Monetary and Banking Reform

40 thoughts on “Monetary and Banking Reform”

1. It has been said that there is nothing new in the world except the history you do not know. The issue of democratic reforms to monetary policy seem new because we never learned its history in school, or through the media, or even in our activist organizations. Many activists still don’t understand the issue believing it too complicated, unrelated to other economic concerns or associated with political ideologies unlike their own. Social change and environmental activists, however, ignore this arena at their peril. And we should remember that complexity, as the great economist J.K. Galbraith pointed out, has been used effectively to hide corruption for decades.

   In 2007,​ in order to answer the question of how do we pay for all the social spending we Greens want to do, a few Greens began studying money and in 2010 GPUS added a monetary reform plank to its platform called Greening of the Dollar​. It ​is based on solid monetary science, history and law drawing on the work of scientists like Frederick Soddy, historians like Alexander Delmar, economists like Irving Fisher and Paul Douglas and many others, and was collected and researched by the American Monetary Institute, an underfunded research and education charity. Greening the Dollar is a structural change that requires​ Congress​ ​to exercise its constitutional power to ​be the sole issuer of all new money by establishing a transparent and independent ​public monetary authority for the creation of new money ​to be spent responsibly for the common good​, much of it at the local level​.​ ​It end​s​ ​the ​legalized privilege commercial banks’ ​currently have ​to create and issue what society uses as money​ with some simple accounting rule change​s​. It also transfers all operations of the Federal Reserve System and ownership of the 12 Federal Reserve Banks to the U.S. Treasury. By implementing ​these ​3 essential monetary reforms ​government would no longer be dependent on the banking system and would be able to pursue public policy without the restraints imposed by the influence of wealthy interests. The military industrial complex would no longer have a blank check becasue banks would no longer be in the driver’s seat in search of war profits. Society would instead prosper in a new quality of life direction.

   Now we have a proposal from Nebraska that removes those 3 reforms and replaces them with vague language that advocates no change in the monetary system becasue it assumes Congress creates money when it spends. Under the current system that means ‘deficit spending’ which they say is a good thing and that the debt can be ignored. This increases the public debt on which we pay a half-trillion per year in interest since the only real way money is created, except the small percentage of it that is coins, is via a loan from a private bank. So it advocates a regime of ‘deficit spending,’ which is a euphemism for borrowing money from the private banking system to fund the needs of the industrial economy instead of creating public money to spend on the general welfare without any debt obligation to the private banking system at all.

   Dee Berry and Ben Kjelshus are the Greens who brought this to the party, here is a video of them telling the story. https://www.youtube.com/watch?v=9E6QFqkR5AQ

   Reply

   1. Howard Switzer wrote: “. . . Greening the Dollar is a structural change that (1) requires​ Congress​ ​to exercise its constitutional power to ​be the sole issuer of all new money by establishing a transparent and independent ​public monetary authority for the creation of new money ​to be spent responsibly for the common good​, much of it at the local level​.​ (2) ​It end​s​ ​the ​legalized privilege commercial banks’ ​currently have ​to create and issue what society uses as money​ with some simple accounting rule change​s​. (3) It also transfers all operations of the Federal Reserve System and ownership of the 12 Federal Reserve Banks to the U.S. Treasury. . . . ”
      Joe Firestone: Howard, I took the liberty of numbering the three reforms above to more easily identify them in replying. First, Congress still retains the constitutional power to issue US Money. However, it has delegated its authority to issue currency and reserves to the Federal Reserve Banks, while delegating its authority to issue coins to the Treasury. Now, the “greening the dollar” proposal purports to “require Congress” to become the “sole issuer of all new money”, but how would it do that?
      If it is intended to pass legislation in which Congress requires itself to do that, then we need to recognize that legislation passed by Congress cannot force Congress to do anything, since the same, or some future, Congress can immediately repeal the legislation which it prohibited itself from delegating money issuance to a new Federal Reserve or to the Treasury Department. So, this suggests that the only way to “require Congress” to do what is proposed is to make clear that the what is being proposed is to pass a Constitutional Amendment that would be beyond the power of the same or a future Congress to repeal on its own authority.
      In addition, it would have to be recognized that that sort of “greening the dollar” mentioned could not be accomplished in less than 7 – 10 years, if ever, due to the difficulty of the amendment process. So, even if successful, an effort at “greening the dollar” by the Green Party must be a long-tern prospect only attainable after a long period of its success and that of a progressive movement in which it was embedded. It is not something that can be accomplished, irrevocably, first thing after taking office. Also, to accomplsh it at all the Green Party would have to be successful in passing legislation that made the party enormously popular for long enough to get the amendment passed in Congress and then ratified in the States. That’s a very tall order for a platform plank.
      Howard wrote further: “. . . By implementing ​these ​3 essential monetary reforms ​government would no longer be dependent on the banking system and would be able to pursue public policy without the restraints imposed by the influence of wealthy interests. The military industrial complex would no longer have a blank check becasue banks would no longer be in the driver’s seat in search of war profits. Society would instead prosper in a new quality of life direction.”
      Joe Firestone: Howard, I believe this claims too much. Congress is not dependent on the banking system now to “pay for” spending. It has the constitutional power to order the Federal Reserve to issue to Treasury all the reserves necessary to implement spending appropriated by Congress within any time period. It also has the power to order the Federal Reserve to supply all the reserves needed to repay the principal and interest due on any previous debt instruments falling due during the period of an appropriation. An approximation to the necessary language for Congress to get this done is this:
      “Upon passage of this appropriations bill, the Federal Reserve is directed to fill the Treasury’s spending account at the New York Federal Reserve with the addition to its Reserve Balance necessary to spend this appropriation. In addition, the Federal Reserve is directed to fill the Treasury spending account with the additions to the Treasury Reserve balances necessary to repay all outstanding debt instruments including principal and interest as they fall due for the fiscal year of this appropriation.”
      All Congress needs to do end the practice of debt issuance by the Treasury Department is to place language like the above in every appropriations or Continuing Resolution bill it passes. The name of this method of financing is Overt Congressional Financing (OCF).
      In addition, apart from OCF, Congress has already passed legislation allowing the Secretary of the Treasury to direct the US Mint to create 1 oz. platinum coins whose face value can be determined by the Secretary. In other words, the Secretary can cause the Mint to create a $100 Trillion coin and have the MInt deposit it at the New York Federal Reserve Bank in its Public Enterprise Fund (PEF) account, following which the Treasury can order the Fed to “sweep” the PEF account and place nearly $100 Trillion in reserves in the Treasury spending account awaiting appropriations from Congress to allow Treasury to do the spending.
      In sum, Congress is in no way dependent on the banks to issue US dollars to enable Treasury spending, since it can always either directly or through the Executive Branch cause the Federal Reserve to issue as much in reserves as it desires.

      Howard wrote further: “Now we have a proposal from Nebraska that removes those 3 reforms and replaces them with vague language that advocates no change in the monetary system becasue it assumes Congress creates money when it spends. Under the current system that means ‘deficit spending’ which they say is a good thing and that the debt can be ignored. This increases the public debt on which we pay a half-trillion per year in interest since the only real way money is created, except the small percentage of it that is coins, is via a loan from a private bank. So it advocates a regime of ‘deficit spending,’ which is a euphemism for borrowing money from the private banking system to fund the needs of the industrial economy instead of creating public money to spend on the general welfare without any debt obligation to the private banking system at all.”
      Joe Firestone: Please read the NE proposal again, Howard. It proposes nationalizing the Federal Reserve Banks, something that’s part of the current proposal and that is surely a significant change in the monetary system even from your point of view, since it would take the big banks out of Fed ownership and clearly make the Fed regional Fed banks government entities, if done, you would not have the same cause to claim that the MIlitary Industrial Complex was in the “drivers seat” in the search for war profits.
      In addition, the NE proposal calls for breaking up the big banks and creating a system of small community banks, and state and local level public banks (which might influde postal banks). Surely this is also a substantial change in our monetary system. Further, the proposal is most assuredly not using “deficit spending” as a euphemism for having the Treasury continue to issue.
      Instead, the proposal uses “deficit spending” to describe a postive difference between Federal spending and Federal taxes, a net gain to the private sector during a time period. The proposal does not mention the method of federal financing to be used.
      However, I’ve already explained that deficit spending can perfectly well be done by using OCF, or platinum coin seigniorage. Neither of these methods would entail using further debt instrument sales. Both could be used to pay down and eventually eliminate all outstanding interest-bearing debt previously issued by Treasury.
      So, the Nebraska proposal, envisions creating new net financial assets through deficit spending. But it most certainly does not entail either increasing the public debt subject to the limit or the interest the Federal government pays to private banks.

      Reply

      1. Hello Mr. Firestone, sorry, I kept looking at the bottom of the comments for new comments and thus I missed yours. Since you are questioning my description and the efficacy of our monetary reform plank I thought I should further explain each of the three reforms that make up Greening of the Dollar, a much needed structural change.

         (1) Require​ Congress​ ​to exercise its constitutional power to ​be the sole issuer of all new money by establishing a transparent and independent ​public monetary authority for the creation of new money ​to be spent responsibly for the common good​, much of it at the local level​.​

         This is the essence of a Sovereign Money System, that is all money is issued by a democratically elected authority for public purpose as the ‘first use’ of all new money. Congress is given this authority by the Constitution in Article 1 Section 8(5), to create Money and regulate its value. We are asking government to take up its responsibility to be the sole issuer of money and to do so for the common good thus fulfilling its Constitutional mandate to promote the general welfare of the nation’s people and not just for the benefit of the big banks and their corporations.

         We further propose Congress establish a transparent and independent ​public monetary authority within the US Treasury to monitor and determine the amount of new money that Congress can authorize via appropriations without causing inflation/deflation and to shield it from the political swings you mention, similar to the Supreme Court. As you know Congress established the Fed in 1913 which basically ceded their monetary authority to the private banking system that today issues all money as debt owed to them plus interest. As you know we the people are paying a half trillion per year in interest on the public debt to these commercial banks who make up the Fed. Our proposal would allow the elimination of the public debt and its interest payments as it comes due. This is done, as you know, in the interest of economic stability.

         (2) ​End​ ​the ​legalized privilege commercial banks’ ​currently have ​to create and issue what society uses as money​ with some simple accounting rule change​s​.

         Currently, through this legalized privilege, commercial banks create nearly all (97%) of the nation’s money which has allowed private wealth control over the nation’s polity and public policy. This is antithetical to Sovereign Money as history has proven. If Lincoln had banned bank-money we might be living in a peaceful, prosperous and sustainable sovereign “greenback” money economy today. The corrupting effects of such private monetary power on Congress are vast and apparent. The simple accounting rule changes are explained on the Greens for Monetary Reform site. http://greensformonetaryreform.org/transition.shtml

         (3) Transfer all operations of the Federal Reserve System and ownership of the 12 Federal Reserve Banks to the U.S. Treasury.

         The evidence is clear that the big commercial banks control the issuance of our nation’s money through the authority of the Fed. To the extent where there is any private ownership of the Fed it is their ownership of the 12 Federal Reserve banks through which they control the issuance of nation’s money and are thus able to limit government spending to areas that benefit them and not the people and their places. Thus ownership is transferred to Treasury thus making what people believe into an actual fact of reality.

         Also, there are considerable psychological consequences to allowing money to be issued privately for personal gain, which is usury, and which alienates people making them less willing to collaborate with one another. By changing the money we can reverse the psychological consequences; moving from an economy based on private greed to an economy based on public care.

         Thus Greening of the Dollar is a critical component for creating a just, democratic and sustainable human culture currently under threat of extinction. This is why, despite the considerable political obstacles, we pursue this policy.

         Reply

2. I​ initially approached this proposal positively believing I might be able to propose amendments that would benefit the party. However, after spending an inordinate amount of time trying to do that I found it to be impossible and now recommend rejecting this proposal entirely. Let me explain.

   The very first issue I have with this proposal are the 2 false premises we are asked to accept ​in the ‘background.’

   1; there is nothing in this proposal that I could find that ‘accurately reflect​s​ ​how the current system actually works.’ Quite the contrary in fact….which I will explain as we proceed.

   2; Our government creates no ‘net financial assets,’ under current law only the banks are allowed to do that.

   ​Our Green Party monetary plank advocates reforming the monetary system so that all money is sovereign money created by the government and spent​, lent ​or gifted ​into circulation for the public good, and banks ​are limited to ​provide accounting, savings, and loan services for already existing money​.

   The Nebraska GP proposal advocates maintaining the status quo​; ​a public-private partnership​ where banks create private-interest-serving debt-based money sanctified by Congress as legal tender and paid for by taxpayers through their income-generating efforts ​exploiting the earth’s resources and our social inheritance to produce new goods and services​ ​along with a few tweaks that further entrench it. ​ More to come​ becasue there is so much in this proposal that needs addressing.

   Reply

   1. Reply No. 2 to Howard Switzer

      Howard wrote: “The very first issue I have with this proposal are the 2 false premises we are asked to accept ​in the ‘background.’

      1; there is nothing in this proposal that I could find that ‘accurately reflect​s​ ​how the current system actually works.’ Quite the contrary in fact….which I will explain as we proceed.

      2; Our government creates no ‘net financial assets,’ under current law only the banks are allowed to do that.”
      Joe: On the first “false Premise”; the Nebraska proposal is one that proposes change in the current monetary system to solve problems. So, I ask, are the problems mentioned in the proposal not about “how the current system actually works? If not, then which problems in Howard’s view are not real problems? Also if he thinks the proposed solutions in 15 – 17 don’t reflect current reality, then my question is: why should they since they are intended to change current reality.
      Moving to the second “false premise.” Here’s what happens now in deficit spending, when the government needs an addition to the reserves (electronic credits) in the Treasury spending account. (1) The Treasury sells interest bearing securities at auctions run by the Federal Reserve. (2) The Fed marks down the reserve accounts of the entities buying the securities offered, destroying that money in the private sector. (3) Then it uses the authority delegated to it by the Congress to mark up the Treasury spending account, creating new reserves (sovereign money) the Treasury can use to do its deficit spending. (4) The Treasury deficit spends part of its appropriations from Congress into the economy.
      So, let’s score this. When the Treasury sells a debt instrument. The private sector gets the money it pays destroyed by the Federal Reserve; but it also gets a financial instrument of equal value from the Treasury in return. So, its net loss of financial assets is equal to zero. On the spending end of things, the Treasury deficit spends the reserves created by the Fed’s marking up of its account into the private economy. So, that’s the creation of ‘net financial assets’ in the private sector by Congress and the Treasury Department through deficit spending/fiscal policy.
      Of course, a Federal Reserve bank (the New York Fed) is involved in that process and someone can take the position that the regional Fed Banks are not part of the Government, but are private banks because regional bank stock is owned by private banks. Well the details of this claim is a fact, but the normal privileges of stock ownership one finds in stock companies are not conferred on the banks that hold stock in the Fed regional banks. The owners do not set Fed regional policies, or elect the people who do. They cannot trade or sell their stock. Also they don’t determine their own dividends, which are set by law, and not the Board of Directors of the regional bank.
      Finally, the regional banks are tightly regulated by the Board of Governors, a Government agency, which like the regional banks themselves was created by the Congress, and most of the regional Fed profits go to the Treasury Department each year, and not to the owners. In short, the regional Fed banks act like agencies that are public-private partnerships, and their authority to create reserves in accounts they hold comes from the Congress which has mandated the Fed banks to be part of a system headed by the Board of Governors and the Federal Open Market Committee (FOMC) to act to create full employment, and price stability, while maintaining the stability of the Banking system. So, yes, in my view, the regional banks are part of the Government even though they are corprations in which private banks own stock. See: http://neweconomicperspectives.org/2014/01/greatest-myth-propagated-fed-central-bank-independence-part-1.html and http://neweconomicperspectives.org/2014/01/greatest-myth-propagated-fed-central-bank-independence-part-2.html
      Howard also wrote: “The Nebraska GP proposal advocates maintaining the status quo​; ​a public-private partnership​ where banks create private-interest-serving debt-based money sanctified by Congress as legal tender . . . ”
      Joe: The NE proposal actually proposes considerable change to the status quo including: nationalization of the Fed regionals, break-up of the big banks, use of State public banks, and local public banks (including post office banks). Much smaller commercial banks and community banks would still create “private-interest serving debt-based money.. . . ” under the NE proposal, but the public State, local and postal banks, would increasingly reduce that component of the banking system.
      Why not strip all banks of the authority to create debt-based money as in the AMI proposals? The reason for this is the idea that once the systemically dangerous institutions are removed from the banking system, and banking is made boring again, then greater adaptability to changing credit needs would be provided by decentralizing decision making about loans and money creation across a variety of different types of banks, then would be provided by a central monetary authority pre-determining the amount of credit that will be needed by the economy and issuing sovereign money accordingly. See: http://bilbo.economicoutlook.net/blog/?p=30833

      Reply

      1. Mr. Firestone, it is Greening of the Dollar that changes the structurally flawed current monetary system, I don’t see anything in this proposal that would do that.

         When Treasury sells interest bearing securities the banks who buy them merely create the money ex nihilo to buy them, they are essentially a bank loan to the Government and are a liability we pay back with interest. If government can create a bond they could certainly create money but as you know the law that requires Congress to ONLY tax or borrow needs to change.

         Reserves are not money, they are an intra-bank system accounting mechanism, so whether reserves are created or destroyed matters little to the money supply. In a Sovereign Money System there are no reserves, no need for reserves as the entire system would operate on actual money.

         Greening of the Dollar nationalizes the Fed banks. The current system is very convoluted to hide the reality that private banks create and control the nation’s money supply, don’t let the industry jargon confuse you. This proposal offers us nothing becasue it is based on flawed assumptions.

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      2. On your point about public banking. Greens already support public banking which would simply mean affordable banking services to people, a good thing for sure, but it is not a system change.
         Greening of the Dollar is a monetary system change, it removes the corrupt connection between banking and the private creation and thus control of our nation’s money. This is a very important detail.

         Regarding your claim that “the regional banks are tightly regulated by the Board of Governors, a Government agency,”
         They are not a government agency, they are not paid by the Government, they and their entire staff are paid by the banks themselves, they are not government employees at all.

         Reply

3. I share Howard Switzer’s concerns with the proposed language. While such things as “deficit spending” and “quantitative easing” often entice progressives who want to counter conservatives’ cruel austerity, they are themselves cruel as long as money creation and profiteering on debt are private privileges. They also ignore the finite nature of our planet, and the saving grace of a reality-based finite money system that would cause our illusory ability to fund endless war and empire expansion to hit a fiscal WALL. Money creation currently represents looting from future generations and the ecological commons. If war profiteers are able to continue to benefit from endless fiscal expansion and endless debt, the wall that we hit will be not fiscal but ecological, and countless other creatures will be taken down with us, as is already beginning to happen in this age of extinction.

   Much of the “quantitative easing” in the wake of the 2008 crash funded the fracking boom, which would not be profitable without the transfusion–in other words, the trashing of the atmosphere and groundwater for fake profit for a few. Very very little of the pseudo-money created by “quantitive easing” benefited those most in need. If our platform needs any revising on the topic of monetary and banking reform, it is in a different direction than what the Nebraskans have proposed.

   What is money, fundamentally? Is it solid or liquid? Is it meant to be accumulated and stored in the hands of the fortunate, or to represent a flow of that which has value in ways which fairly distributes and enhances value? We need to create a financial system that mirrors a healthy biodiverse ecosystem, and I leave it to minds better informed on monetary issues than mine to craft the laws that would promote this!

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   1. Thanks for the clarifying question, Eric. Fundamentally ‘money’ is an abstract social power embodied in law as an unconditional payment system. That is why it is important that it be a public utility issuing money only for public purpose (its first cause) as an asset, a share in the nation’s equity which gives it value instead of being issued as debt. It should not be a private for-profit operation that controls public policy to favor the rich. The so-called public/private “partnership” is an illusion to cover that it is in reality private power. The system we currently have uses credit as money which is not really money. Banks should only lend out real money that was created and spent, lent or gifted for public purpose and then put into a savings/investment account. This way we can build robust local economies while fairly distributing the wealth.

      Reply

   2. Eric Greening said: “Much of the “quantitative easing” in the wake of the 2008 crash funded the fracking boom, which would not be profitable without the transfusion–in other words, the trashing of the atmosphere and groundwater for fake profit for a few. Very very little of the pseudo-money created by “quantitative easing” benefited those most in need. ”

      Joe Reply: Please make clear the causal chain from “quantitative easing” to the fracking boom.

      Reply

4. I am grateful that comment has been posted on this proposal. I have been trying to figure out how it differs from our current platform. At best it seems the NE proposal says that the US government can already create money–though maybe only in the form of printed or coined money? I don’t understand what is meant by “reserves”.

   Also, the proposal says that the fractional reserve system no longer exists because the Federal Reserve grants overnight loans. Everything I see about requirements for banks suggests that they operate on the fractional reserve principle. The overnight loans of the Fed just help them evade trouble if they have exceeded obligations allowed under that system, no?

   So why is this proposal being submitted?

   Reply

   1. Very good question, Joanna, why?
      You’ve got it right, “reserves” are interbank money that never enters the economy. Joseph Huber explains the “two circuit” system we have. It is part of the system’s sleight of hand, the complexity, used to hide that fact that our money system is privately controlled.
      https://www.sovereignmoney.eu/split-circuit-reserve-banking/
      The US Mint creates the coins and sells them at face value to the banks. The office of printing and engraving prints the paper bills and sells them to the banks for cost of production, 4-5 cents per bill. The banks then issue it at full face value when cashing checks etc. reaping the profits known as “seigniorage.”
      https://www.treasury.gov/about/budget-performance/annual-performance-plan/Documents/FY17_AFR_508_FINAL.pdf
      What is important to know about that is that ALL the coins and bills created only represent 3% of the money supply, most of it (97%) is created electronically and issued by commercial banks as interest bearing debt when they make loans. The owners of the system that dominates the creation of money control monetary policy.

      Reply

   2. Reserves are bank balances or additions to them. They are basically checking account balances.

      We say that the fractional reserve system is no longer in effect is because its most important function was to constrain private banks from making loans once they no longer had an amount of reserves equal to 10% of their outstanding loans. However, in the present system, it is well-known that the banks don’t even look at the reserves they have before concluding a loan with a customer. They create a deposit against the note of the customer alone.

      Nor does the bank lend out the savings of its depositors to loan customers. So, neither the level of their reserves nor the savings in accounts at the bank function as a prior constraint on, or a source of funds for, lending. Why? Because in the current system, either the overnight interbank market, or the Federal Reserve discount window can supply the reserves a bank needs to meet its reserve requirements AFTER THE FACT of lending.

      The Fed has no choice about being the lender of last resource. It must always supply the needed reserves in order to fulfill its mandate of maintaining the stability of the banking system.

      Reply

      1. Again, reserves are NOT money, they are an intra-banking system accounting device to fix the books at the end of each banking day to justify the creation of money that day. Reserves are never spent, they are just moved around among the banks to settle accounts for reserve requirements. It is all part of the private system that profits off of creating our nation’s money.

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5. It might be useful here to explain the difference between ‘creating’ money and ‘issuing’ money becasue they are often used interchangeably. Money can be created but not issued, for instance like bank “reserves” which never enter the economy and are in-house bank-money moved around to “back” loans being made by banks in the process of settling accounts at the end of each day. Also while government ‘creates’ the paper currency it does not ‘issue’ it. Instead it is sold to banks for the cost of production and they ‘issue’ it at face value as money, reaping the difference between face value and cost of production. Government does ‘create’ the coins and ‘issue’ them, which means government gets the profit or what is known as “seigniorage.” Our current platform plank proposes that all money be ‘created’ and ‘issued’ by governments rather than a profit oriented industry. This is the only way our elected governments will be able to pay for the general welfare needs of society, people and planet.

   Reply

   1. Hello again Howard, you said:

      “Also while government ‘creates’ the paper currency it does not ‘issue’ it. Instead it is sold to banks for the cost of production and they ‘issue’ it at face value as money, reaping the difference between face value and cost of production.”

      Joe: Here “banks” is a vague term that cries out for more specificity. The banks that issue the currency and “reap the profit” are the 12 regional Federal Reserve banks, not the thousands of banks that constitute most of the banking system. Also, 94% of the profits made by the regional Federal Reserves are remitted to the Treasury each year, and only 6% are retained by the regional banks to cover expenses and support the Board of Governors of the Fed system. Further, none of that 6 % is distributed to the banks owning stock in the Fed regional banks. So, the statement that the banks reap the difference between the face value of currency and the cost of producing it can easily be interpreted by people as meaning that the banks profit from this difference in an untoward way, while the truth is that this arrangement gives 12 Fed banks the gross profit to allow them to operate and no net profit at all.

      Howard continues:

      “Government does ‘create’ the coins and ‘issue’ them, which means government gets the profit or what is known as “seigniorage.” Our current platform plank proposes that all money be ‘created’ and ‘issued’ by governments rather than a profit oriented industry. This is the only way our elected governments will be able to pay for the general welfare needs of society, people and planet.”

      Joe: Our new monetary reform plank proposes that the Fed regional banks be nationalized and placed within the Treasury Department to remove the influence that Wall Street now has over these banks. It also proposes that commercial banks be broken up, and a network of small community banks and Federal postal banks be set up to handle banking needs. These banks would all be able to create deposits against borrower notes, based on the creditworthiness of borrowers.

      The Federal postal banks would be non-profit banks. The community banks would make profits but would be prohibited from engaging in investment banking or financial speculation. The remaining relatively small commercial banks would also be restricted only to commercial loan activity and their profits would be regulated by the nationalized Fed, now accountable to the President. The Fed would remain the Treasury’s banking agent and would create and issue net new money when Treasury called for it to spend its Congressionally appropriated deficits into the economy.

      So, my question is why would these arrangements not be sufficient to ensure that “our elected governments will be able to pay for the general welfare needs of society, people and planet?” Why is government issuance of all money by a centralized monetary authority “the only way” to ensure our needs are met?

      Reply

6. from Joe Bongiovanni , Director The Kettle Pond Institute, recent Green Party Member in Virginia

   The Green Party US Economic Platform, with its Greening The Dollar foundation, is the most progressive political posture out in political space, including that of Sen Bernie Sanders, I-VT . With the existing Greening the Dollar Plank in its Platform, surely the GP is the only body politic with an honest, fact-and-science-based answer to the question – ‘how are we going to pay for it?’ That answer is by actually re-acquiring the money power that the Constitution grants to ‘we the people’, a sovereign power gained by our revolutionary forefathers in their struggle against the private money powers of the British monarchs and their bankers.

   Benjamin Franklin declared the primary cause for the Revolution to be the denial by the British of the use of the public-money currencies of the Colonies to pay duties demanded by the King. It is a power won in our military victory over the British – but shortly undone by Alexander Hamilton in assuming management of the new American purse.

   The Second American Monetary Revolution – to re-assert that public money power to where it belongs – by taking it back from the One Percent, and giving it to The Restofus – is at hand . This time around, no weapons are needed, not even those pitchforks of Shay’s Rebellion. Merely, a pen.

   I want to thank the GP for the opportunity to comment on and to advise upon the various amendment proposals by our Green kinfolk from the great state of Nebraska, where I gained a Management Schools certificate on the Cooperative Business Model back in ’92, and from where my appreciation for the great work of progressive Republican Senator George Norris, and of Populist Governor Willaim V. Allen, was also gained, oftentimes from the live portrayals of Norris’ fiery speeches by S/Sen Dave Landis. Where are they when we need them?

   That is all by way of background to my Background comment here. It is my intention to delve deeply into the details of the flawed proposals to amend ( to gut) a perfectly sound, viable and vital plank in the GPUS Platform. I thank the Nebraska contingent for the opportunity to engage these many ideas that actually call for maintaining the private creation and issuance of the nation’s money. Their defense for that indefensible posture is an empty, theoretical claim, advanced by adherents to the mythical Modern Monetary Theory(MMT) , that today , now, we already have the power of government money-issuance, when nothing in modern political economics can be further from the truth. Why does Gov. Borrow ?
   https://www.youtube.com/watch?v=2HRt6sSXpOQ

   We look forward to engaging on that specific point. But first, on the evolution of monetary reform in this country – a factual, accepted, historic, scientific and legal “background” to our cause.
   1. Background
   The History and Science of Money are behind the GPUS Platform – ‘Taint broke.

   The work and struggle of Dee Brown and Ben Kjelshus to gain the Green Party Platform’s Greening the Dollar perspective(1) was well-informed by a full hundred years of popular political struggle to transform our money system from the present one of private gain to one operating exclusively for the public purpose.

   That ‘Greening the Dollar’ perspective was further informed through major works by renowned scientists and authors on the subject of a reformed understanding of money itself. This understanding explains how our private money system has advanced to this point – through the abdication by our Congress of our Constitutional right of public money creation.

   The writings of historian, author and national-statistician Alexander Del Mar on ‘The History of Monetary Systems’ (2) should be sought. The later reform proposals of progressive ‘Chicago School’ economists to FDR back in 1933 represented their advanced thinking for achieving social progress by restoring economically-critical money creation powers to the government, again aimed at ending the private privilege to create financial wealth by using the people’s money.
   Their Chicago Plan for Monetary Reform (3) specifically included each of the three legs of our exisitng GPUS Platform – being planned for gutting by the proposed amendments; point being that ‘reform to money’ is not a new idea, nor should it be historically controvertible. The writings of Nobelist in physics and early ecological-economist Dr. Frederick Soddy on both ‘money’ (4) and on its potential ‘wealth-distribution role’ in sustaining an ecologically-based economy (5) are not only behind the policy proposals of the above authors, but also the later works of Dr. Irving Fisher, the Dean of Political-Economists of the last century (6), on monetary reform.
   This science and history also provides the basis for the more recent works of modern progressives including author Stephen Zarlenga of the American Monetary Institute and Congressman Dennis Kucinich in drafting a new legal foundation (7) for implementing these scientific ideas.
   Science, history and the law are all on our side.
   Toward Greater Monetary Understandings
   __________
   (1) https://www.youtube.com/watch?v=9E6QFqkR5AQ
   (2) https://archive.org/stream/historyofmonetar00delmrich/historyofmonetar00delmrich_djvu.txt
   (3) https://www.amazon.com/Chicago-Plan-Deal-Banking-Reform/dp/1563244705#reader_1563244705 (Read Dr. Hyman Minsky’s Foreword)
   (4) https://archive.org/stream/roleofmoney032861mbp/roleofmoney032861mbp_djvu.txt
   (5) https://archive.org/stream/cartesianeconomi00sodd/cartesianeconomi00sodd_djvu.txt
   (6) http://faculty.chicagobooth.edu/amir.sufi/research/monetaryreform_1939.pdf
   (7) https://www.congress.gov/bill/112th-congress/house-bill/2990/text

   If anyone cares to write, to challenge or agree with anything I have written here, yet prefers to not do so on the Green Party list serve , I will gladly provide my email address.

   Thanks.
   _________________________

   Reply

   1. Hi Joe B.
      You said:
      “The Green Party US Economic Platform, with its Greening The Dollar foundation, is the most progressive political posture out in political space, including that of Sen Bernie Sanders, I-VT . With the existing Greening the Dollar Plank in its Platform, surely the GP is the only body politic with an honest, fact-and-science-based answer to the question – ‘how are we going to pay for it?’ That answer is by actually re-acquiring the money power that the Constitution grants to ‘we the people’, a sovereign power gained by our revolutionary forefathers in their struggle against the private money powers of the British monarchs and their bankers.”

      Joe F: Congress never gave away “the money power” granted to it in Article I, Section Eight of the Constitution. I think I can easily prove this. Here is some boilerplate language any Congress can include in all the Appropriations and Continuing Resolution bills it passes:

      Upon passage of this appropriations bill, the Federal Reserve is directed to fill the Treasury’s spending account at the New York Federal Reserve with the addition to its Reserve Balance necessary to spend this appropriation. In addition, the Federal Reserve is directed to fill the Treasury spending account with the additions to the Treasury Reserve balances necessary to repay all outstanding debt instruments including principal and interest as they fall due for the fiscal year of this appropriation.

      This language, providing for what I call Overt Congressional Financing (OCF) plainly answers the question: “How will you pay for it?” by saying: “We’ll just order the New York Federal Reserve to create the necessary money in the Treasury spending account!” It also provides for re-paying the outstanding federal interest-bearing debt instruments as they fall due over a 30 year period, provided the boilerplate language is always used. There is no legal barrier stopping Congress from using this language tomorrow, which shows that Congress still retains “the money power.”

      Joe B. says further:

      “The Second American Monetary Revolution – to re-assert that public money power to where it belongs – by taking it back from the One Percent, and giving it to The Restofus – is at hand. This time around, no weapons are needed, not even those pitchforks of Shay’s Rebellion. Merely, a pen.”

      Joe F: I think there’s an ambiguity in the language of this debate, which I’d like to now try to clarify. There is well-known distinction between the authority to create and issue money and the influence and/or power to create it. Above, I said “the money power” was never lost to Congress, but I think we will get further in this discussion if I now say that the authority to create and issue money is retained by the Congress, while it has also been delegated partly to the Federal Reserve banks, partly to the Treasury, and partly to private banks who create money (but not net financial assets) in concluding loan transactions with people and companies.

      So, if we can agree that the above is a fair description, while tabling the dispute about whether the Federal Reserve banks are private or public, I think we can move on to the questions of “the money power.” I think there is no question that while the Congress still retains the money authority it has under the Constitution that “the money influence” or “the money power” is an entirely different matter.

      Private influences over the creation and influence of money are very real and very great. Wall Street has had undue influence over monetary and fiscal policy for most of the history of the US, and it has had great influence over these since the creation of the Federal Reserve in 1913.

      Whether Wall Street and other private interests had “the money power” in the sense of actual control of the money since 1913 is arguable, since the word “power” implies full control. Certainly Wall Street had more control from 1913 – 1933 than it had from then until the Treasury-Fed accord in 1950. After 1950, I think there were conflicts over monetary policy reflecting the views of Wall Street and implemented by the Fed, and fiscal policy, implemented largely by Democratic Congresses until the late 1970s.

      At that point, President Carter appointed Paul Volcker, and the Fed using monetary policy and channeling Wall Street’s interests, exerted both through the Fed and through the Republican Party, and, increasingly during the 1980s, through the growing Wall Street wing of the Democratic Party, as well, became the dominant factor in restricting the creation of new net financial assets by the Government through fiscal policy. Today we look back on the period from 1980 on and we see not only the rise of neoliberalism to dominance, but also the development of the extremes of inequality we see today, and the heavy role played by the Fed in facilitating these outcomes. So, it is not unreasonable to conclude, and there may be broad agreement among us on this, that today “heavy money influence” if not “the money power”, resides in the hands of Wall Street and special interests, rather than in the hands of the representatives of the people through Congress.

      Also, I suspect we agree that the people through their Congress must take control of this “money power” if we are to create democracy in the United States. In short, we agree that we must take back “the money power” from the 1% and use it in the service of the 99%. So, I think we ought to look at our contending proposals in that light.

      We believe that our proposed nationalizing of the Fed regional banks and placing both they and the Board of Governors under the Treasury Department indirectly accountable to the President will partly take care of the problem of the power Wall Street has over creating and issuing the money of the United States. In addition, part of the problem can also be solved by breaking up the huge commercial banks and creating a network of small community banks, credit unions, public banks, and much smaller commercial banks that cannot exceed a certain size.

      Wall Street and private interests, it is true, would, theoretically, still be able to exert influence and power through the hold they can have on Congress, the presidency, and the Supreme Court if we pass the new monetary reform NGP proposals. But the key point is that neither your proposals nor ours will pass until progressives have enough control of Congress and the presidency to pass them anyway, and also sufficient power to tame the Supreme Court, if that becomes necessary by using either court packing or the exceptions clause of Article Three, Section Two, which by the way, when coupled with new campaign finance legislation will prevent Wall Street from regaining control of Congress.

      So, to conclude, our reform proposals, coupled with the political victories that will make them possible, can break the money power for good, even if we leave relatively small commercial banks and small community banks as part of the profit making sector, while creating a new social value banking sector including postal banks, many more credit unions, State and local public banks, and the 12 regional banks, now truly federal and public. But, even if you agree with this, you may ask, why leave any part of the banking system private? Why not just replace all commercial private banks and local community banks?

      After all, why should private money make any profit at all, when its banking activities are guaranteed to be profitable by a Federal Reserve that is charged with the task of removing all risk from banking so that it can be a completely stable and boring activity? Truthfully, I think the only reasons not to nationalize the whole banking system are political, and some MMT writers do prefer a system of public banks alone.

      But, I think it is easier in the US to advocate for and legislate a banking system, that has both private and public elements than it is to pass an act that provides for completely public banking. I suspect that that his thought also lurks behind the “Greening the Dollar” proposal and that is why AMI never proposed nationalization of the whole system.

      In addition, I think that it will also be easier to maintain some degree of decentralization of our banking authority, which I think is desirable, if we have a system with diverse elements where local authorities are not subject to full control from the center. That is why we advocate the system we do, rather than the system of private banks, whose money creation capabilities are very tightly controlled, that is envisioned by the “Greening the Dollar” proposal.

      Joe B continues:

      “It is my intention to delve deeply into the details of the flawed proposals to amend ( to gut) a perfectly sound, viable and vital plank in the GPUS Platform. I thank the Nebraska contingent for the opportunity to engage these many ideas that actually call for maintaining the private creation and issuance of the nation’s money. Their defense for that indefensible posture is an empty, theoretical claim, advanced by adherents to the mythical Modern Monetary Theory(MMT), that today , now, we already have the power of government money-issuance, when nothing in modern political economics can be further from the truth. Why does Gov. Borrow? https://www.youtube.com/watch?v=2HRt6sSXpOQ “

      Joe F: I think I’ve already addressed this with my distinction between authority and influence/power. I think the MMT writers, and certainly myself are saying that the authority to issue money still belongs to the Congress even though it has delegated part of its authority to the Fed and the Treasury.

      The Congress can take back the power to control the creation and issuance of money any time in cares to. I have already illustrated this with my example of the language that can be used in legislation to implement OCF. But, in addition, it is obvious that the current monetary reform proposal, assuming as it does Congressional passage of a bill, also envisions Congress using its existing authority under Article I, Section Eight, to end “the money power” of the private banks. So, I don’t think MMT writers differ from “Greening the Dollar” proponents when it comes to assuming that Congress can end the money power of Wall Street by using its authority under Article I, Section Eight.

      Joe B: “We look forward to engaging on that specific point. But first, on the evolution of monetary reform in this country – a factual, accepted, historic, scientific and legal “background” to our cause.

      1. Background

      The History and Science of Money are behind the GPUS Platform – ‘Taint broke.
      The work and struggle of Dee Brown and Ben Kjelshus to gain the Green Party Platform’s Greening the Dollar perspective(1) was well-informed by a full hundred years of popular political struggle to transform our money system from the present one of private gain to one operating exclusively for the public purpose.

      That ‘Greening the Dollar’ perspective was further informed through major works by renowned scientists and authors on the subject of a reformed understanding of money itself. This understanding explains how our private money system has advanced to this point – through the abdication by our Congress of our Constitutional right of public money creation.
      The writings of historian, author and national-statistician Alexander Del Mar on ‘The History of Monetary Systems’ (2) should be sought. The later reform proposals of progressive ‘Chicago School’ economists to FDR back in 1933 represented their advanced thinking for achieving social progress by restoring economically-critical money creation powers to the government, again aimed at ending the private privilege to create financial wealth by using the people’s money.

      Their Chicago Plan for Monetary Reform (3) specifically included each of the three legs of our exisitng GPUS Platform – being planned for gutting by the proposed amendments; point being that ‘reform to money’ is not a new idea, nor should it be historically controvertible. The writings of Nobelist in physics and early ecological-economist Dr. Frederick Soddy on both ‘money’ (4) and on its potential ‘wealth-distribution role’ in sustaining an ecologically-based economy (5) are not only behind the policy proposals of the above authors, but also the later works of Dr. Irving Fisher, the Dean of Political-Economists of the last century (6), on monetary reform.

      This science and history also provides the basis for the more recent works of modern progressives including author Stephen Zarlenga of the American Monetary Institute and Congressman Dennis Kucinich in drafting a new legal foundation (7) for implementing these scientific ideas.

      Science, history and the law are all on our side.
      Toward Greater Monetary Understandings”

      Joe F: I find this last section to be mainly rhetoric. Specifically, what is more “scientific” about the writings on money of Soddy, Fisher, and Zarlenga, compared to the writings of MMT-friendly economists such as Keynes, Lerner, Minsky, Mosler, Wray, Mitchell, Kelton, Tcherneva, Fullwiler, Tymoigne and others. Is there a greater emphasis on fact? Is there a lesser emphasis on falsification? Is there a greater use of models accompanied by empirical testing? Really I am at a loss to understand what makes the work of the AMI supportive economists more scientific than the MMT writers? Perhaps you can explain that to me.

      Reply

7. From – Joe Bongiovanni
   Response Two

   After a paragraph admitting that the Fed – the (private) federal reserve banking system(FRBS) – was incapable of achieving our economic policy objectives for many reasons ……. we are presented with the following :

   “”Our Government retains its sole ability to create high-powered government money (government reserves, currency, and coins) and to spend this money into circulation through fiscal policy directed toward major federal programs addressing our mounting volume of societal, energy, environmental, and climate change problems, strengthening and growing community banks, state banks and interest-free loans, and local and state government entities to be used for infrastructure, health, education, and the arts.””

   Whoa ! A high-powered-government-money …….. retention of its ability ……..

   What you have there is whole plateful of truly great, progressive fiscal policy stuff that could indeed be achieved – this is why we like MMT – but these great policy objective are supported by a non-existent construct of the nature of the money power today – which power lies exclusively with private bankers; coins excepted(c.e.).

   In order to achieve that policy goal, we are presented with the following –
   “”Our Government retains its sole ability to create high-powered government money (government reserves, currency, and coins) and to spend this money into circulation through fiscal policy…””

   None of that is true. Again, except the coins.
   The government retains its sole ability (right) to issue coins…… into circulation, and to gain for the people by that issuance. Let’s hear it for the good guys ! (CJM)

   The government does not issue currency notes (paper bills) into circulation, that is done by the private federal reserve banks. It’s their job under the Acts. Currency Notes arrive at the federal reserve banking system for the cost of printing – being all the proof that is needed that they are not placed into circulation by the government printer.

   When they are placed into circulation, a $1 Bill costs One Dollar, and a $100 Bill costs One Hundred Dollars – being the amount of ‘reserves’ drained from the bank-of-issue’s account at the Fed.
   https://www.treasury.gov/about/education/Pages/distribution.aspx
   https://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

   That leaves those beleaguered ‘government reserves’ as the surviving high-powered money that our government might use ‘to spend this money into circulation’ through fiscal policy for all those goodies. When it comes to the money-system’s actual operations, that would be a ‘fool’s errand ‘

   There’s more than one problem with that particular WAN about ‘high-powered reserves’.
   The first is this : federal ‘reserve’ banking system “reserves” never leave the inter-bank system. They can not ever be spent – by anyone – on any of the things on the progressive wish-list ……. or anything, ever, in the budget. If we can’t spend them on stuff, what is the point of issuing them? How are ‘government reserves’ considered a form of ‘high-powered money’ ?

   But ‘not in circulation’ is not the biggest problem for the role of FRBS ‘government reserves’ in achieving the government’s fiscal policy objectives. It is rather that, like our currency notes, ‘reserves’ are not issued by the government. There is no such thing as government reserves. They are issued by the ‘central bank’. Period.

   Again, none of that is true.

   So, what we’re left with in this part of the amendment proposal is an immoral, and unworkable, social construct of private wealth and privilege gained from the private bankers renting us the people’s own money – the federal reserve banking system . The Green Party Platform, with its Greening the Dollar plank of today, proposes to change all of that, in order to actually be able to do all of those great things.
   Steady on the helm.

   Reply

   1. Joe, I’ve just finished a 2200 word reply to your first post. So, I’ll leave the second one for the next few days. For now, I’ll say that the term “ability” above refers to the continued existence of the “authority” of Congress which I think I’v established in my first reply.

      Also, implicit in your reply just above is the assumption that the Treasury Department or at least the Executive Branch is the Government. However, you know very well that when we say the “Government,” we include the Congress and the Federal Reserve (Board of Governors and Regional Banks) as well. So, our claims of authority have to be viewed in that context.

      Reply

8. Now I’m wondering whether the privilege of issuing coins remains with the government because the cost of production exceeds their value. I bet it does.

   Reply

   1. Right Joanna, kind of like how the post office is treated.

      Reply

   2. Whether the cost of production exceeds their value depends on the face value of the coin. Since the Secretary of the Treasury can can order the mint to create a coin whose face value is decided upon by the Secretary, the Treasury can create coins on which it earns seigniorage at her/his discretion.

      Reply

9. Neither banks nor present-day government create “net financial assets.”

   Bank credit creation has no effect on any net financial position (Assets minus Liabilities). The bank records a new asset (called a “loan”) and a new liability (called a “deposit”) of equal size. The customer receives a new asset (called a “deposit”) and a new liability (called a “loan” or “debt”) of equal size.

   Abstracting from a mass of detail,
   Government deficit finance via Treasury bonds/notes/bills operates the same. Matching asset and liability are created by a bank as above. Matching deposit and debt are received by government. Whoever ends up owning the security also paid for it somehow. I see no net asset creation in all this.

   The US Notes (aka “greenbacks”) issued during the Civil War *did* change the government’s net position. They were created by US Treasury as a spendable asset, increasing the government’s net of Assets minus Liabilities.

   Reply

   1. Thank you Allen, you are right. So would you say, we want government to create ‘net financial assets’ and propose changing the laws to allow it as well as demanding better representation?

      Reply

      1. Yes.

         It is allowed by the US Constitution for government to create money as new Asset and Equity rather than new asset and liability. Article I Section 8, clause 5 still gives Congress the power to issue new money and control its value (i.e. its quantity).

         Meanwhile the banking industry has since Hamilton gotten government to underwrite their risk. Bank credit thus passes 1 for 1 as money due to consumer acceptance (aided by lack of alternatives, and government guarantee).

         The money issuing power has thereby been ceded to the privately-owned banks . . . which are, if you think about it, government-sponsored enterprises.

         I would favor removing that sponsorship, and greening the dollar as stated in the existing Green Party platform.

         Reply

         1. Just to clarify that last sentence above:

            I’m in favor of greening the dollar, as called for in the current GP platform.

            Reply

   2. When the Government deficit spends today it also sells securities in corresponding amounts. The Government’s deficit spending adds reserves to the private sector. The bond sale destroys reserves in the private sector, but it also leaves the securities in the private sector. So, the net financial assets created in the private sector are the securities.

      Reply

      1. “When the Government deficit spends today it also sells securities in corresponding amounts.” Indeed! This means that when an appropriation is made by Congress to spend, the Treasury “sells securities” or more prominently “bonds”, of the same amount, which is just another way of saying the Government borrows the money from the banks in order to spend.

         The spending can’t happen until there is the money to spend and that comes into existence from banks creating it ex nihilo in order to buy the bonds, or “debt securities,” that the government creates ex nihilo to “sell.” As Tom Edison pointed out, if Gov can create the bond they can create the money …so why don’t they? Because that would give the government power over public policy and the private financial industry headed by the private and wealthy interests behind the big banks of the Fed want to retain that power. So, government borrows when it spends and banks create the money for them to do it and we the peeps pay the interest on the debt. A debt obviously impossible to pay off in such a system.

         Greening of the Dollar gives the money power over public policy to government where it should rightly be and takes it away from the private interests driving our world towards oblivion. These wealthy interests have over time gained power over the populations through the social management system of schools, media, (psychological manipulation) and police/military etc. to protect and project their fraudulent scam. The Green Party seeks to reverse that and make sure the wheel is in responsible hands to steer us towards sustainable prosperity. That is our political project that MMT clearly seeks to derail through “confusury;” economic double-speak in defense of usury; the issuance of money for personal gain instead of public purpose.

         Greens can ignore all the nonsense about “reserves” (confusury) which are part of the convoluted system to hide and manipulate our economic reality. Greening of the Dollar makes the system transparent and free from manipulation by the dominant economic interests.

         Reply

10. The Nebraska proposal essentially retains the status quo, attempting to rely heavily on massive and unmanageable regulation to shore up a fundamentally and fatally flawed system. Contrary to their claim, the regulators have been hard at work, but have failed. They’ve failed because the system is inherently unworkable.

    See if you can find anything in the proposed revision that prevents banks from lending mainly to the most creditworthy borrowers. You won’t. And who are these creditworthy borrowers? Those with high wealth and income as anyone who has applied for a mortgage knows all too well. This is a fundamental driver of the wealth and income equality we have today.

    See if you can find any understandable description of the claim that the government creates the money it spends (other than coins). You won’t, because that is not how the system works. It is no secret that money is created based upon market demand, through commercial bank loans, NOT through societal needs and demands. This bank-lent money is the source of all tax revenue and money lent to the government to spend.

    Ask the Nebraska delegation – why do they fear the democratization of money?

    As previous commenters have pointed out, the concept of sovereign people’s money is not new, not some pie-in-the-sky concept. Among esteemed economists who have made it their live’s work to study the nature of money (very few, by the way), the concept of money as a public utility to serve the needs of society is the only function it should play – not as toys for the affluent. The Nebraska proposal has been tried and failed. The Greening of the dollar has been tried (Greenbacks of the mid-1800’s) and succeeded marvelously until quashed by the financial interests. Ask the Nebraska delegation, whose side are they on.

    Reply

11. Hi, I’m Sue Peters and I’ve been a Green Party member for over ten years. In 2010, I heard Missouri Greens Dee Berry and Ben Kjelsus speak about our current ‘Greening the Dollar’ monetary reform plank at the annual meeting of the American Monetary Institute (AMI): https://www.youtube.com/watch?v=9E6QFqkR5AQ
    I’ve been studying monetary reform since then. The most important thing I’ve learned by my studies is that a nation’s money creation must be 100% under public control. If you give private banks even 1% of this power, over time, they will buy back the entire country. Over time, private banks will remove any regulation, corrupt our representatives, and change the laws to their advantage, just like today.
    I have also learned, from studying the history of money, that our country’s public issuance of money has been excellent. Our Civil War Greenbacks were not over-issued. What you see around you today – huge public and private debts, wealth inequality, inflation, depressions – are caused by the private banks’ control of our monetary system.
    In 2015 NY Green Howie Hawkins was the keynote speaker at the AMI annual meeting. The audience was composed of 40% Green Party members. We asked Howie what we Greens needed to do next. He said, “Create a website to teach Greens about our monetary reform ‘Greening the Dollar’ and keep it simple.” Immediately, a group of Greens began work on the website, and since then, over the last 3 years, have had fun and friendship creating a simple but complete explanation of the current monetary reform plank: http://greensformonetaryreform.org
    Please review the website, to understand why the current ‘Greening the Dollar’ platform should not be changed and how our current private monetary system works. If you like history, look at the “HISTORY” tab and then the “class materials” link. You can listen to recordings and look at powerpoint slides of a class for the book LOST SCIENCE OF MONEY, by Stephen Zarlenga, past Director of the AMI. As Stephen always said, “Over time whoever controls the money system controls the society” and “The Story of money is the story of power.”

    Reply

12. I am Will Decker. I am a working member of the group that created greensformonetaryreform.org and is continuing to update it.

    The proposals being made by MMT keep the “Money Power” in the hands of the same bankers that have created the world we live in, the world we do not like and know is a disaster. It sure isn’t the world The Green Party envisions for us all.

    Bankers create money the instant they make a loan. They loan to their friends/the people who like what they like: Cars and Houses and Weapons. MMT keeps that money stream going.

    Oh yes the promise us benefits like medicare for all and free education and infrastructure. Their proposal is what Hitler used to create their war making ability while throwing bones to the people like full employment, medical care, autobahns with the promise of Volkswagen Beetles that he never delivered to them. What they got was a whole generation of young men dead. MMT is that same road.

    The Green Party of the United States is the only political party with a plan to get us off that road. It is called “Greening The Dollar”. Do not allow it to be killed by MMT.
    Love,
    Will

    Reply

13. This is a complicated issue.

    I’ve seen three positions. One is the conventional wisdom (CW). The second is the current Green position (AMI). The third is Modern Monetary Theory (MMT).

    I have looked in some detail at AMI and MMT. These theories start from fundamentally different axioms. Like one of them claims that the source of money is the federal government doing deficit spending, while the other claims the source is banks lending with fractional reserves.

    I claim without proof that both theories give the same implications about how the system actually works. Both have the same implications about what reforms we ought to make. Despite their theoretical differences, they give the same results.

    But many MMT enthusiasts promote different reforms. I don’t think those reforms follow from MMT theory, but they believe so. This proposal is a giant change in policy, in what we say ought to be done and what the Green Party would do if we could.

    So it deserves very careful study. I believe that study has not been done yet, and we should spend at least another year discussing it.

    I am not sure the new ideas are wrong. But they are a radical change for us.

    Reply

14. As a start toward discussion, here is one thing that the new proposal changes.

    Background:

    There is a concept that there is a volume of money — at any given moment every dollar belongs to somebody, and the sum of all the dollars that anybody owns is the amount of money in the system.

    And those dollars change hands. The rate that they change hands — the number of dollars that change owners in a day, or a quarter, or a year — is the flow rate of the money, the money velocity.

    These concepts turn more than a little vague in practice. They traditionally were hard to measure, and when you get into detail it all gets murky. But the fundamental idea is useful.

    Traditionally people said that the money changed hands on average about 4 times a year, and nowadays it’s probably somewhere between 4 and 8 times a year on average. Depending on how you count. It’s only a vague rule-of-thumb.

    What we care about for velocity-of-money is actual meaningful transactions. If a computer program trades a stock back and forth ten thousand times a second because its owner hopes to get a fraction of a penny profit, that doesn’t matter so much. One way to figure it is with GDP. The money may change hands much more, but this is how many times somebody actually gets what they want. GDP is maybe somewhere around 6 times the amount of money.

    The amount of money in circulation does change. AMI says it changes this way: Banks make new loans. When they lend money they credit somebody’s account, and now there is more money. Virtual money. The debtor now owns money that didn’t exist before. The bank owns a debt so the books balance. Later the debtor pays back the money, and that money disappears. When the total amount of loaned money goes up, the money supply increases. When it goes down, there is less money.

    MMT says the money supply changes like this: When the government spends money but does not collect the same amount of taxes, then there is more money. Money appears out of nowhere when the government spends it, and disappears when the government collects taxes.

    AMI says that money that the banks could lend out but don’t, does not exist. MMT says that money which the government has not printed and spent yet, does not exist. They disagree philosophically about the meaning. They agree about what happens. The government sells bonds — that is it borrows money at interest. People who have money — including banks — buy the bonds and lend money to the government. Meanwhile the government spends money. Whoever gets the money spends it and if you could track each dollar, it would eventually end up either taxed by the federal government, or used to pay off a bank debt.

    The money to pay for government bonds was all lent by banks, usually to somebody who spent it because why borrow money at a higher rate and lend it to the government at a lower rate?

    All of the nation’s savings is money that is not being spent, that somebody else owes. For Americans to have savings somebody must go into debt. That somebody is the US government, which must keep borrowing so that there can be net savings for somebody else.

    It’s a cycle. AMI and MMT posit different starting points for the cycle. I say it doesn’t matter where you say the cycle starts.

    Reply

15. Why does all this money manipulation matter?

    Ideally you’d like to know that the same money that buys a loaf of bread today will buy a loaf of bread 40 years from now. If you could depend on that, you would easily know how well your savings will support you in your old age.

    When on average things get more expensive, we say there’s inflation. When on average they get less expensive, we say there’s deflation.

    Unexpected inflation or deflation makes it very hard to plan. You put aside money for necessary future expenses, and you don’t know how much you’ll need. If you make a product and sell it, you can’t predict what prices you will need to set. Etc.

    Expected inflation or deflation is still bad. If you have $1 million and you are thinking about investing it, and you know that next year it will buy $50,000 more than it buys now, you might have some temptation to just spend $50,000 and do nothing with your money. You cannot lose that way. You might be tempted to invest in Donald Trump commemorative moose antler hats, and that might make a lot more than $50,000. Or you could lose your whole investment. If people don’t invest because they have a guaranteed profit by not investing, there won’t be as many jobs. More people will be unable to buy. Prices will fall, deflation will increase, and the temptation for investors to avoid risk will get bigger.

    If there’s inflation, then people don’t want to hold onto money. They do better to spend it, or to invest it. If there are no good investment opportunities then it might make sense to buy collectibles that might hold their value better than the money will. Like for example Trump commemorative moose antler hats. When there’s a lot of inflation then it makes sense to buy something tangible quick almost no matter what it is, because almost anything will be a better barter item than money.

    The common wisdom is that a little bit of inflation is just fine, it helps grease the wheels of the economy. But it shouldn’t be too much or too unpredictable.

    And so a good system will control the rate of inflation by controlling the money supply. When there’s a little deflation, create a little extra money. when there’s a little too much inflation, remove some money. This is not easy to do because in reality the concept is vague and hard to measure well. How fast is the money velocity changing? How fast is GDP growing? You find out later, long after you needed to make the changes. The Fed can reduce the money supply by raising the interest rates (or by otherwise keeping the banks from lending as much). But they can’t always increase the money supply because if they reduce interest rates or make sure banks have plenty of money to lend, the economy might be in a state where nobody is stupid enough to borrow more money, or bankers may not find anybody they’d trust with it. Congress can increase the money supply by spending more and taxing less. You can’t make private debtors borrow more, but the government can always borrow more. But it’s hard for Congress to back away from that later, and raise taxes while reducing spending.

    This is why it’s important. the government (plus the Fed) can make the economy go faster or slower by fiddling with money. They can create jobs (and maybe wealth), or they can create unemployment and misery. They can easily get results by accident. The US economy almost always does better in even-numbered years, and does best in presidential election years. This may be a coincidence, or maybe incumbents of various sorts can arrange for the economy to do temporarily better by manipulating one thing or another. It isn’t an exact science and sometimes they get it a little bit wrong. A president wants the months leading up to the next election to be good for voters, but somehow the timing is a bit off and it’s bad before the election and then good after the challenger wins. Ouch. It’s kind of plausible that GWB wanted the giant banking crisis to show up after Obama was elected, or anyway after the election, and he was off by 5 months or so.

    It matters. But little swings that the government can make don’t matter much. If the government can actually create prosperity instead of shift it forward or back a few months, that would matter A LOT. Both AMI and MMT suggest that government can do that. That a Green government could create a whole lot of wealth and prosperity, just by doing competent government and competent economics. They only disagree about the details of how to do it.

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16. Is it immoral to be a banker?

    Here’s what bankers do. Each bank runs a database. They keep track of how much money their customers have.

    If you want money, they can lend it to you if they choose to. When they lend you money, they add money to your account in the database. It is created out of nothing.

    The Federal Reserve (and sometimes others) can check how much money they have lent. If the Fed decides they are being irresponsible about it, the Fed can take their bank away from them and give it to somebody else who will run it more responsibly. So they can’t just create however much money they want. They have to be responsible. In the old days, the generally accepted rule was that if a bank had $1 in real money, they could not lend more than $4 more to make a total of $5. Nowadays, the rules are very complicated and basicly they are whatever the Fed chooses to enforce.

    If you print a $1 bill yourself and lend it to somebody, you are a counterfeiter. If you get caught you will be arrested and jailed. If a banker does it, he is a banker, not a counterfeiter. He has a license.

    Suppose the average bank loan is at 12% per year. And suppose that the amount of money is 1/6 of GDP. Then 12/6… the banks collect about 2 percent of GDP every year, for creating the money supply and deciding who to lend it to. (But hey, if the credit card companies charge companies 2% to accept credit cards, they’re taking another slice of every transaction that isn’t paid by cash or check.) That isn’t a whole lot, really. Except their share keeps going up unless they spend it. And they didn’t *earn* that money, right? They created it out of nothing by just punching new numbers into their database.

    They don’t really make that much because sometimes people don’t in fact pay back their loans. If you don’t pay back your loan the bank can take your collateral, which is not worth nearly as much as the money they gave you. Bankers typically sell it cheap. If your collateral is a gold mine, bankers won’t know how to make it profitable any more than you did. But somebody who has connections might get a really good deal. It’s hard to be sure just how much bankers are taking over the world, and how much they are barely scraping by. There are various clues. But remember that just as rich people care more about beating each other than they care about driving you into poverty, bankers care more about beating the other banks than they care about owning the rest of the economy – after their banking competition is gone it’s no big deal to get control of everything else.

    Why should bankers have a license to steal? One argument that they should, is that they are responsible professionals who do what works best to keep the economy on an even keel, and they deserve to be paid well for their professional expertise. This argument looked ridiculous in 2008, but still it isn’t obvious which amateurs should replace them.

    Or maybe we should get rid of the whole thing. Don’t let bankers have money for nothing that they lend at interest. If anybody gets money for nothing maybe it should be the government. Or maybe split it up equally among all the voters.

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17. Here’s what MMT enthusiasts say we need to do, and why they say it will work.

    They say the government should take over the Fed and use it to control the banks. The government should then spend all the money that it takes to finance the Green New Deal, and not collect extra taxes. Without the Fed raising interest rates etc to slow the economy down, the economy will run faster and better, and everything will be peachy-creamy.

    Lots of people think that the government needs to collect a dollar in taxes for every dollar it spends. This is simple book-keeping. If you spend more than you collect, you go in debt. People will think you are a debtor and they will refuse to lend you more money, and you will be in trouble. You need the books to balance.

    But MMT says this is not so for government. After all, the government is the debtor of last resort. If nobody else will borrow enough money to keep the economy running, we depend on government to do that. Times that the government did not increase the debt have generally been very bad times. People praise Bill Clinton for having one year with no deficit, but doing that probably caused the first Reagan Recession. The government doesn’t collect taxes to pay for its spending, which has hardly every happened for a very long time. No, the government collects taxes so there won’t be too much inflation.

    So we can spend a whole lot of money, and it will help the economy.

    At first sight this argument is right. Except you have to look at the numbers. Say that GDP increases 5%. Other things equal, we need to increase the money supply by 5%. But if money velocity is 6 GDP transactions a year, and the money supply is 1/6 of GDP, then to prevent deflation we need to increase the money supply by 5/6 of a percent of GDP. Call it 1% among friends. But federal government spending is 22% of GDP. So we need taxes to pay for 21% of GDP to prevent inflation, before we increase spending. And we can’t expect to have a whole lot more untaxed spending, unless we will accept a lot of inflation.

    Maybe MMT enthusiasts are right and the numbers are wrong. It’s possible that existing monetary policies are dragging the economy badly, and if we could just remove that drag then GDP would rise fast and long, so in a few years it would double and in a few more years it would triple. I can’t say for sure. But it isn’t the way to bet. It’s like the Laffer Curve. The Laffer Curve fits CW economics just fine. If taxes are way too high then they hurt the economy, and tax cuts will let the economy grow so fast that actual tax revenue will rise. The problem with the Laffer Curve was that it turned out taxes were not that high, and so it did not work. The MMT solution is like the Laffer Curve, except it might be right.

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18. Here is what AMI says to do, and why they say it will work.

    First, get rid of the banking system as we know it now. Banks can run their databases if they want to, but they must keep 100% reserves. No more banks as legal counterfeiters.

    Keep something like the Fed which can dole out money to banks which they can loan out at a higher interest rate. The Fed would know in detail what is going on with those banks, and it would be run by the US government, not as a private organization which is not accountable.

    Set up government-run banks. The US government bank could have a branch in each post office. The US government could have a very clear idea what is going on in the economy by keeping (sanitized) statistics about whatever trends it wants to look at. Nobody can do that very well today. Every citizen gets a “free” bank account and debit card. The debit card can be used as voter ID.

    When the US government wants to increase the money supply, they can do it simply by spending new money or by crediting the bank accounts of all voters. They have no need to borrow money. They have the official right to create money.

    Maybe states and definitely cities would have the right to create their own currency and their own banks which use that currency.

    The same MMT idea is lurking here. That the government can spend a lot of money on the Green New Deal without having to collect new taxes, because the new money will stimulate economic growth to the point that the spending pays for itself. It faces the same criticisms as the MMT version.

    Maybe we can get a lot of growth from the Green New Deal. If we can foster cheap renewable energy, that saves us a whole lot of foreign exchange and it saves us a lot of expensive fossil fuel. That could be enough to allow a lot of growth. If businesses don’t have to pay for employee healthcare, they could export cheaper. That could get us more jobs, and more consumer spending here. If government can give us cheap but effective healthcare, that’s a lot of savings that can be put to better use. If we can get away with a cheaper military without having to get into expensive wars, that helps.

    So we don’t just depend on monetary theory to pay for it. We have more strings to our bow.

    Is it wise to change the fundamental nature of the economy? Make the banks relatively unimportant? Remove the US government as the premier source of debt? Maybe. The status quo is morally wrong, whether it works or not. If we actually try out an alternative it has to work or we get booted out after all the trouble we take getting in.

    But of course if the status quo fails, and we get the task of creating a working system out of a catastrophe, then there’s good reason to do it different.

    Anyway, MMT makes similar claims starting from a different place. They have a far less radical approach to getting similar results. It’s so different we need to get real clear what we want to advocate. This is a great big change in methods though it could fit into our other plans pretty smoothly — if it works. It fits just exactly the same as AMI fits in if it works.

    It’s a great big change in the platform and we should not make that change before careful discussion.

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19. Actually Jonah, it is a very simple issue that has been intentionally complicated. As John Kenneth Galbraith famously said, “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” Well, for obvious reasons, right? As Upton Sinclair wrote, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

    AMI’s work is not based on theory, but it analyzes theory based on facts, law and history, it is monetary science on which its proposals are based. If you want to understand the current system and its solution it is helpful to read the long suppressed monetary history, compiled over 11 years of research, in Stephen Zarlenga’s extensively footnoted book, The Lost Science of Money. History has a way of putting things into perspective.

    The issue is very old and has to do with private wealth ruling public policy instead of public control of public policy. Any government that does not issue the money does not control public policy. Our government does not issue the money and isn’t that obvious?

    One must also be wary of the various efforts at obfuscation and misdirection out there, use some discernment and be aware of how money can employ propaganda techniques. One can get lost in the weeds, the details where the devil lurks to confuse. I believe in the independent investigation of truth. Here is an extensive bibliography that may help you discover. http://www.alpheus.org/bibliography-monetary-theory-and-reform/#A

    Ultimately, of course, positive change depends on We the People being able to elect a government dedicated to the public interest, thus our political project. Welcome.

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20. From Joe Bongiovanni

    Response No 4 ________
    From GPNebraska Proposal TO AMEND GPUS PLATFORM – Chapter IV – Section M – Economic Justice and Sustainability BEGINS
    Omit Section M. Preface-Paragraphs
    Omit “Greens will reduce our national debt”

    (Explanation for Omission:
    This needs to be omitted

    because posing a necessity on reducing Federal spending when we still have unemployed people and underfunded programs around the country is dangerous.

    Spending practices of a Monetary Sovereign are inherently different than those of Users of the Currency. The Federal Government is the Issuer of the Currency, and issues and spends into the economy for Public Purpose.
    END

    The Nebraska Greens propose that the reason the existing Platform – calling for a reduction in the national public debt – needs to be omitted is

    1. “” …because posing a necessity on reducing Federal spending when we still have unemployed people and underfunded programs around the country is dangerous.””

    Excuse me ? Reducing Federal spending ?

    For the record, nothing in the Greening the Dollar plank or the GPUS economic platform calls for, or expects, any reduction in federal spending. Quite the opposite. How can Nebraska Greens claim, that reducing public debt might force the reduction of future government spending, be credible ?

    Are the Nebraska Greens claiming that maintaining the existing level of national debt is ‘financially’ related to funding present or future government spending? Surely that can not be what they are claiming??

    In truth, ALL of the $21 TRILLION in existing public debt has already funded government spending in the year in which the money was borrowed, and the debt was issued.

    Is that statement in any way controvertible?

    With regard this unfounded connection between the present level of debt and future spending (“”when we still have unemployed people and underfunded programs around the country”” ), the first understanding should be this.

    It is only legally possible to issue government debt for the purpose of financing already Congressionally-authorized public spending. See Title 31, SSection 3104 of our Money Statutes.

    As a result, the only spending that the government can fund with NEW debt-issuance is what is in that year’s budget. Existing debt simply can not finance ‘future’ government spending.

    Sorry. Nebraska Greens. WE can’t spend it again – even to reduce unemployment or achieve unfunded policy goals – not even by keystroking.

    In conclusion – paying down (reducing) the level of national debt cannot possibly result in the ‘necessity on reducing Federal spending.’ That is a complete myth.

    So we may as well keep the policies in the Platform and pay the public debt off at maturity using the ‘public money power’ we are seeking in the existing ‘Greening the Dollar’ platform.

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