Surgery Prescribed for the Debt Money Disease: Fighting for the NEED Act

By Nick Egnatz.


The author is a former small businessman who has spent the last decade as an activist for peace and social justice. About five years ago he discovered that our monetary system is not what the people had been led to believe it is. More specifically:

1. The Federal Reserve System is not a part of our government, all 12 Regional Federal Reserve Banks are entirely owned by the same private banks in their districts that they were chartered to regulate. [source]

2. Almost all of what we use for money is created out of thin air by banks when they make loans. The only money created by the federal government are the coins in our pockets and our children’s piggy banks. [source]

3. While the U.S. Department of Engraving prints the Federal Reserve Notes which we commonly refer to as dollar bills of various denominations, the Federal Reserve pays the treasury only for the cost of printing them, about 5 cents for a one dollar bill and 12 cents for a one hundred dollar bill. [source]

“When a bank makes a loan it simply adds to the borrowers’ deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”
Robert B. Andersen, Secretary of Treasury under President Dwight D. Eisenhower [source]

What I concluded was that the basic unfairness of allowing private banks to have the Money Power is at odds with democracy. It certainly flies in the face of our Declaration of Independence’s statement that “all men are created equal”. Perhaps if the people in our country were experiencing prosperity, we could in some crazy way justify giving the Money Power to private banks. After all, Aristotle looked to see what worked and what didn’t work. He junked the latter and supported the former. No doubt, he wouldn’t support our current monetary system. Our country is supposedly recovering from the Global Financial Crisis, but the recovery certainly doesn’t seem to trickle down to the poor or working class. Those who use the term middle class freely admit that it continues to shrink. The basic unfairness and the horrendous results of our monetary system is why I became a monetary reformer and a passionate advocate of the only comprehensive monetary reform bill placed into our Congress — the NEED Act.

I have written several other articles supporting monetary reform and the NEED Act. It has always been my intention to write an article that anyone can understand because economists have their own language and I for one had difficulty following their reasoning. This is not meant to denigrate economists, but those academics seeking a more technical explanation are encouraged to read the NEED Act and other papers included in the references, with particular encouragement in reading German economic sociologist Joseph Huber’s “Sovereign Money in Critical Context“.

While encouraging academics to read Huber, I caution those uninitiated in economist-speak to at the very least read this article first. Huber’s sovereign money, also called new currency theory, is entirely supportive of the NEED Act, but reading and understanding his paper will be a tough slog for those outside the economics community. Indeed, the grasp of his argument will be a challenge for bankers and economists alike. Not because they are unfamiliar with the language, but because they are unfamiliar with even considering reforming the present monetary system.


Money is the very lifeblood of a nation. If a nation’s money system is healthy, society and people will prosper. From a sick or diseased money system, just as the night must follow the day, all manner of ills will follow.

A healthy monetary system is one in which the money is created and issued by the national government, debt-free, and spent into existence for the needs of the nation and its people as determined by its elected, representative government, in amounts that are neither inflationary nor deflationary.

A sick or diseased monetary system is one in which the money is created by banks and loaned into existence, as debt, for those endeavors that are determined profitable for bankers, with little or no regard for the actual needs of the nation and its people.

The Lost Science of Money, Director of the American Monetary Institute Stephen Zarlenga’s tour de force book on money, examines over 3,000 years of monetary history and uses Aristotle’s sage guidance in diagnosing and prescribing the cure for the critically diseased monetary system. It is available at the AMI website A much shorter treatment of the subject, Linking Social Justice to Monetary Reform, is available free online at

Our understanding begins with Aristotle’s statement “Money exists not by nature, but by law.” The “money by nature” Aristotle referred to was a money as a commodity monetary system in which money was gold, silver or some other commodity, the system of choice for the wealthy who held the gold and silver. Money as a commodity, rejected by Aristotle, embraced by the rich, is the foundation for the debt money monetary system of today. Early goldsmiths or bankers began to issue paper notes for gold or silver given to them for safekeeping. They soon realized that people preferred the paper notes, which were accepted as money within their community by merchants, for their convenience. Very few people turned their paper notes in for their gold on deposit. This led the banker/goldsmiths to issue more, roughly 10 times the amount, paper notes than gold on deposit. Called “fractional reserve lending” it is the philosophical justification for the present debt money monetary system. (Federal Reserve Bank of Chicago 1992 publication “Modern Money Mechanics” available at AMI website,

The author is fully aware that Aristotle died more than 2,500 years ago. He prized justice above all other virtues and there is little doubt that Aristotle, confronted with the basic injustice of the present day debt money system, would prescribe a system of money based on justice or law and the NEED Act (explained below) is that system.

Money: an abstract Power and Duty of the state, that acts as a medium of exchange, for the benefit of the people and society.

 The Debt Money Disease

Our present monetary system is one in which almost all (except the coins) of what is used as money is created by private banks when they make loans.  As the loans are repaid the money is extinguished on their books and no longer exists.  The problem is exacerbated because no money is created with the loan to pay the interest that we most certainly are required to pay.  (Putting aside for now the matter of justice: why should we be made to pay interest to a bank for the use of money that they were allowed to create from the ether of the atmosphere?)  Since repaying our loans with the banks erases the money, it is necessary for us to be in debt so that the system has money with which to function.  Expanding the supply of money can only come from an expansion of the level of debt with which we and our government are burdened.  This system requires us, individually and collectively through our governments, to be in debt at unsustainable levels.  This debt money monetary system (known as fractional reserve banking) is a cancer that must be removed.  








Of course there are apologists for the debt money system, using terms like stocks and flows, who will be quick to point out that there does not have to be enough money in the system to repay all the debts, because this has never been done. We would add, of course it has never been done because any significant repayment of the overall level of indebtedness would result in a crash of the system. The system is designed to keep us in debt, not to allow us to repay our debt. The system is designed for debt slavery, not freedom from debt.

A few symptoms of the debt money disease:

1. The nations of the world are $57 trillion in debt (Economist World Debt Clock)

2. Federal, state and local government debt: $66,000/person (

3. U.S. citizens’ personal debt: $53,000/person (

4. Greece is but the first nation to be destroyed by the disease.

5. Estimated 9 million American families lost their homes to foreclosure (Cornell University)

6. Real U.S. unemployment rate: 23% (

7. Increasing wars and militarism, financed by loans at interest from bankers.

8. Destruction of our environment, since the bankers can realize little profit in its care and nurturing.

9. Inability of U.S. society to fund education, $1.3 trillion student loan debt and broke local school districts.

10. Inability of U.S. society to provide comprehensive healthcare for all.

11. Yet the banking cartel responsible for the debt money epidemic has only one prescription for the people — austerity in increasing doses.

“The mistake lies in fearing money and trusting debt.”
Henry Simons, University of Chicago Economist and advocate of the Chicago Plan that inspired the NEED Act
Economic Policy for a Free Society, 1948, page 199.

The NEED Act Is the Cure

Building upon Aristotle’s empirical conclusion that money is a function of the law; and seconded by the U.S. Constitution (“Congress shall have Power To…coin Money, regulate the Value thereof…”, Article I, Section 8); the complete cure was developed by the American Monetary Institute as the American Monetary Act and put into legislative form before the U.S. Congress in 2011 by Congressman Dennis Kucinich, co-sponsored by Congressman John Conyers, as the NEED Act (National Emergency Employment Defense Act).

The 3 Necessary Reforms of the NEED Act are actually just common sense and represent what most citizens mistakenly think is actually how our monetary system works.

1. Federal Reserve System is nationalized and placed under the Department of Treasury.

2. Bank creation of money as debt, commonly called fractional reserve lending, is decisively ended. Banks will only lend money that already exists.

3. Money is created and spent, debt-free, in non inflation/deflationary amounts for the needs of the nation and its people, immediately putting 10 million people to work, at good paying jobs, by financing the rebuilding of our country’s broken infrastructure.

The NEED Act also calls for specifically funding education, healthcare and addressing the mortgage crisis.

Regarding infrastructure; the NEED Act was written using the American Society of Civil Engineers 2009 Infrastructure Report Card calling for $2.2 trillion in infrastructure repairs. The 2013 Report Card now calls for $3.6 trillion to be spent by 2020 to bring 16 categories of U.S. infrastructure up to a state of good repair. That increases the jobs that would be created from 7 to 10 million, the vast majority of which would be good-paying union jobs that would also each support 6 or 7 other jobs in local economies across the country.(source, source, source).

It is important to note that “Since 1996, the Society (ASCE) has formally recognized civil engineers’ obligation to practice sustainability by making it part of its Code of Ethics.”

“The banks got bailed out, we got sold out.” A chant that echoed throughout Occupy camps across the country. The NEED Act addresses this inequity with a people’s bail-out, called a Citizen’s Dividend, that could and should be $10,000 for every citizen. It is necessary to immediately inject money in the economy when the NEED Act begins, to avoid deflation and a deepening of the present depression. The Citizen’s Dividend instantly does so and begins to ameliorate the disastrous effects of the depression on the people. It will also provide our small businesses with what they need — you and I to have money in our pockets to purchase their goods and services.

The NEED Act stipulates that 25% of all newly created money will be given to the states on a per capita basis to use as they individually see fit for their very real funding needs. And interest free funding will be available to help local governments fund capital expenditures on schools, libraries, sewers, roads and other major projects.

While a transition to clean, renewable energy and other environmental concerns are not spelled out in the NEED Act, it provides the vehicle to fund these with the approval of Congress. All Congress will need is for a knowledgeable citizenry to make its desires clear.

The NEED Act pays off the national debt as it comes due and does so with no inflation. No one from either political party has a plan to do this. They go into crisis mode with regularity trying to agree on increasing the debt ceiling, closing government programs or the government itself. Aristotle understood that a debt money system is incapable of co-existing with a free independent people and a government free of debt.

Before the NEED Act was written, Dr. Kaoru Yamaguchi put the American Monetary Act into his advanced system dynamic computer model and concluded that the national debt can be paid off as it comes due and the ASCE infrastructure repairs (at the time $2.2 trillion, now $3.6 trillion, putting 7-10 million people to work), can be done without causing any inflation. (source)

In 2012, Jaromir Benes and Michael Kumhof, Deputy Director of the Modeling Division at the International Monetary Fund, published the IMF Working Paper “The Chicago Plan Revisited”, in which they concluded the 1939 Chicago Plan, which is the template of the NEED Act, would solve most of the problems of the current Depression.

“At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher’s claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.”

Endorse the NEED Act

The American Monetary Institute welcomes vigorous debate on monetary reform, but is somewhat perplexed by organizations and individuals that claim to work for monetary reform, while ignoring the NEED Act and the AMI.

The NEED Act is the only comprehensive monetary reform ever put forth into our Congress in ready-to-go legislative form. This was a tremendous step and as such it deserves the attention of everyone interested in monetary reform. Evading it while at the same time pushing another monetary reform agenda is similar to an environmental group that concentrates on a single issue such as fracking, Arctic drilling, or the Keystone pipeline, that would completely ignore taking a position on legislation that has been presented to Congress that provides a complete seamless transition to clean sustainable energy. You can’t claim to be a reputable environmental advocacy group and ignore proposed comprehensive environmental legislation like it doesn’t exist. The same can be said for monetary reform legislation.

Those groups that claim to want monetary reform should either publicly endorse the NEED Act or present a paper telling the nation their reasons for not supporting the only comprehensive reform ever put into the U.S. Congress that decisively ends the debt money system and provides a seamless overnight transition to a democratic money system.

It is easy to understand people being led astray by alleged monetary reform groups who think that peaceful coexistence is possible with the debt money system. Once the monstrous nature of the this system becomes known, unsuspecting individuals start looking for a cure for the debt disease. In their search they may be introduced to a group that purports to greatly empathize with their concern over the debt disease and then seemingly innocently prescribes a remedy that leaves the basic debt disease intact, while the patient is treated with the distraction of a traveling medicine show, complete with snake oil elixir that does nothing to strike at the heart of the disease.

The NEED Act diagnoses the debt money system as a cancer that can only be treated by removal. Allowing the disease to continue consigns the country and its people to a future of overwhelming debt, unable to pump the lifeblood of money into the projects most needed — good-paying jobs, clean sustainable energy, 21st century infrastructure, national healthcare for all, education for our youth, etc.

Before entrusting your health and the health of those dear to you to a monetary reform group, ask them if they heartily endorse the only comprehensive monetary reform ever placed before Congress — the NEED Act? If not, tell them you are interested in 21st Century medicine and not snake oil, while running, not walking, to the nearest door. Then join AMI at and become part of the monetary reform solution.

Endorsements of the NEED Act should not be limited to monetary reformers. All organizations, unions, political parties, social justice groups, citizen and neighborhood groups, etc. who are interested in a sane, democratic monetary policy are invited to publicly endorse the NEED Act.

Is It Necessary to Enact all 3 Reforms of the NEED Act?

A resounding yes! Historically partial reforms have been tried before and the Money Power has always been able to overturn the partial reforms and get back to the business of amassing wealth at the top by putting us and our governments in greater and greater debt.

The 3 Necessary Reforms of the NEED Act

1. Nationalize the Federal Reserve.
2. Decisively end all bank creation of money.
3. Federal government will create and spend into existence, debt-free, US Money for the needs of the nation and its people.

All 3 Reforms must be done or the Money Power will remain with the banks.

The Bank of England was nationalized in 1946 (Reform #1). But because bank creation of money was not stopped (Reform #2), private banks now still create 97% of the UK’s money.

Presidents Jackson and Van Buren revoked the Second Bank of the U.S.’s charter, effectively ending most bank created money at the time (Reform #2). Misunderstanding the true nature of money, they failed to create and spend debt-free money into existence (Reform #3), bringing on the terrible Panic of 1837.

Debt-free Greenbacks (Reform #3) were created under Lincoln to fight the Civil War and save the nation. Because bank creation of money (Reform #2) was not decisively stopped, the bankers eventually got the upper hand and quashed the Greenbacks.

NEED Act Brings Sanity and Safety to Monetary System

Surgery for a cancer that is destroying its host is standard medical practice. The NEED Act does the surgery and brings our monetary system in line with the Constitution and what people think it should be. The NEED Act is not radical. The only thing radical is to keep the debt money system in place and to continue allowing the Money Power to reside with the bankers and not the people through our elected government.

The NEED Act provides the safe, seamless transition to a just money system that Aristotle would be proud of. Bankers have no need to fear the system. Their liquidity and income should both improve. The people have nothing to fear from the system. Under the present debt money system our money deposited in banks is not ours, but is owed to us by the banks. Under the new system, it will belong to us and be kept in a bank “safekeeping” account. This again, is what most of us mistakenly think is the presently being done.

“How the NEED Act gives an Immediate, Seamless and Non-Disruptive Overnight Transition from a Crisis-Prone Bank Debt System to a Stable Government Money System” by Jamie Walton gives an easy to understand explanation (source).

Moving the NEED Act Forward

Not a single member of the U.S. Congress or Senate has stepped forward to re-introduce the NEED Act. Kucinich is no longer in Congress and Conyers has not done so on his own.

A July, 2014 poll of 100 UK Members of Parliament by Dods Monitoring revealed that 70% mistakenly believed that money was created by the government and only 10% understood that it was created by banks making loans.

Without a reputable scientific poll of U.S. Congress Members on money creation, we must judge their knowledge by their actions. Since none of them now publicly support returning the Money Power to Congress, where the Constitution places it, we must conclude that they too are ignorant on the subject.  The personal experience of colleagues talking with bankers on the subject also brings out their confusion and ignorance.  Many bankers erroneously believing that they lend bank reserves instead of creating the money from thin air.   

It is not hard to understand why our legislators, bankers and the American public are misinformed and confused on the subject of money. Lord Adair Turner is one of the world’s most respected members of the monetary establishment, a member of UK’s Financial Policy Committee, former chairman of Financial Services Authority, Pensions Commission and Committee on Climate Change. He made the following admission in his 2013 featured lecture to the Stockholm School of Economics:

Modern textbook assumptions. I think it’s fair to say that they make 3 assumptions which are dramatic and wrong over the best simplifications. They tend to assume that what banks do is take deposits from household depositors and lend it to borrowers. That misses the insight that banks create credit and money and purchasing power. They tend still and I have read back through several economic textbooks over the last several months to check this. They tend to say that what banks do with that money is that they lend it to businesses in order to fund those projects that have a higher return than the interest rate. That ignores almost entirely the fact that most credit extension is no longer funding business capital projects.” (source, source)

In other words, our economic textbooks have been lying to us. These concepts are not difficult to understand, we have just been lied to and misinformed by the monetary establishment for years. Those with the most formal monetary education have been duped the most. In that light, it is not difficult to understand why many of our leaders are clueless. Our job is to educate them.

If most legislators are ignorant and bankers confused, it is not difficult to understand the lack of support in Congress for the NEED Act. What our legislators will not be confused about is an aroused citizenry demanding the justice of the NEED Act. This is a matter of education. Every person we talk with, give a pamphlet or book to, every letter to the editor, every comment we make online, every article we post on Face Book, every email, phone call or meeting with our Congressman, every time we speak up at a union meeting or town board meeting, every time we invite a knowledgeable speaker from the AMI to speak: all adds up to a more informed public. As this people’s movement grows it will reach a critical mass and Congress will take notice.

Our own monetary donations to those fighting for the comprehensive reforms of the NEED Act are also vital to the cause.  Those of us that can afford to contribute monetarily to the cause should and those that are unable to can find other ways to support the movement.  

An August, 2015 Gallup Poll shows only a 14% approval rating for Congress and a whopping 82% disapproval rating. To be fair, it is because they have been given an impossible job: “promote the general welfare” of the people and the nation with a cancerous monetary system. An aroused citizenry will have the immediate attention of a Congress with these dismal ratings. People do want their Congress Members, Senators and President to work together to solve the issues and crises that confront us. The NEED Act is not a partisan bill. It was written as non-partisan legislation by the Congressional Legislative Council. It’s appeal is universal.

A couple hours of reading Aristotle last night left me completely comfortable that he prized justice above all other virtues.  Of course he couldn’t have prescribed the NEED Act, because he never could have imagined the degree of injustice that flows from the present debt money system. But would he prescribe the NEED Act if he were here today?  Most definitely!

Aristotle has given us insight on money, but it is our struggle now. It is a fight for our destiny. Join us. What shall it be? A free independent people? Or a nation of debt slaves?

Nick Egnatz

Nick Egnatz is a Vietnam veteran. He has been actively protesting our government’s crimes of empire in both person and print for some years now and was named “Citizen of the Year” for Northwest Indiana in 2006 for his peace activism by the National Association of Social Workers. For the last few years he has passionately fought for monetary reform.

Contact Nick

Reference Materials

Fisher, Irving. 1935. 100 per cent Money. Works Vol. 11, ed. and introduced by William J. Barber, London: Pickering & Chatto, 1997.

Fisher, Irving. 1936.  “100% Money and the Public Debt”. Economic Forum, Spring Number (April-June 1936): 406-420.

Huber, Joseph. 2014a. “Modern Money Theory and New Currency Theory”. Real-world economics review 66, (13 Jan 2014): 38-57.

Huber, Joseph. 2014b. “Sovereign Money in Critical Context: Responding to criticism of monetary reform from a variety of economic viewpoints“. Sovereign Money Website, Oct 2014.

Huber, Joseph & Robertson, James. 2000. Creating New Money: A Monetary Reform for the Information Age. London: New Economics Foundation.

Kumhof, Michael & Benes, Jaromir. 2012. “The Chicago Plan Revisited.” IMF Working Papers 12/202, International Monetary Fund.

Lainà, Patrizio. 2015. “Proposals for Full-Reserve Banking: A Historical Survey from David Ricardo to Martin Wolf”. Economic Thought, Vol 4, No 2 (28 Sep 2015): 1-19.

McLeay, Michael & Radia, Amar & Thomas, Ryland. 2014. “Money in the modern economy: an introduction”. Bank of England Monetary Analysis Directorate. Bank of England Quarterly Bulletin 2014 Q1.

Werner, Richard A. 2012. “How to Turn Banks into Financial Intermediaries and Restore Money Creation and Allocation Powers to the State”. University of Southampton, Centre for Banking, Finance and Sustainable Development, Policy Discussion Paper, No. 3-12 (8 Nov 2012): 2-9.

Werner, Richard A. 2014a. “Can banks individually create money out of nothing? The theories and the empirical evidence”. International Review of Financial Analysis, 36 (2014): 1–19.

Werner, Richard A. 2014b. “How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking”. International Review of Financial Analysis, 36 (2014): 71–77.

Yamaguchi, Kaoru. 2010. “On the Liquidation of Government Debt under A Debtfree Money System: Modeling the American Monetary Act”. In Proceedings of the 28th International Conference of the System Dynamics Society, Seoul, Korea, 2010. The System Dynamics Society.

Yamaguchi, Kaoru. 2011. “Workings of a Public Money System of Open Macroeconomies: Modeling the American Monetary Act Completed”. In Proceedings of the 29th International Conference of the System Dynamics Society, Washington D.C., USA, 2011. The System Dynamics Society.

Yamaguchi, Kaoru. 2012. “On the Monetary and Financial Stability under A Public Money System (Revised): Modeling the American Monetary Act Simplified”. Paper presented at the 8th Annual AMI Monetary Reform Conference in Chicago, USA, Sept. 20 – 23, 2012. It was originally presented at the 30th International Conference of the System Dynamics Society, St. Gallen, Switzerland, July 22 – 26, 2012.

Zarlenga, Stephen. 2005. “Moving Monetary Reform to the ‘Front Burner’”. American Review of Political Economy, Vol 3, No. 1 (March 2005): 39-84.

Zarlenga, Stephen. 2002. The Lost Science of Money: The Mythology of Money – The Story of Power. Valatie, NY: American Monetary Institute.

2 Responses to “Surgery Prescribed for the Debt Money Disease: Fighting for the NEED Act”

Leave a Reply

  • (will not be published)

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>