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Why does Congress Nickel and Dime the Debt when it could just Dollarize it?

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$5 Dollar U.S. Note by Wikipedia

 

A new bill, H.R. 2535: the American Liberty Coinage and Deficit Reduction Act of 2013, has just been introduced (June 27, 2013) by Rep. Garland "Andy" Barr [R-KY6], a rare centrist Republican, according to Govtrack (his ideology score is barely to the right of the Democrats).   This bill, which has a 27% chance of making it out of committee, but only a 4% chance of being enacted, according to Govtrack is potentially game-changing for the economic status of the Republic.  

Here is the full title:
"To cause increased seigniorage for the United States Mint leading to enhanced revenue to the Treasury and increased offsets to annual budget deficits in perpetuity, to require the Secretary of the Treasury to mint and issue coins commemorating and celebrating American Liberty, "The Union", and the American values and attributes of freedom, independence, civil governance, enlightenment, peace, strength, equality, democracy, and justice, to provide for the continued and concurrent production and distribution of existing presidentially-themed circulating and numismatic coinage designs, and for other purposes."

 

The reason this bill is so important has nothing to do with commemorations and celebrations of liberty, etc. though it would do all that, not symbolically, but in actual fact.   From section 2, paragraph 3 of this 15-page bill:

(3) During the 10 years of the 50 State Quarters Program, the cumulative production of quarter dollars exceeded 34,000,000,000, representing a 136 percent increase in quarter dollar production as compared to the cumulative 10-year period immediately preceding the program. This enhanced production level of quarter dollars resulted in increased seigniorage revenues of approximately $3,000,000,000 and, therefore, an equal reduction in the budget deficit.

Wikipedia defines seigniorage as "the difference between the value of money and the cost to produce and distribute it."

The bill states, in clear, unambiguous language, that if Congress passes this bill, it can directly create -- via Treasury, specified later in the bill -- coins valuing $3B "and, therefore, and equal reduction in the budget deficit."    Progressives may not agree with the deficit reduction emphasis of the bill, believing instead in the Keynesian idea of deficit-spending during times of economic contraction, but there is a an even larger issue at work here, whether Rep. Barr knows it or not.  

It is an issue of monetary sovereignty.  

What this bill would do, at least for coins, is firmly re-establish Congress' right, under Article 1,Section 8, Clause 5, to "coin Money" (case structure in the original document, and important, as we shall see later).   From the beginning of the Republic private banks have attempted, and often succeeded, in wresting this power from Congress by establishing private Central Banks such as the First (1791-1811) and Second (1817-1836) National Banks of the United States.   President Jackson, who loathed banks, desolved the Second National Bank in 1836, paid off the entire national debt for the first and last time, but did not avail himself of the Constitutional right to "coin Money," thereby plunging the United States into one of its deepest depressions in history, caused by deflation of the money supply.   It fell to his successor, president Martin Van Buren, to partly reverse Jackson's monetary policies and issue enough coinage to begin to lift the country out of its depression.   However, he only issued new money in species (gold), a compromise effort that finally created an independent Treasury in 1840, for a time, though the new money itself was not issued until 1843, 2 years after Van Buren had left office.

It fell to president Lincoln, acting under emergency conditions of the Civil War, when the North was nearly bankrupt, and the New York banks wanted 24-36% interest, to create truly sovereign paper money for the first, and so far, last, time, in the form of United States Notes.   This new and thus far, unique, form of debt-free legal tender money, constituted up to 40% of the currency ($450m) at a critical time in the Civil War when, as now, the banks private monopoly over money creation threatened to strangle the Republic.   The Supreme Court, in what came to be known as the Legal Tender cases, eventually concluded, in Julliard v. Greenman (8-1), that the federal government was authorized to create paper money as well as coins.   Although this ruling gave the right under the "borrowing clause," in fact the Greenback money was never repaid and was actually excluded from all Treasury Debt reports.   Greenbacks were officially withdrawn from circulation only in 1996, and remain our country's longest-lasting form of currency.   They can still be purchased as collector's items on eBay for approximately twice face value.

Getting back to bill HR2535.   Although this bill deals with coins only, and although it emphasizes deficit reduction, it clearly reestablishes Congress' option (some would say, duty) to "coin (create) Money" -- Money being capitalized to indicate ALL forms of money, not just physical coins.   If we can gain seigniorage from government coin creation, we can do so with government paper money creation - and have done so.  

Representative Barr, whatever progressives may disagree with him on other issues, should be supported in his efforts to introduce truly sovereign money in extended form.   The bill would establish newly designed coins in denominations from dimes to half dollars that would directly pump money into the starved real economy.   Though this bill is not as explicit as former Representative Dennis Kucinich's tabled bill HR 2990, which would have recreated United States Notes to replace all privately issued money, and issued it for direct payment for a wide range of government expenses from infrastructure to social security, it does open that possibility.   And it has a real chance, albeit small, of passing.  

You can become a citizen co-sponsor here: http://barr.house.gov/services/citizen-cosponsor.   Imagine if thousands of liberal to progressive co-sponsors signed on to support this Republican bill, along with the usual supporters from the Right.   And imagine if we got into a dialog with Representative Barr and informed him of the way to gain even more seigniorage benefit.   This would expand the monetary narrative well beyond the restrictive monopolistic Federal Reserve and might even lead to a reborn Greenback Party.   At the very least, we would finally have a truly bi-partisan opportunity to do what Jackson, Lincoln, Kennedy, all tried and failed to do, create Sovereign American Money.

 

Take action -- click here to contact your local newspaper or congress people:
Support Sovereign Money

Click here to see the most recent messages sent to congressional reps and local newspapers

http://newthinking.blogspot.com/

Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles was published by Tayen Lane Publishing (December, 2014) and may be found here:
https://tayen-lane.squarespace.com/america-is-not-broke/

Scott is President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written (more...)
 

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You can also sign my e-petition to bring back the ... by Scott Baker on Sunday, Aug 4, 2013 at 2:51:01 AM
The president does not have to borrow more money f... by Lance Ciepiela on Sunday, Aug 4, 2013 at 10:07:54 AM
President John F Kennedy, our last president follo... by Robert James on Sunday, Aug 4, 2013 at 12:36:24 PM
their enforcers are very afraid that the people ar... by Mark Adams JD/MBA on Sunday, Aug 4, 2013 at 1:22:23 PM
It better hapen soon, time is running out.  A... by Robert James on Sunday, Aug 4, 2013 at 6:11:00 PM
the dollar and the US economy in 2008, but it is f... by Mark Adams JD/MBA on Sunday, Aug 4, 2013 at 6:28:30 PM
Lincoln "stiffed" the bank in paying for the North... by Dennis Kaiser on Monday, Aug 5, 2013 at 6:18:21 AM
On the current paper money, the one we use today.... by BFalcon on Monday, Aug 5, 2013 at 12:42:13 AM
See also S.1105, which is even better.  It pr... by Clifford Johnson on Sunday, Aug 4, 2013 at 4:35:57 AM
How The Dollar Coin Can Cure The Economy Dolla... by Clifford Johnson on Sunday, Aug 4, 2013 at 4:54:33 AM
This part of S 1105 scares the heck out of me: (A... by Scott Baker on Sunday, Aug 4, 2013 at 5:01:57 PM
I'm drafting an article specifically explaining S.... by Clifford Johnson on Monday, Aug 5, 2013 at 1:38:31 AM
"What is unique about S.1105 is that it s immersed... by Scott Baker on Monday, Aug 5, 2013 at 3:17:58 AM
The assignment of seigniorage in S 1105 guarentees... by Clifford Johnson on Monday, Aug 5, 2013 at 11:38:35 AM
The act's clarification re seigniorage is merely t... by Clifford Johnson on Monday, Aug 5, 2013 at 1:56:35 AM
My source re the above somewhat pejoratively summa... by Clifford Johnson on Monday, Aug 5, 2013 at 2:28:53 AM
Well, it starts out OK:"The earnings from issuing ... by Scott Baker on Monday, Aug 5, 2013 at 3:57:59 AM
I make no defense of the GAO report!  Indeed,... by Clifford Johnson on Monday, Aug 5, 2013 at 11:52:05 AM
And Cliff's mention of S.1105 sounds like a great ... by Richard Clark on Sunday, Aug 4, 2013 at 9:57:09 AM
Yes, I should have said the spending part of Keyne... by Scott Baker on Sunday, Aug 4, 2013 at 5:07:06 PM
Revenge for 9/11 that was a big one going into Ira... by Lance Ciepiela on Monday, Aug 5, 2013 at 9:25:14 AM
Lance, when you say that "The truth is that the Fe... by Richard Clark on Monday, Aug 5, 2013 at 10:31:24 AM
It's true that since the 1980s the Fed, after payi... by Derryl Hermanutz on Monday, Mar 3, 2014 at 6:43:42 PM
Good and timely article, Scott.  I was just r... by Gary Murphy on Sunday, Aug 4, 2013 at 11:37:27 AM
This is a solution to the deficit debate similar t... by Seymour Patterson on Sunday, Aug 4, 2013 at 11:54:17 AM
I wrote about platinum coins hereDebt No More! How... by Scott Baker on Sunday, Aug 4, 2013 at 5:14:32 PM
While is certainly makes more sense for the Treasu... by June Genis on Sunday, Aug 4, 2013 at 12:21:21 PM
Government, freed from the corrupting influence of... by Scott Baker on Sunday, Aug 4, 2013 at 5:22:17 PM
Scott, let me interpret this phrase of yours: "(t... by Richard Clark on Monday, Aug 5, 2013 at 10:45:40 AM
Typo corrected (late night typing is always suspec... by Scott Baker on Monday, Aug 5, 2013 at 5:28:36 PM
More to the point, can any Wall St bank be trusted... by Derryl Hermanutz on Monday, Mar 3, 2014 at 6:50:00 PM
This coinage bill is a small, but significant step... by Chuck Muldoon on Sunday, Aug 4, 2013 at 2:28:53 PM
As Monetary Reformers recognize - Ben Dyson, Steve... by Scott Baker on Sunday, Aug 4, 2013 at 5:25:37 PM
June wrote, "Money is, after all, just a convenien... by Derryl Hermanutz on Sunday, Aug 4, 2013 at 3:21:25 PM
If money was not a store of value it would be wort... by June Genis on Sunday, Aug 4, 2013 at 4:03:27 PM
However, if you put your money in the wrong kind o... by Richard Clark on Monday, Aug 5, 2013 at 10:54:15 AM
Nothing of any significance in this wast of paper.... by kanawah on Sunday, Aug 4, 2013 at 6:32:47 PM
Support Sovereign Money! We've had it before with ... by Scott Baker on Saturday, Aug 10, 2013 at 4:05:56 AM
Well, this is interesting.About 2 months ago, I wr... by Scott Baker on Sunday, Dec 15, 2013 at 3:28:35 AM