Open Government Dialogue
Congress could take back the power to create the national money supply by:
(a) Nationalizing the Federal Reserve.
(b) Reviving the Reconstruction Finance Corporation, a government-owned lending facility used by Roosevelt to fund the New Deal. Rather than merely recycling borrowed money as Roosevelt did, however, the RFC could actually create credit on its books, in the same way that banks do it today, by fanning its capital base into many times that sum in loans. Assuming $300 billion is left of the TARP money approved by Congress last fall, this money could be deposited into the RFC and leveraged into $3 trillion in loans. That’s based on a 10% reserve requirement. If the money were counted as capital, at an 8% capital requirement it could be leveraged into 12.5 times the original sum. That would be enough to fund not only President Obama’s stimulus package but many other programs that are desperately short of funding now.
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