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Paying for the Green New Deal

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Open Letter by Nick Egnatz to US Congresswoman Alexandria Ocasio-Cortez (NY-14).

Dear Congresswoman Ocasio-Cortez,

You have proposed an individual income-tax rate of 70% on earnings in access of $10 million per year. This to fund a proposed progressive agenda of transitioning to clean renewable energy, expanded Medicare for All and tuition-free public-university education. You correctly reference that we had a 90% top tax rate in the 1950s and did just fine with it. Critics are quick to point out that even increasing the top tax rate won't fund the Green New Deal, as the reforms are called.

Whether of not there is success in raising the top tax rate I support the Green New Deal, while calling for reform of our monetary system to provide the additional funding that makes it all possible, doing so debt-free and without inflation/deflation.

If you would just rather watch a video before you read my thoughts, please do. Reverend Delman Coates is pastor at Mount Ennon Baptist Church in Clinton, MD. His presentation is titled The New Abolitionism - Monetary Reform and the Future of Social Justice.

70% of Americans live paycheck to paycheck, 40% can't cover a $400 emergency (new tires on the car, a trip to the dentist or a couple of missed workdays due to the flu).

The American people, almost half of whom have virtually no net worth, would overwhelmingly support monetary reform that would fund, debt-free, a massive rebuilding of both our crumbling physical infrastructure and our human infrastructure via education, healthcare and a clean, sustainable environment. Monetary reform will create millions upon millions of new good-paying jobs and bring about the drastic reduction of both private and government debt. All the American people need is a little knowledge about unjust and just systems of money - what our money system is now and what it could be with simple monetary-reform legislation that is already written and in Congress.

Aristotle's statement "Money exists not by nature, but by law" is the soul of the monetary-reform movement. Aristotle did not spout theories and then use his intellect to try and justify them. He observed nature and society, what worked, what didn't, and what conformed to nature. Both ancient Sparta and ancient Rome had legal systems of public money, with no intrinsic commodity value, that allowed them to grow and prosper for about 400 years each. Rome eschewed gold and silver (commodity money) for bronze coins (fiat legal money). Sparta used iron coins that were dipped in vinegar after smelting to take away any future commodity use. Both Rome and Sparta thrived with fiat legal money and then sadly after 400 years each, got away from it and began their decline (see Stephen Zarlenga, The Lost Science of Money, Chapters 1 & 2).

In the American colonies three examples of money-by-law systems (fiat legal money) like the NEED Act represents were responsible for the growth of the colonies, the revolution that gave us our country, and the eventual abolition of slavery and the continuation of the Union. Colonial currency allowed the colonies to grow and build infrastructure when the mother country made possession of its own currency illegal in the colonies. Continental currency enabled the colonists to fight the revolution, debt-free. Greenbacks financed the Civil War, allowing the Union and country to continue (Idem, Chapters 14, 15, 16 & 17).

In contrast the present debt-money system is responsible for the huge unmanageable levels of debt that people and governments presently have and must continue to have for there to be money in the system for society to function. The debt-money system is a fraud that fails the people in actual practice in the real world. The debt-money system is quite simply incapable of functioning for the betterment of society and the environment. Abolition of this cancerous system is imperative.

Both theory and actual practice give the NEED Act the solid foundation that should be required of our nation's monetary system. The NEED Act is based on the premise, reiterated in our Constitution, that the power to create our money belongs to the people collectively, through our elected government. It is further supported by the successful historical examples cited above and in Stephen Zarlenga's book The Lost Science of Money.

Money is not a commodity, as often represented by gold or silver in ancient times, or the modern banking system's representation of money as credit or debt. Money is an abstract legal power of the state that acts as is a final means of payment, facilitates commerce and "promotes the general welfare" of society as called for by the preamble to our Constitution.

Monetary reform is the only vehicle that can get both people and government out of debt. Why? Unknown to almost all of us, virtually all of what we use for money is created out of thin air as debt by private banks when they make loans. As the loans are repaid the money is extinguished from the bank's books; it exists only while we are in debt. Only money for the principal amount of the loan is created by the bank; no money is created for the huge amounts of interest we must pay over the life of the loan. Therefore within the debt-money system there is never enough money to repay both loan principal and interest. And even if there were exactly the amount of money in the system to repay the debts, once repaid the money no longer exists and there would be no money in the system for society to function. We are consigned by the debt-money system to endless and ever-increasing debt. This applies to both government and individuals.

"In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower's bank account, thereby creating new money. The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" (Bank of England, Quarterly Bulletin 2014 Q1, "Money Creation in the Modern Economy").

How does monetary reform get us out of debt?
Step 1

Monetary reform decisively stops all bank creation of what we use for money as debt. Under monetary reform banks will only loan money that already exists, exactly what most of us mistakenly think is going on now.

Without getting too complicated, the present debt money representing loans is a liability to the banks. This money, on the banks' books as a liability, under the NEED Act instantly become US money and is no longer a liability to the banks, but the banks are charged with transferring this money to the US Treasury as soon as it is repaid. The banks are allowed to keep the interest part of the repayments and immediately transfer the principal to the Treasury as it is repaid. Future lending will use funds invested with the bank in which the investors (us) will receive a negotiated portion of the interest that is charged. Banks will also have safekeeping accounts (savings and checking); the banks will not be allowed to touch this money. Banks will be allowed to charge for this service.

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Nick Egnatz is a Vietnam veteran. He has been actively protesting our government’s crimes of empire in both person and print for some years now and was named “Citizen of the Year” for Northwest Indiana in 2006 for his peace (more...)
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