructure. Everyone supports the infrastructure, but they worry how to
pay for it. That becomes possible with passage of the American Monetary Act.
History shows that all three elements must be done, and done together, for the reforms to work. This is clear
in the pages of The Lost Science of Money book, by Stephen Zarlenga.
The system has again shifted in the present crisis. The Federal Reserve itself purchased about $1.5 trillion
bonds direct from the U.S. Treasury and has credited the government's account, creating the money as a
bookkeeping entry. This is actually better than the more complicated process described above that's been
operating for decades, because the Federal Reserve has to turn over its net earnings to the Treasury.
But this doesn't represent reform. The simpler process, used in financing WW2, evolved into the more
complex one because the financiers could then grab more money and power. For while the Fed turns over its
earnings on money creation to the Treasury, the various banks keep the net interest they earn in the fractional
reserve money creation process. That fractional reserve accounting feature is still in effect and at an
opportune moment the system will obviously shift back to the more complex, more profitable one for banks.

The above descriptions may seem difficult – the system's main "protection" is the confusion it generates.
Just keep in mind that the power to create our nation's money has been usurped and privatized. Those in
control promote their interests rather than the general welfare; destructively manipulating accounting rules;
unfairly concentrating wealth and misdirecting society's resources into various gambling activities instead of
creating values for living. That must change once and for all. We must demand and act for that change.

THE AMERICAN MONETARY ACT

An Act to restore the Constitutional power to create Money to
the Congress of the United States
Be it enacted by the Senate and House of
Representatives of the United States of America in Congress
assembled,
SEC 1. SHORT TITLE
This Act may be cited as the American Monetary Act
SEC 2. FINDINGS
The Congress finds that –
(1) The Federal Reserve Act of 1913 effectively ceded the sovereign
power to create Money delegated to Congress by the Constitution to
the private financial industry.
(2) This cession of Constitutional power has resulted in a multitude of
monetary and financial afflictions, including a growing and
unreasonable concentration of wealth, an uncontrollable national
debt, excessive taxation of citizens, inflation of the currency, drastic
increases in the cost of public infrastructure investments, excessive
un- and under-employment, and erosion of the ability of Congress to
exercise its Constitutional responsibilities to provide for the common
defense and general welfare.
(3) The issue of means of exchange by private financial institutions as
interest-bearing debts should cease once and for all.
(4) The power of Government to create Money and spend or loan it into
circulation as needed is similar but different in nature from the power
to create and market instruments of indebtedness; it eliminates the
need to pay interest charges on the nation's money supply to financial
institutions and removes their undue influence over public policy.
(5) The unprecedented 2008 breakdown of the US banking and monetary
system has brought severe and unacceptable effects on employment
and the economies of the United States and every major country.
(6) Under Federal Reserve administration of the US monetary power,
mandates, directives, and common sense goals have not been met
regarding: *full employment; *a relatively stable currency value;
*avoiding excessive debt; *a destructive concentration of wealth;
*operating in the public interest; *proper funding to maintain our vital
infrastructure, which the American Society of Engineers informs us is
$2.2 trillion behind in keeping it safe.
(7) An examination of the historical record demonstrates that U.S.
Government control over our money system, in providing the
nation's money supply has been superior to private control. The
current crisis is the latest most glaring demonstration of that
fact.
( As our money system is a key pillar in maintaining our society and as
the Federal Reserve System and the financial establishment have
failed to operate to promote the general welfare, the US must directly
re- assume the powers granted in Article I, section 8 of our
Constitution.
The Purpose and Short Title of the
Act are given.
The "Findings" summarize the
problem – that Society's monetary
power has been privatized in the
hands of the financial industry (1),
especially the ambiguous but
essentially privately controlled
Federal Reserve System.
This privatization has led to a
multitude of afflictions (2) through
the mechanism of allowing financial
institutions to issue money in the
form of interest-bearing debt (3).
The "Findings" point out (4) how
this differs from government
creating money, not debt, and
spending it into circulation interest
free. That removes the interest
burden on our money supply and
allows public control rather than
private influence to determine how
money is introduced into the
economy. For example, whether it
is largely directed as at present into
real estate speculation and various
Wall Street games, or into crucially
needed infrastructure, such as
levees protecting major American
cities, and the nation's bridges and
dams.
A solution is described (5 & 6) and
its objectives are outlined (7), in a
general form taken from the U.S.
Constitution that all reasonable
Americans can support in order
"to promote the general welfare."

Background: The Fed is a private organization, not a part of our government.
The Federal Reserve System consists of 12 regional Federal Reserve banks, with boards of directors, under an umbrella
direction of the seven member Federal Reserve Board in Washington, which has the power to determine major aspects
of banking activity, such as setting interest rates, and the reserve and other operational requirements. There are no shares
of the Washington Fed Board organization; the only "ownership" of the Fed is in shares of each of the 12 regional
banks. They are entirely owned by the private member banks within their respective districts, according to a formula
based on member bank size. The ownership is highly restricted in that such ownership is mandatory; the shares can't be
sold; and they pay a guaranteed 6% annual dividend.
Thus the stories that the Federal Reserve is "owned" by foreign bankers (the Rothschild's and other prominent banker
names usually come up) are not accurate and these types of rumors have mainly served to discredit wholesome criticism
of the banking system.
It will be clear from the following facts that the Fed is definitely not part of the US Government.
*The Fed is not organized within the Executive, Legislative or Judicial branches of our government.
*Who pays the Fed's bills and determines its budget? Not any part of our government. The Fed gets its funding from its
own specially privileged operations. The Fed Board determines Fed budgets.
*Who monitors and oversees Fed activities? Again the Fed itself. While some important elements of proper auditing
have taken place, there has not yet been a comprehensive independent audit, by the Government Accountability Office
as proposed in a recent letter from Ralph Nader to new Fed Chairman Ben Bernanke, calling for greater monetary
transparency.
*Federal Reserve employees are not part of the US Civil Service System and are not covered by government
employees' health insurance or pension programs. Who does the hiring and firing? Except for the highly publicized
Chairman and seven member Washington Board, this is in private, unelected hands.
*Federal Reserve Banks are not listed as government organizations by the telephone companies, a small but telling fact.
The ambiguity surrounding the Fed arises because the U.S. President appoints the Fed Chairman to four year terms, and
the seven member board to 14 year terms. Also the Fed is supposed to implement government fiscal policy, but it has not
really done so. (see Is the Federal Reserve System Part of the U.S. Government, at our website
http://www.monetary.org/federalreserveprivate.htm)
Several structural problems arise from private control: The system tends to be run to benefit those in control rather than
the whole society. This concentrates wealth into fewer and fewer hands. The interest received by the banking system for
money creation flows into their hands. The control over where the money goes determines the direction the society
moves in. Privately controlled money tends to go into speculation to make a quick buck. Infrastructure, health and
education get ignored or short changed.
The private banking system, not government, now creates our money in the form of debt.
Most Americans think our money is issued and controlled by our government. They are surprised to learn that most of
our money is created when people and businesses have to borrow from banks, since this is the main way that money now
enters the system. The banks make loans by crediting the borrowers account. This is fiat money, or "purchasing media"
created out of thin air, thanks to a special legal privilege granted to them called "fractional reserve banking." They write
a computer credit in the account of those whose needs have driven them to the banking system to borrow money.
This concentrates great power and transfers tremendous wealth to the financial sector.
Under this privately controlled monetary system, it's not surprising that wealth and power have become concentrated to
obscene levels never before seen in our society, where less than 1% of the population is now claiming ownership of
nearly 50% of the nation's wealth!
This money creation prerogative, often referred to as "THE MONEY POWER," (President Martin Van Buren always
capitalized it!) has traditionally been associated with national sovereignty. Alienating the power from government into
private hands has inevitably served to concentrate elements of what should remain national sovereign power into those
private hands, where predictably it has been used to promote the interests of the few in control rather than the society as
a whole. That is clearly unacceptable in both a democracy and a republic. It establishes plutocracy – the rule by wealth.

TITLE I – DISBURSEMENT OF U. S. MONEY
SEC. 101 AUTHORIZATION FOR DISBURSEMENT
Not later than 90 days after the effective date of this section, all
United States Government disbursements shall be denominated
in United States Money, the nominal unit being the U.S. Dollar.
SEC. 102 LEGAL TENDER
United States Money shall enter into general domestic
circulation as full legal tender in payment of all debts public and
private.
SEC. 103 NEGATIVE FUND BALANCES
The Secretary of the Treasury shall directly issue United States
Money to account for any differences between Government
appropriations authorized by Congress under law and available
Government receipts.
Note: The fact that the Treasury will be able to make
disbursements based on direct issuance of United States Money
for negative fund balances reflects Congress's Constitutional
authority to "coin Money", because Congress will then have
the ability to adjust the amount of Money so created by
regulating both appropriations as well as revenues from
taxation and other sources. The focal point of power will be the
House of Representatives as the initiator of revenue bills.
Restoring to Congress its Constitutional authority will shift the
ability to create Money and enter it into circulation from the
private banking industry to our elected representatives, as the
Constitution mandates.
SEC. 104 FORECASTING OF DISBURSEMENT
REQUIREMENTS
The Secretary shall:
(1) forecast disbursement requirements on a daily, monthly, and
annual basis;
(2) provide such forecasts to Congress and the public;
(3) integrate forecasts with the Federal budget process;
(4) maintain a sufficient research capability to continuously and
effectively assess the impact of disbursement of United States
Money on all aspects of the domestic and international
economies;
(5) report to Congress and the public regularly on the economic
impact of disbursements of United States Money and the status
of the monetary supply.
SEC. 105 MONETARY CONTROL
(1) The Monetary Authority and the Secretary shall pursue the
policy that the money supply should not become inflationary
nor deflationary in itself but will be sufficient to allow goods
and services to move freely in trade, in a balanced manner.
Sections 101 & 102 specify the U.S.
Dollar as our currency unit and
make it "legal tender" – meaning all
debts can be legally paid with it;
creditors must accept it in payment.
It does not prescribe a value for the
dollar in terms of commodities, or
labor or any other thing. The value
of the currency unit is already
known in the market in terms of its
relation to assets and goods and
services and existing obligations.
This value is not fixed but adjusts to
continuous changes in supplies and
desirability of goods and services
and is also influenced by the
existing supply of money. This is a
valid use of the market mechanism.
If the money supply and economy
are reasonably guided, such
changes should be gradual and
gentle and are a normal part of life.
They help assure that the forces of
production and consumption are
rooted in economic realities, not
frozen or dictated ideologically.
Sec 103: "Negative Fund Balances"
is the Treasury term for how much
money the government needs to
come up with to balance its
available funds with its immediate
expense needs. At present this
balance has to be obtained through
taxation or borrowing. This process
in effect allows the private banking
system to create the money and
loan it to the U.S. at interest. But
under this Act, our government will
create such money directly, and
interest free.
Sec. 104 requires the Secretary of
the Treasury to forecast these
disbursements in a timely and
effective way; and maintain enough
research muscle to analyze and
understand the impact of these
disbursements both in the U.S. and
internationally.

(2) Monetary supply targets shall be established by a Monetary
Authority consisting of a Board of nine public members
appointed for staggered six-year terms by the President with the
advice and consent of the Senate. The Board reports
periodically to the U.S. Congress.
(3) Administrative responsibility to regulate the monetary supply in
reasonable accordance with targets established by the Monetary
Authority shall rest with the Secretary of the Treasury.
(4) The Secretary shall report to Congress any discrepancies
between targets and supply in excess of one percent at the end
of each quarter.
SEC. 106 DISBURSEMENT IN LIEU OF BORROWING
(1) Disbursement of United States Money under this Act shall be
made in lieu of borrowing through Treasury instruments.
(2) Such borrowing shall cease as of the date stated in Section 101
of this title, unless otherwise authorized by Congress;
(3) Nothing in this Act shall prevent Congress from exercising its
Constitutional authority to borrow on the full faith and credit of
the United States.
SEC. 107 ACCOUNTING
The Secretary shall account for the disbursement of United
States Money and of current fund balances through accounting
reports maintained and published by the Secretary and by
departments and agencies of the Government. The General
Accountability Office shall conduct an independent audit every
second year.
TITLE II – RETIREMENT OF U.S.
INSTRUMENTS OF INDEBTEDNESS
SEC. 201 COMMENCEMENT OF RETIREMENT
Not later than one 120 days from the effective date of this
section, the Secretary shall commence to retire all outstanding
instruments of indebtedness of the United States by payment in
full of the amount legally due the bearer in United States
Money, as such amounts become due.
Background: Publicly created money - the key ingredient needed to achieve human progress
Two Important effects will result from our Government creating money directly instead of borrowing
money the banks have created. First we'll begin saving the interest costs which in 2007 was $465
billion; which was 17% of the U.S. federal budget that year. At present, the interest cost that is paid on
infrastructure construction generally doubles to triples the cost of construction. Saving the interest will make it
much easier to bring our crucial infrastructure up to acceptable 21st century safety levels. The American
Society of Civil Engineers gives our present infrastructure an embarrassing grade of "D" and estimates that
$2.2 trillion is needed to make it safe once again.
More importantly, private lenders will have far less influence over public policy decisions. The
power to determine the fiscal course of our society will be in the hands of the Congress, where our
Constitution places it. The difference is that a more reasonable and independent method of funding will be
used. With Congress in charge, society's blood – its monetary circulation – is much more likely to go into vital
infrastructure – for example building and repairing levees that protect major cities – instead of going into real
estate speculation and destructive Wall Street games as banker control over money creation has traditionally
misdirected society's money power.
Section105 instructs the Secretary
to pursue a stable monetary policy
and neither cause inflation nor
deflation through monetary policy.
To oversee and assure that this
policy is carried out, a 9 member
Monetary Authority, is appointed by
the President and confirmed by the
Senate, to establish the monetary
targets to accomplish this policy
and any substantial discrepancies
between the targets and actual
results are quickly reported.
Section 106 specifies that instead
of borrowing money created by the
banking system, the U.S. will create
the money directly.
However, the Congress continues
to have the power to borrow money
on behalf of the United States,
should the Congress consider that
advisable in a given situation.
Section 107 provides thorough,
independent and timely accounting
of this money creation process.
Section 201 provides that as U.S.
debt instruments (bonds and notes)
become due, they are to be paid
with U.S. Money, not by rolling over
more debt. This will be a gradual
process as the debts extend
decades into the future. Such
payments will then be available for
many other productive investments,
and will tend to lower interest rates.

TITLE III – CONVERSION TO U.S. MONEY
SEC. 301 CONVERSION OF FEDERAL RESERVE NOTES
(1) Not later than 90 days from the effective date of this section, the
Secretary shall establish the rules and procedures for converting
outstanding Federal Reserve Notes to United States Money of
equal face value.
(2) Not later than 120 days from the effective date of this section,
as Federal Reserve Notes are converted to U.S. Money the
Secretary shall provide a sufficient quantity of United States
Money to the domestic banking system to allow for conversion
of all cash-on-hand;
(3) Not later than 180 days from the effective date of this section,
all financial institutions within the United States shall disburse
funds only in United States Money;
(4) The Secretary shall promptly dispose of all Federal Reserve
Notes as they are returned in exchange for U.S. Money.
SEC. 302 REPLACING FRACTIONAL RESERVE
BANKING WITH THE LENDING OF U.S. MONEY
(1) Not later than 60 days from the effective date of this section,
The Secretary shall establish and publish the accounting rules,
pricing and processes which converts the then existing bank
credit in circulation, into U.S. legal tender money. At that point,
all money in all accounts in the U.S. Banking system shall be
declared to be U.S. legal tender, without exception.
(2) In consideration for converting existing bank credit into U.S.
legal tender money, each bank shall become indebted to the
U.S. Treasury for the amount of credit it has extended. That
amount will be the sum of the bank's loans, regardless of
duration, minus the bank's capital and retained earnings; which
could have been loaned as money, not credit. U.S. Treasury
securities held by the bank will be cancelled and credited to the
bank's position of indebtedness to the US. A ratio of the total of
such assets (capital, retained earnings, U.S. Treasury securities)
to the total of the bank's loans outstanding will be determined.
(3) The accounting rule changes will direct that as customers repay
the principal on their bank loans, a proportion will be paid over
to the U.S. Treasury. That proportion will be the total, less the
ratio calculated under 2) above. Such repayments will continue
until the banks indebtedness to the U.S. Treasury is paid off.
Banks may also settle their debt through transfers from
additional capitalization and retained earnings. These
repayments will go into a pool available for disbursement under
Title V of this Act, at the Monetary Authority's direction, and
the still necessary Congressional appropriations for spending.
(4) The effect of (1) thru (3) above is to after the fact, make the
banks intermediaries between the government which properly
creates money, and the clients who have borrowed it, and
private banks in America can properly lend it and earn a profit.
Section 301 describes how Federal
Reserve notes will be replaced by
U.S. money. We won't call them
notes because that could indicate
debt, and they are not debt. Some
Green backers of the 1870s knew
this and called them "certificates of
value." That's the best description
we've heard, except for our own term
– we just call it "money."
Section 302 ends fractional reserve
banking in the U.S. This is the
mechanism which allows the banking
system to create "money" out of thin
air: When banks make loans, they
simply credit the borrower's accounts
at the bank, in exchange for the
borrower signing over his finances to
the bank as collateral. It's essentially
all credit.
Under the present fractional reserve
of 10%, the banking system as a
whole can loan about ten times the
reserves; in effect creating money, or
more accurately, the credit which
serves as money in our system.
"Seigniorage" is the principal and
interest banks receive on their
creation of such credit "money;"
estimated now at far over $100 billion
per year.
Seigniorage rightfully belongs to the
nation, through our government, so
at commencement, the Act, by an
accounting adjustment, turns the
credit that banks have already
created, into real American money.
This conversion will indebt the banks
to the U.S. Government for those
amounts they created.
Today when borrowers repay banks
this credit money goes out of
circulation. But the new accounting
rules will direct that those client
repayments, be used to repay the
bank's new debt to the U.S. Such
payments will then be available to the
Monetary Authority for purposes
under Title V of this Act. Virtually
everybody wants those good things
but they wonder how to pay for them.
Passage of the American Monetary
Act makes that possible, without
inflationary consequences.

(5) Not later than 90 days from the effective date of this section
the Secretary shall publish new lending and accounting
regulations for various types of accounts including:
a) Checking type accounts (i.e. demand deposit accounts) which
become a warehousing and transferring service for which
banks charge fees.
b) Savings and Time Deposit type accounts, whereby loans can
be made with maturities related to the duration of deposits.
c) Money Market and Mutual Fund type investment accounts.
(6) The regulations and actions in parts (1) thru (5) above will
encourage private, profit making money lending activity by
banks, but prohibit private money creation, through lending
credit.
Note: It is anticipated that the money spent into circulation by
the U.S. Government under Title V of this Act, will ultimately
be deposited into the banks, where that money, not fractional
reserves, will provide the engine for continued loans and any
necessary expansion. It is also anticipated that enough public
spirited banking professionals will join with Treasury officials
in assuring that these regulations are properly formulated
recognizing realities within the banking industry, to assure a
smooth transition.
SEC. 303 INTEREST CEILINGS
(1) The total amount of interest charged by a financial institution to
any natural person borrower through amortization, including all
fees and service charges, shall not exceed the original principal
of any loan, except mortgages;
(2) The maximum interest rate of 8% per year will apply
throughout the U.S. inclusive of all fees;
(3) Interest payments by the U.S. to foreign central banks or their
intermediaries will be reduced pro-rated over a 15 year period
to a maximum of one fourth of 1% per year.
TITLE IV – RECONSTITUTION OF THE
FEDERAL RESERVE AS A BUREAU WITHIN
THE UNITED STATES TREASURY
DEPARTMENT
SEC. 401 RECONSTITUTION OF THE FEDERAL
RESERVE
(1) No later than 90 days from the effective date of this section, the
Secretary shall purchase on behalf of the United States all
outstanding Federal Reserve Stock at current market value
denominated in United States Money.
Banks will be encouraged to act as
intermediaries between clients
seeking a return on funds they
deposit and clients ready to pay for
the use of those funds. They will not
be allowed to create any new
money in this process.
This becomes possible under
new bank accounting rules, not
under present rules, the key
being that checking accounts
become a warehousing service.
Banks will not be able to create new
money through savings accounts
because those accounts will
represent real money that
depositors have saved.
Suggested rules on p.14 below.
Where will such real money come
from? From all types of payments
by our government: for education,
infrastructure and health care; for
social security, and government
bond repayments. From the trillions
of dollars of government money that
has replaced the trillions in old
Federal Reserve notes and bank
deposits.
Sect. 303(1) establishes a rule used
by several ancient money systems
(Hammurabi, Hindustan, Rome and
others) that the amount of interest
shall never exceed the principal
amount of the loan. We adopt this
provision out of respect for its
frequent historical appearance.
An interest rate ceiling of 8% is
established throughout the United
States. The howls of concern that
will arise over this provision will all
ignore that until 1980-81 forty nine
states had such limits, without the
predicted dire consequences!
Background: the concept of money was being removed from the English language, so that when
one spoke of money, one was substituting ideas of debt, for example calling bank notes money or calling U.S.
notes debt. Economists have blurred the crucial distinction between money and credit, by referring to real money
as "high powered money," and referring to bank credit as "lower powered money." This greatly empowered
those dealing in credits – the banks. AMI ends this error of confusing money with credit, and vice versa. That
falsehood has led to the present unethical situation. We must carefully distinguish between money and credit.

(2) The Federal Reserve in its role as a central bank of issue, a
national fund processing clearinghouse, and a fiscal agent for
the Government shall be reconstituted as a bureau within the
United States Department of the Treasury.
(3) The Federal Reserve shall be administered by a commissioner
and deputy commissioner appointed for six-year terms by the
President with the advice and consent of the Senate.
(4) The Federal Reserve shall administer on behalf of the Secretary
the monetary targets established and authorized by the
Monetary Authority and shall administer lending of United
States Money to authorized financial institutions as described in
TITLE III of this act to assure that money creation is a function
of the United States and fractional reserves lending is ended.
TITLE V – INFRASTRUCTURE
MODERNIZATION
SEC. 501 DIRECT FUNDING OF INFRASTRUCTURE
IMPROVEMENTS
Note: Since the banks will not be creating new money and it is
crucial in an expanding economy and population base that new
money be added into circulation, this will be done through
direct funding of infrastructure, education and health programs
on a per capita basis assuring an equitable distribution
throughout the nation.
Not later than 90 days from the effective date of this section, the
Secretary shall report to Congress on opportunities to utilize
Section 401 describes how the
Federal Reserve System shall be
incorporated into the U.S.
Treasury.
The Fed will continue to be the
nation's check-clearing house, but
will do so as a bureau within the
U.S. Treasury.
It will administer the U.S.
monetary policy to the banking
system, assuring that banks are in
compliance. But the Federal
Reserve will no longer determine
monetary policy. That will be
guided by the new Monetary
Authority, which will establish
monetary target levels, and
manage the system for practical
results rather than for theoretical
or ideological reasons. To
"promote the general welfare" will
become the guiding light of
monetary policy.
Background: Adam Smith institutionalized a mythology of money pretending that
government can't properly administer the MONEY POWER, that private money is better.
Better for whom?
Thanks to centuries of propaganda there is a widespread attitude against government that really constitutes an
attack on society. But government is the only organizational form that can potentially protect the people from
the thieving "Enrons" of the world. And theft is not the end of it, it's often a matter of life and death.
We found the "smoking gun" where Adam Smith, a normally cautious professor, launched the vicious attack
on the English Government, smearing it as "slothful" and "negligent" and "thoughtless(ly) extravagant" (see
LSM, Ch. 12). Smith inadvertently laid bare the reason for his attack: to keep the MONEY POWER in the
hands of the then privately owned Bank of England, when serious proposals were being made to nationalize
this power back into the British Government. He also bitterly attacked the American Colonies for issuing our
own money.
What was Smith's motive? We're not mind-readers; however we note that his Patron's family (The Scottish
Duke of Buccleugh) had recently intermarried with the English House of Montagu, which was the power
behind the private Bank of England. We also note that Smith's Wealth of Nations book came out in 1776, the
year after the American Continental Congress began issuing our Continental Currency, which enabled us to
fight and win the revolution against Britain, then the world's strongest military power.
The Continentals have been smeared as inflation money, and while British counterfeiting eventually destroyed
them, still they carried us over 5 ½ years of warfare to within 6 months of final victory. The Continentals gave
us a nation. Later the Greenbacks allowed us to keep it. Examining the real facts (that we summarize below)
surrounding government money creation, a very different picture emerges, from the propaganda about them.

[jai_mann]

My problem with central banks is that the power would be centralized, which always leads to trouble.

Yes, we can say that ALL centralized systems (herarchical pyramidal systems) are the favorities forms that the Empire prefers using to control the Power, so decentralization is KEY and with the future in mind, cooperation via distributed ways and other kind of systems are not, of course, out of the question.



Stephen Zarlenga was interviewed by  Dave vonKleist's radio 2007 and Dennis Kucinich supports AMI Monetary Reform, so, nobody is perfect :

Dennis Kucinich addresses AMI Monetary Reform Conference Participants 2009
http://www.youtube.com/watch?v=v8OjgN-3ZDA

The Power Hour with Dave vonKleist Monday August 6 2007
http://video.google.com/videoplay?docid ... V1LzbCw&q=


.
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This is a great picture to help others understand the problem with centralization. Visual depiction is superior to verbal explanation in terms of conveying a concept to a broader audience.

I plan on using bartering and private contracts to be compensated as much as possible when I wrap up school and work independently. If people increase growing their own foods this can easily become a viable barter item with others. Quality goes up, things are decentralized.

We must keep in mind that the synthesis of communism and capitalism is the goal of the UN local agenda 21, also known as communitarianism. Which means these fucking swine on the other side are going to offer community government as the solution to the mess they've intentionally created in communist and capitalist lands. So, we need to identify the NGO's and people involved. We'll need plenty of ropes in all communities in order to properly stretch their necks and remove them from our lives. I'd like to suggest hemp for the rope. It could be a great way to show the community how well it works and why it should be reintroduced in farming...