My (Tom Usher) comment on H.R. 2990 "National Emergency Employment Defense Act of 2011": a monetary-reform act (aka the NEED Act):
It's a good start, but it has many problems and unnecessary layers remaining.
The authority of the Federal government to borrow should be removed. It's not necessary.
We don't need a "Monetary Authority."
The Monetary Authority should simply be the Secretary of the Treasury.
The Federal Reserve should be nationalized but then dissolved ASAP.
The US should not lend money to banks. Having the US be a lender to banks makes the US a wholesaler to banks as retailers. That's a very bad idea.
If there is to be any private-bank retail lending, then such banks can lend based upon deposits and not loans from the US. I agree that banking should be public though.
In addition, the amount of money in supply should be regulated in real-time (just the way huge corporations manage "just-in-time" inventory: automated), not by a committee.
Also, all Federal Reserve Notes should be nationalized in one fell swoop at the time the Federal Reserve is nationalized.
Lastly, this Act doesn't address immediately paying off the National Debt (retiring all bonds).
It also doesn't address replacing taxes with money issuance such that no taxes ever need be collected by the government.
Joe Bongiovanni replied.
My response to him and then to Ellen Brown:
Hello Joe, (Ellen, you're mentioned and also addressed below.)
Thank you for your reply.
I agree that removing the federal government's ability to borrow would require a constitutional amendment and have written as such. I've been calling for it. Bill Still (this thread is here because of his candidacy, albeit we would still need to have the national conversation regardless), has also called for removing the government's borrowing authority. It's one of his main planks.
If we are going to issue money, why should there ever be government debt? There is no reason to borrow. If the whole system were to come down to the point where money couldn't be created, it wouldn't be able to move anyway. We'll just have to be smart enough to set up a system that will work better without governmental borrowing than with it. That's far from difficult.
You replied: "The legal requirement for the MA's independence and autonomy is well thought out, aimed at eliminating the potential for government interference to whatever degree possible." If the US government is once again going to set the value of money, which Dennis Kucinich and Bill Still and others have been advocating, middlepersons won't prevent "interference." Either the government issues money to avoid inflation and deflation or, tautologically, it doesn't. The Fed certainly hasn't been a blessing with all of its insider-info sharing, etc. As Ellen pointed out in her recent interview (she supplied the link to the audio) on Pacifica I believe, a central question of our time is why some people get to borrow at lower rates than do others when it is the US government (tax-payers) backing that system? It's not as if investment bankers are better for the masses than are medical quacks. Licensing doctors has some practical utility in this ethics challenged world. Giving banksters a leg up on the rest of us does not, quite the contrary.
I wrote that "The Federal Reserve should be nationalized but then dissolved ASAP," and you replied:
"Uummm, iit IS nationalized,...." I left too much to be read between the lines there. It should not be replaced by another monetary (as in monetarism: inflation-fighting) outfit/bureaucracy. The Act strikes me as too much reform and not enough toss-out-and-replace. It is not radical enough. It's built upon an older attitude toward computerization too.
"...but who does supervision, regulation, clearing, etc? We need someone to manage the new money system - a new Fed." The Treasury Department should do that as a matter of course. The clearing should be done by "we the people" via our existing governmental departments for the benefit of all of us, equally. Look, I don't like privatized water. I like public waterworks. I like public parks. I like freeways, not toll roads. I don't like ads in the schools. I know the NEED Act is headed in a far cry better direction than what we have now, but it can be much, much better; and the iron is hot and getting hotter. You can see Occupy, etc. Even Obama has channeled TR, not that TR's going to cut it either. We need public banking and only public banking.
"While lending to banks is not the role of the Treasury, once you manage the monetary system by money supply rather than interest rates, you need some mechanism to ensure the adequate supply. This is not only a good idea, it is essential to carry out the purposes of the Act." Yes, but there will still be interest rates and there will still be bonds (which are used now to regulate the money supply). The MA could revert or never even start on the right foot.
We're still figuring out which meats go into the sausage here, and I'm a vegan. Of course we need to ensure an adequate money supply, and I addressed that, anticipated it, in my earlier comments.
It appears to me that way too much deference is being given to the current crop of commercial bankers. As I wrote earlier, I understand Bill Still's concerns about consolidation. He wants lots of little entrepreneurs. I want lots of employee/citizen-owned enterprises with loads of democracy-in-the-workplace. Call me a socialist if you like, but I don't fit the bill of the dreaded "statist."
"Of course, deposits, investments and inter-bank transactions should be the primary source for bank retail lending. The only borrowing from government should be to correct for locational or emergency situations." However, that should not be through private banking. It should be through governments via their/our public banking facilities that need to be set up. That is economic democracy rather than the rich ruling the markets.
I wrote, "In addition, the amount of money in supply should be regulated in real-time (just the way huge corporations manage "just-in-time" inventory: automated), not by a committee," and you replied:
"This is something that needs a lot of discussion. It will take a BIG committee to come up with the economic matrices that would guide the 'real-time' lever. Also, I'd rather a limited-purpose independent body I can fire rather than a computer program. But that's just me." Yes, it does need discussing. I hope this precipitates that. As for needing a big committee, already in this discussion thread, we've had some discussion about creating an opensource program. I'd rather have a computer program that doesn't have a political agenda where it needs firing. With it being opensource, there would be zero need for sunshine laws concerning the money supply. It would never be a secret. Why if you want the best monetary reform possible, you wouldn't jump on that idea escapes me.
The NEED Act creates a huge layer of bureaucracy that is not needed or helpful. It's a centralized, elitist bureau in the making; whereas, what I'm suggesting is driving the decision-making down to the grassroots and then, and only then, back up again where best-practices may be disseminated most easily across the whole country.
"All FRNs will be replaced with $USM notes upon presentation to the bank. We want to nationalize the money system, not the FRNs." My point is that the Act says, "...disposal of obsolete United States currency...," which doesn't even address recycling. It's needless production (wasteful). We have more pressing issues, but....
I wrote, "Lastly, this Act doesn't address immediately paying off the National Debt (retiring all bonds)," and you replied, "It addresses their retirement upon maturity, providing some stability to the market in government securities. (I have a few myself, thanks.)" Well, what's the point with that? You're glossing over the idea of paying off the National Debt and removing the hundreds of billions each year that goes partially to you because you bought government debt? I think you need to do justice to the idea. Bill Still has started talking about paying off the National Debt too. Not too long ago, he wasn't sure it could be done in one fell swoop. I kept saying it can. I'm glad he's saying it now without hesitation but rather enthusiastically. The original hurdle with United States Notes was because they could have been used in this way. The people who hated the idea were the rich bankers, of course. They didn't hate it for the sake of the poor. I'm tired of the system being of, by, and for the superrich. It's time the poor were lifted up. They shouldn't have to wait for bonds to "become due." Pay them off, and get rid of the burden that never should have been there in the first place. You won't take a hit. Think about it. We're fixing the whole system here.
I wrote, "It also doesn't address replacing taxes with money issuance such that no taxes ever need be collected by the government," and you replied, "Sorry, that possibility is something that remains to be determined.
We're working on it."
That possibility does not remain to be determined. If the government issues the money and the banks don't create money via interest-bearing loans and if the government controls the supply in real-time and if the flow of fund to local governments and enterprises runs through public banking, then taxes would be moot. It's simple.
My position is that as a people, we don't need or want taxes or debts (especially at interest). I'm working on getting rid of both, and I don't much care which rich banker is impacted by the leveling effect. I'm interested in raising the bottom up as high as I can in terms of quality of life. The banksters will be better off too, but they'll not "know" it until it happens.
Also, the Act states: "In General- After the effective date, and subject to limitations established by the United States Monetary Authority under provisions of section 302, the Secretary shall originate United States Money to address any negative fund balances resulting from a shortfall in available Government receipts to fund Government appropriations authorized by Congress under law." I don't know how you read that, but it says that the government doesn't have to tax anyone to fund government. I just like things to be as clear as possible up front. I want the people to understand what's happening. It's a strong selling point if they can be made to realize via clear (amended) language in the proposed legislation that they wouldn't have to pay federal taxes anymore. I trust you agree.
By the way, the Act says, "No interest may be paid or may accrue on any United States Money on deposit in a transaction account at any depository institution...not be treated as an asset of the depository institution or as a source of credit." However, "402(a)(1)(A) IN GENERAL- All deposits at any depository institution shall be designated as and treated as United States Money (either cash or an electronic equivalent) and as transaction accounts."
So, what do they lend at interest, air? So, the banks earn the spread on money that can't earn interest?
"402(e) United States Money as Source of Loans- After the effective date, all lending by depository institutions may be accomplished only by the lending of actual United States Money that is
"(1) owned by the depository institution from earnings and or capital contributions by investors;
"(2) borrowed at interest from the Federal Government; or
"(3) borrowed at interest through the issuance of bonds or other interest-bearing securities by the lending bank, to the extent that such bonds or securities are structured in a manner consistent with the purposes of this Act."
It all seems ambiguous to me. It can be made clear of course, but the Act strikes me that it was rolled out prematurely.
The Act says, "no amount may be borrowed by any Federal agency or department, any independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, Federal savings association, or Federal credit union) from any source other than the Secretary." Why the exceptions?
Ellen, I like your points about the Treasury being a public bank. However, I hope you'll move beyond the "turn the interest over to the government" idea by considering the harm of usury in general. There's nothing good in it. Not only that but if the enterprises are public utilities too where they are locally owned by the employee-citizens and if they are doing the will of the people via democracy in their workplaces, why treat the funding as principal on a loan? Why expect the government to reap when it can print/create money anyway? Fund the enterprises that will do the things the whole citizenry wants done and don't call the funding "loans." The US military is funded. Before all the privatizing, most of what needed to be done was done by the service members. If it can work for war, it can work for peaceful purposes and even better. The CCC worked and worked well. We can have millions of CCC's in all fields of endeavor. The only limit is the imagination and spirit.
Also Ellen, the money banks lend out is a computer entry just as at the federal government/Fed level. The other banks honor the bits. The banks are supposed to maintain the reserves and borrow from each other, etc., to do that. Banks though create debt-money, and that debt-money cashes checks. When the economy crashes and lending dries up, money disappears. It's written off or repaid and not replaced until the pump is primed if you're Keynesian or people just start over off the austerity-floor if you're with Hayek. I'm not interested in either; but if I were force to choose, I'm sure you'd guess correctly that it would be Keynes.
As for the banks paying back the government, supposedly the banks will have structured their lending to be able to do that just as they do now. That's assuming the "transaction account" confusion is cleared up. They'll lend out money and receive back the principal and the interest and then repay their debts to the government with interest. I want to do away with all of that regardless.