From The Hill
The walls are closing in on Congress.
Terrifying walls of water from Hurricanes Harvey and Irma, which, when the damage is totaled, could rise to a half trillion dollars. The Walls of War: The multi-trillion dollar ongoing cost of Afghanistan, Iraq and other interventions. The crumbling walls of the U.S. infrastructure, which need at least $3 trillion to be repaired or replaced. A wall of 11 million undocumented immigrants, whose deportation could easily cost $200 billion. The planned wall at the Mexican border, which some estimates place at $67 billion. Then there is the Wall of All, the $20 trillion national debt. The walls of debt are closing in.
At moments of crisis in our nation, in addition to invoking the assistance of Higher powers, we can call upon the Constitution for guidance.
Article I, Section 8, of the U.S. Constitution contains a long-forgotten provision, "the coinage clause," which empowered Congress "to coin (create) Money." The ability to create money to meet the needs of the nation is a sovereign power, which enables a nation to have control of its own destiny.
The same article indicates the Founders anticipated having to borrow money on the full faith and credit of the United States. Enter the Funding Act of 1790, which assumed and paid off the debt of the colonies and retired the financial obligations of the newly created states now united. This was a powerful, object lesson in debt retirement, relevant today.
It is abundantly clear from a plain reading of the coinage clause that the Founders never intended that the only way the government was to be funded was to borrow money.
The needs of the nation were to come from a system of not borrowing wherein money was a neutral value of exchange connecting resources, people and needs, without debt attached.
In 1913, the passage of the Federal Reserve Act ceded the constitutional power to create money (and control of our national destiny), to the Federal Reserve, a quasi-private central bank. At this fateful point, the only way money could be brought into being was to borrow it, whereby money became equated with debt. The money system transited from public control to private control, and there it has remained.
Instead of following the path set forth by the Founders to create money directly, our government became obliged to borrow from private banks, which assumed the sovereign power to create money from nothing and then loan it to the government, turning on its head the intention of the Founders.
As a member of Congress, I came to the conclusion that while the debate over taxation was interesting, it was wholly insufficient. One must first study how money is created, before one can sensibly have a discussion of how it is to be taxed.
With the help of staff, I spent a full five years working with legislative counsel to come up with a way to realign with the founding principles, to reclaim and to re-establish for our nation the sovereign power to create money.
The vehicle was H.R. 2990, the National Emergency Employment Defense (NEED Act), which articulates why the current debate over the debt ceiling should lead directly to a debate about monetary policy, and the origins of the debt-based economic system.