#5 So, what’s the solution? Implement the Greenback Renewal Act.

(Editor’s note: the implementation of the Greenback Renewal Act uses terminology that is new to describe two types of money:

Bank issued money	Government issued money (US Money)
Federal Reserve Notes (This is the paper money in your pocket right now)	US Notes
Federal Reserve Bank Credits	US Bank Deposits

The GREENBACK RENEWAL ACT

http://monetaryreform-taskforce.net

Rationale

1.     The US national debt has been growing exponentially at about 3% per year to an alarming $16 trillion with no end in sight;

2.     The interest payments on the national debt have been growing at the same rate to approximately $0.5 trillion per year;

3.     The labor force participation rate has gone from 67% in Feb 2007 to 62.8% in Nov 2014.

4.     The budget deficits have remained high for the last decade, and above $1 trillion for the last four years;

5.     Abraham Lincoln’s greenback money issues were declared constitutional by the Supreme Court and circulated successfully for over 100 years;

6.     The Central Bank of Canada successfully issued government money debt-free from its opening in March 1935 until it mistakenly switched to government funding from private banks in 1975;

7.     The Island of Guernsey has issued debt-free money for its economy successfully for almost 200 years, which circulates in parallel with British pounds;

8.     $3 billion in US Notes were authorized by the Thomas Amendment to the Agricultural Adjustment Act of 1933 but were never issued;

In order to prevent sequestration budget cuts, avoid a national debt default, to bring unemployment down rapidly, and to put the American economy on a stable path to debt free status with full employment and stable prices, the following is proposed:

Government Money Creation

1.     The US government shall resume the practice of issuing its own money, debt and interest free, as President Abraham Lincoln did to win the Civil War with paper money called “greenback” notes.  The term US Money shall be used to refer to government issued paper money, called US Notes, and their electronic equivalents, called US Bank Deposits. 

2.     Government issued money will circulate through the economy alongside of bank issued money (Federal Reserve Notes and Federal Reserve Bank Credit) and shall be legal tender for all debts, public and private. 

a.     In all matters of payment, the value of a US Note shall be equal to the value of Federal Reserve Note of the same denomination.

b.     A dollar of US Bank Deposit money (electronic) shall be the same value as a dollar of Federal Reserve Bank Credit money. 

c.      Whether in paper or electronic form, a dollar of one shall be equivalent to a dollar of the other.

3.     The backing for this money shall be the real output of the economy, and hence as a general rule, the money supply shall increase at a rate that parallels the growth in the real output of the economy, with exceptions to be determined by variations in money velocity and other relevant macroeconomic variables.

(How this slays the Escalating Debt and Deficit Spending monsters is addressed in the next blog post)