A Viable Solution to the Economic Crisis

By Robert Poteat, Director, American Monetary Institute

The Problem: The 1913 Federal Reserve Act

Arguably the greatest attack on humanity in all of history was made December 23, 1913, the enactment of the Federal Reserve Act by the Congress and President of the United States. It was the culmination of centuries of political, financial, intellectual, and moral corruption. The corruption has only increased in the one hundred three year history of the Federal Reserve Banking System.

Stated purpose of the Act:

An Act To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.

The Act gave the power and privilege of creating the nation’s money supply to a private banking cartel, the Federal Reserve Banking System. That power is reserved and granted to the Congress of the United States by Article I, Section 8, Clause 5, of the United States Constitution. The Act did in fact establish Federal Reserve Banks. If “elastic currency” is a euphemism for inflation, the System has fulfilled that intention. Certainly, the System rediscounts commercial paper to the advantage of the monopoly System and disadvantage of the nation. Since the passage of the Act, there have been nineteen recessions, including two major depressions, showing banking supervision to be a tragic farce. Who knows the meaning of the vague phrase “other purposes?”

Subsequently, the Act was amended to also require the maintenance of employment. That, too, has become another item in the System’s catalogue of failures. The System’s failure is obscured by politically manipulated corruption of employment statistics.

The System creates the nation’s money supply by creating debt. The debt is euphemistically called credit. Either way, credit and debt is the same thing. It is done by bookkeeping trickery often referred to as fractional reserve deposit expansion. [1]

This power to issue debt used as money gives the private banking cartel power over the rest of society because it not only determines how much debt, used as money, is put into circulation and withdrawn; but, also, gives the cartel power to determine who gets money for what purpose. War is given preference over beneficial production, physical infrastructure, and human infrastructure such as education and healthcare.

The Act was passed just ahead of the United States entry into WWI. The war was

financed by bank credit creating the greatest increase in national debt to that time. Since then, the national debt has been exponentially expanded and used as power to concentrate wealth in private hands that control government, information sources, production, and education. Since WWII the economy of the United States has been co-opted for the purpose of nearly continuous war making. The war making is an attempt to gain monopoly control of the world’s resources for the most violent and brutal corporate empire the world has yet known.

The power to issue money was assigned to the Congress by the Constitution of the United States. Congress, and President Woodrow Wilson subverted democracy and justice when it passed that power to private interests. The System subverts peace, justice and democracy. It is the responsibility of the current Congress and President of the United States to address and correct the mistake Congresses and Presidents have made.

The Solution: The 2012 NEED Act

A viable correction has been offered; it was last introduced into the 112th Congress by former Congressman Dennis Kucinich as HR 2990, the National Emergency Employment Defense Act (the NEED Act ). [2] If passed, this bill could have refreshed and stabilized the U.S. economy, begun paying off the national debt, and made any level of physically possible and socially acceptable human culture available without national debt. The NEED Act would 1) terminate the power of private banks to create credit used as money; 2) restore the power to Congress to create and spend into circulation United States money debt and interest free to maintain a stable and productive economy without inflation or deflation; and 3) the present statistical data keeping, bank regulation, and institutional knowledge of the present system would be folded into the US Treasury as a new bureau. Private banks would retain the business privilege of acting as monetary intermediaries using their own money or money deposited with them by investors desiring that service. Uninformed people believe that this is the way banks operate now. 

Some provisions of the NEED Act are an immediate end to growth of national debt; fast investment in infrastructure to create millions of jobs; a tax free grant to all citizens to stimulate the economy; and begin paying off the national debt as it comes due to reduce interest burden on taxpayers. Environmental cleanup and energy needs can be met while creating jobs, too.

Another less visible public benefit of the NEED Act is that banks without the power to create credit would not be able to create the “bubble and crash” economy that has been so effective in robbing society to form the greatest concentration of wealth in the fewest hands in history, ever.

The United States has just experienced and incredibly corrupt election cycle of money, lies, voter fraud, media bias, personal attacks, and avoidance of substantive issues such as banking, war and resulting, legal, moral, and social disintegration. Much of the corruption was exposed by computer hacking without which it would not be known, except, perhaps, to historians fifty years in the future when irrelevant.

What would any election cycle be without catch-phrase promises like “drain the swamp,” clean up/out the corruption, and “make America great, again”? The NEED Act is the opportunity to make the promises real.

If the incoming administration spokesman and President elect intends to make good on his promises, a means to finance it is already written in legislative language. The aggressive promises, if carried out without monetary reform, could only mean huge increases in national debt, environmental destruction, stratification of wealth, and unstable economy; just more of the same.

A great opportunity is before the incoming administration.

Sources

[1]. Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion. 1992 (1961). The Federal Reserve Bank of Chicago. 

This publication is outdated since “reserves” no longer serve as a limitation of loan making, but it does confirm that loans are created by bookkeeping entries. The process is also confirmed by other Federal Reserve Bank publications and statements and a Bank of England report titled “Money Creation in the Modern Economy”.

McLeay, Michael & Radia, Amar & Thomas, Ryland. 2014. Money Creation in the Modern Economy”. Monetary Analysis Directorate. Bank of England Quarterly Bulletin 2014 Q1:14-27.

[2]. HR 2990 – National Emergency Employment Defense Act of 2011 (NEED Act). 112th Congress (2011-2012)

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The American Monetary Institute is a 501c3 Charitable Trust founded in 1996 for independent research and publication of monetary history, theory, and science toward a moral and just monetary system.

Over time, whoever controls the money system controls the nation.

Stephen Zarlenga, founder (1941 – 2017)

American Monetary Institute, P, O, Box 601, Valatie, NY 12184

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