Kucinich Proposes Landmark Reform of Monetary Policy

Lefty Rep. Dennis Kucinich starts his own campaign to end the Fed

Submitted by cpowell on Wed, 2010-12-22 02:53. Section: Daily Dispatches

Kucinich Proposes Landmark Reform of Monetary Policy;
Begins Discussion to Make Monetary Policy Work to Rebuild Economy

Congressional Press Release
Friday, December 17, 2010

http://www.kucinich.house.gov/News/DocumentSingle.aspx?DocumentID=217846

As the nation struggles with long-term unemployment at rates not seen in generations, contracted credit, and the hoarding of public dollars by the banks, U.S. Rep. Dennis Kucinich, D-Ohio, today introduced a dramatic new proposal to establish fiscal integrity, reassert congressional sovereignty, and regain control of monetary policy from private banks.

The National Emergency Employment Defense Act of 2010 would allow the federal government to directly fund badly-needed infrastructure repairs and fund education systems nationwide by spending money into circulation without increasing the national debt. The bill would end the current practice of fractional reserve lending, whereby the economy depends upon private financial institutions to lend money into circulation.

Kucinich stated: "The staggeringly bad employment and economic numbers represent a massive problem which cries out for bold action. Rather than crossing our fingers and hoping that banks will finally lend some of the billions of public dollars they haven't thus far seen fit to lend, we can take action. My bill would replace the Federal Reserve System's dependence on private banks to create credit. In its place, a Monetary Authority under the Treasury Department would directly inject liquidity into the economy by purchasing much-needed public infrastructure repair. Today we have idle capital, millions of able-bodied but unemployed workers, unused equipment, and record low interest rates. These conditions are the best possible time to make a long-term investment in our nation's infrastructure. My bill would do exactly that."

See the legislation here:

http://kucinich.house.gov/UploadedFiles/NEED_ACT.pdf

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Excerpts from the legislation.

Findings. ...

(17) The authority to create money is a sovereign power vested in the Congress under Article I, Section 8 of the Constitution.

(18) The enactment of the Federal Reserve Act in 1913 by Congress effectively delegated the sovereign power to create money to the Federal Reserve system and private financial industry.

(19) This ceding of constitutional power has contributed materially to a multitude of monetary and financial afflictions, including:

(A) growing and unreasonable concentration of wealth;

(B) unbridled expansion of national debt, both public and private;

(C) excessive reliance on taxation of citizens for raising public revenues;

(D) inflation of the currency;

(E) drastic increases in the cost of public infrastructure investments;

(F) record levels of unemployment and underemployment; and

(G) persistent erosion of the ability of Congress to exercise its constitutional responsibilities to provide resources for the general welfare of all the American people.

(20) A debt-based monetary system, where money comes into existence primarily through private bank lending, can neither create nor sustain a stable economic environment, but has proven to be a source of chronic financial instability and frequent crisis, as evidenced by the near collapse of the financial system in 2008.

(21) Banks pyramided their value by spending money into existence, greatly inflating the value of bank holdings, inflating the value of their asset bases, enticing unknowing investors to participate in financing schemes like the bundling of subprime mortgages, and ultimately bringing undercapitalized banks and the entire financial system to the edge of ruin, creating circumstances where the taxpayers of the United States were called upon to save the banks from their own imprudent money-issuing practices, misspending, and misinvestments. The banks' ability to create money out of nothing ultimately became the taxpayers' liability, and raises a fundamental question about a practice of money creation which threatens the wealth of the American people.

(22) Abolishing private money creation can be achieved with minimal disruption to current banking operations, regulation, and supervision.

(23) The creation of money by private financial institutions as interest-bearing debts should cease once and for all.

(24) Reclaiming the power of the federal government to create money, and to spend or lend money into circulation as needed, eliminates the need to treat money as a federal liability or to pay interest charges on the nation's money supply to financial institutions; it also renders unnecessary the undue influence of private financial institutions over public policy.

(25) Under the current Federal Reserve System, the persons responsible for the conduct of United States monetary policy have been unaccountable to the Congress and the nation, have resisted auditing by the General Accounting Office, and have claimed exemptions from some federal statutes, including the Civil Rights Act of 1964, that apply to all agencies of the federal government.

(26) The conduct of United States monetary policy by the Board of Governors of the Federal Reserve System, and specifically the failure of board members to safeguard the financial system against wholesale fraud and abuse of citizens, demonstrates the risks of maintaining a system wherein the power to create and regulate money has been delegated to private individuals who are unaccountable to the people of the United States in any way, even through their representatives in Congress.

(27) The Board of Governors of the Federal Reserve System has acted unilaterally to create and spend $1.25 trillion for the purpose of acquiring mortgage-backed securities, in disregard for the constitutional requirement that all Federal Government spending originate in the House of Representatives.

(28) An examination of the historical record demonstrates that the exercise of control by the United States Government over the money system has provided greater moderation in the supply of money and promoting the general welfare, and has been indispensable in times of national emergency for generating resources required to support public investment, provide for national defense, and promote the general welfare, and is therefore superior to private control over the money system.

(29) As our money system is a key pillar in maintaining general economic welfare and as the Federal Reserve System and its private banking partners have consistently failed to promote or preserve the general welfare, it is essential that Congress, in the name of protecting the economic lives of the American people and the long-term security of our nation, reassume the powers and responsibilities granted to it by the Constitution.

PURPOSES. The purposes of this Act are as fol1ows:

(1) To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money; to modernize and provide stability for the monetary system of the United States, and for other public purposes.

(2) To abolish the creation of money, or purchasing power, by private persons through lending against deposits, by means of fractional reserve banking, or by any other means.

(3) To enable the federal government to invest or lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure.

(4) To incorporate the Federal Reserve System into the Executive Branch under the United States Treasury, and to make other provisions for reorganization of the Federal Reserve System.

(5) To provide for an orderly transition.

(6) To make other provisions necessary to accomplish the purposes of this Act. ...