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OpEdNews Op Eds    H1'ed 10/18/13

Debt No More! How Obama can defeat Austerity Thugs by Using the Constitution and Debt-Free Money

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The president has not just the option to do this, but also the requirement.  He would just be following the constitution, something this so-called constitutional scholar has repeatedly failed to do.

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Here is most of the letter I hand-delivered to Representative Jerry Nadler's office a day after we met. It contains a summary of the advantages of U.S. Notes.  I have not yet received a reply:

January 22, 2013

Dear Congressman Nadler:

It was a great honor to meet you at the Progressive NYC launch party last night.  With your platinum coin idea, you have solidified your reputation as a true progressive, unafraid to think outside the box, a rarity in politics. 

To summarize our discussion on Greenbacking last night, these are some of the advantages and features of issuing debt-free money, direct from the Treasury Department:

1.  The money does not have to be borrowed from the Central Bank by issuing Treasury bonds, which carry interest.  The seigniorage savings is in the hundreds of billions/year.

2.  Congress can issue any amount, at any time, for any reason, under the Constitution's Article 1, Section 8, "coin Money" clause (see Robert Natelson's paper from the Harvard Journal of Law and Public Policy, "The Coinage Clause in the Constitution" http://www.economicstability.org/history/the-coinage-clause-in-the-constitution).

3.  President Lincoln DID issue $450 million in United States Notes (aka Greenbacks) in 1862-1863 to fund the north during the Civil War, when NY banks wanted up to 36% interest.  This money was up to 40% of the currency during the height of the war, at a critical time for our nation (then, as now, the banks cared more for their own profit, than for the nation's well-being).

4.  The Supreme Court, in a series of legal tender cases, but culminating in Julliard v. Greenman, by an 8-1 ruling, affirmed the right of the Federal Government to create money itself in 1884 (before there was a Central Bank).  This ruling stands today.

5.  United States Notes continued to be produced, in 14 total series, until 1972, and the stock was not fully burned by Treasury until 1996.  Even now, Treasury estimates there are $239 million of them in circulation (including the $5 note I showed you last night, which cost twice face value on eBay).  U.S. Notes were our longest-lasting form of currency.

6.  According to the Treasury Department, United States Notes CANNOT legally be used to pay down the debt, going back to Lincoln, so they are not subject to the debt ceiling - see:

"Monthly Statement of the Public Debt of the United States"

and this is a feature, not a bug, because....

7.  Trillions in United States Notes, or their electronic equivalent, could be issued to produce FDR-scale public works projects, creating real, good, middle class jobs to, for example, rebuild our crumbling infrastructure. 

8.  This new money would not be inflationary if issued within reason, because, according to the Federal Reserve, money in circulation is STILL some $3 Trillion less than it was before the 2008-09 crash.  We would simply be restoring what was lost due to bad credit creation by the banks.

9.  Two recent bills - HR1452 (from then-congressman Ray LaHood, 1999, reintroduced in 2003-04 as HR4371) and HR2990 (Kucinich, present), attempted to issue new U.S. Notes to augment or, in the more recent case, replace, existing Federal Reserve Notes.  LaHood's bill is the simpler one, basically a transportation bill creating $350 billion "to provide for noninterest bearing loans of the money so created to State and local governments solely for the purpose of funding capital projects."  However, the new money does not have to be loaned at all, but can simply be issued into the real economy (see #8).

10.  Although U.S. Notes cannot directly pay off the debt, the tax revenues generated by businesses and individuals newly employed in public works projects, CAN be used to pay the debt.  Eventually, the surplus could retire the debt, forever.  A sovereign United States need not borrow its own money, at all.

11.  Our nation's bond rating, so critical to low borrowing costs if we continue to borrow, would actually be improved.  S&P, Moody's etc., would see that we have the wherewithal to pay our bills, and to create low levels of unemployment and an improving infrastructure for the future.  Our rating should return to AAA and stay there.
 
This is a lot to take it, I know, but I have studied alternative economics for 4 years now...taken a dozen economics courses, read everything I could and discussed these theories with economists like Dr. Michael Hudson, Dr. Mason Gaffney, and very many more.  I am now the president of Common Ground-NYC - a Georgist economics group - and New York Coordinator of the Public Banking Institute, where we discuss these changes regularly and try to reach out to people like you to implement them.

America is not broke, and indeed there are 10s of trillions of dollars in real, or creatable, assets, just waiting to be tapped for the common good.
I welcome the chance to discuss these issues and more with you in the near future.

All the best,

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Scott Baker Social Media Pages: Facebook Page       Twitter Page       Linked In Page       Instagram Page

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 "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:
http://www.americaisnotbroke.net/

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

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