The American Monetary Act

[bart]

The American Monetary Act, a three part reform to bring our money system under proper public control agrees in its main features with the Chicago Plan:
(the latest formulation of the Act is viewable at
http://www.monetary.org/amacolorpamphlet.pdf)

First: It incorporate the Federal Reserve banks into the U.S. Treasury where money will be created by the government as money, not as private interest-bearing debt; and will be spent into circulation to promote the general welfare and monitored to be neither inflationary nor deflationary.

Second: It removes the banks privilege to create purchasing media through the fractional reserve system. Fractional reserves are elegantly ended by the U.S. government initially loaning banks enough money at interest to bring reserves to 100%, converting all the past monetized credit, into U.S. government money. Banks then act as intermediaries accepting deposits and loaning them out to borrowers, what people think they do now.

Third: It Spends newly created money into circulation on infrastructure, including education and healthcare needed for a growing society, starting with the $1.5 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding all levels of government.



Full article here:
http://www.monetary.org/chicagoplan.html

[Rajiv]

I believe that this is a rework of the "Chicago Plan" ptoposed by Irving Fisher.

Two relevant items

One from Asia Times - Dust off the Chicago Plan (http://www.atimes.com/atimes/Global_Economy/JI17Dj03.html)

The financial crisis 2007-2008 is, in many respects, reminiscent of the Great Depression of 1929-1934 in terms of its causes, intensity, and consequences. Maurice Allais, the Nobel Prize winning economist, has written that the causes of the present financial crisis and the Great Depression are the same. Both were preceded by speculative credit booms fueled by low interest rates and consequent asset bubbles in stock and housing markets. Both were triggered by the bursting of these bubbles, asset price deflation, and were compounded by an ensuing credit contraction or freeze. The severity of the Great Depression was conveyed by a drop of real GDP of 29%, a resulting unemployment rate of 25%, contraction of money supply by 30%, and widespread business and bank failures. The magnitude and ordeal of the Great Depression led a number of celebrated economists to devote considerable effort to analyze the true causes of the Depression and to formulate financial reforms that would immunize the economy against such financial turmoil.

The reform plan that was developed came to be known as the Chicago Plan, as it was formulated in a memorandum written in 1933 by a group of Chicago professors, including Henry Simons, Frank Knight, Aaron Director, Garfield Cox, Lloyd Mints, Henry Schultz, Paul Douglas, and A G Hart, and was forcefully advocated by the noted Yale University Professor Irving Fisher in his book titled 100% Money. Also The Chicago Plan & New Deal Banking Reform (http://books.google.com/books?id=GuLRy4aZ4mIC&pg=PA1&lpg=PA1&dq=chicago+plan+fisher&source=bl&ots=B1LeAWtkLz&sig=Mxyi_p-a2F0mjjqlroNiqWpDcQQ&hl=en&sa=X&oi=book_result&resnum=3&ct=result) By Ronnie J. Phillips

I think this along with the concept of interest free money as discussed in Money and Merit (http://itulip.com/forums/showthread.php?t=6050) and Margrit Kennedy's work (http://www.margritkennedy.de/index.php?lang=EN) could be useful

[bart]

I believe that this is a rework of the "Chicago Plan" ptoposed by Irving Fisher.

...

I think this along with the concept of interest free money as discussed in Money and Merit (http://itulip.com/forums/showthread.php?t=6050) and Margrit Kennedy's work (http://www.margritkennedy.de/index.php?lang=EN) could be useful

Very much so on the Chicago plan ( http://www.monetary.org/chicagoplan.html ), and its the cleanest solution by far, as well as taking many more of the actual facts and actual history into account than anything from Keynes or the Austrians.

Great links, thanks... and here's hoping...

[tsetsefly]

The American Monetary Act, a three part reform to bring our money system under proper public control agrees in its main features with the Chicago Plan:
(the latest formulation of the Act is viewable at
http://www.monetary.org/amacolorpamphlet.pdf)

First: It incorporate the Federal Reserve banks into the U.S. Treasury where money will be created by the government as money, not as private interest-bearing debt; and will be spent into circulation to promote the general welfare and monitored to be neither inflationary nor deflationary.

Second: It removes the banks privilege to create purchasing media through the fractional reserve system. Fractional reserves are elegantly ended by the U.S. government initially loaning banks enough money at interest to bring reserves to 100%, converting all the past monetized credit, into U.S. government money. Banks then act as intermediaries accepting deposits and loaning them out to borrowers, what people think they do now.

Third: It Spends newly created money into circulation on infrastructure, including education and healthcare needed for a growing society, starting with the $1.5 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding all levels of government.



Full article here:
http://www.monetary.org/chicagoplan.html

those lines already scare me, why central banks are "suppose" to be independent is that direct government control over the money supply leads to a moral hazarz of sacrificing long-term benefits for short term gains, like inflation to curve unemployment...

the third part, is a joke and it in itself could lead to inflation to fund these projects...

[bart]

those lines already scare me, why central banks are "suppose" to be independent is that direct government control over the money supply leads to a moral hazarz of sacrificing long-term benefits for short term gains, like inflation to curve unemployment...

the third part, is a joke and it in itself could lead to inflation to fund these projects...


I recommend you read the entire article and also study more of Zarlenga's work... perhaps even look into what Schacht did in the 1930s.

I believe you will find the results at least somewhat surprising. It is not as it seems on a cursory & quick glance.

[$#*]

This plan is the simplest and most elegant solution to end the bankster parasitism. But we need something major (like a terrible financial crisis or a revolution) to move things in the right direction and make it happen.

<b><big>WHY DIDN’T THE CHICAGO PLAN PASS</big></b>
First there was no understanding or support for the proposal among the electorate. Only Irving Fisher seems to have understood the necessity for popularizing the matter.
Simons himself got cold feet and shied away from promoting the plan, desiring to remain on a level of professorial discussion. He even threw a wet towel on Fisher who was promoting the reform suggesting that Fisher avoid popularizing the idea!
Simon was demanding perfection from his own proposal and was being overly cautious. The proper goal was not perfection, but should have simply been substantial improvement that the Chicago Plan clearly represented. Instead Simons became obsessed with how banks would evade the reforms.
Second the Plan was mishandled politically.
Cutting appears to have misunderstood his own bill, and incorrectly said in interviews that credit as well as money creation was also to be a sole function of government.
Third, the bill suffered a major setback when Senator Cutting died in an Airplane crash in May 1935 while being forced to defend his election results in New Mexico by challenges from the Roosevelt Administration which was then held responsible for his death.

[Rajiv]

Also this video of a Kucinich speech discussing Stephen Zarlanga.

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[marvenger]

But we need something major (like a terrible financial crisis or a revolution) to move things in the right direction and make it happen.


check out this post, http://www.itulip.com/forums/showthread.php?t=4548&highlight=genius+greenspan, there's a lot of riddle like stuff and the guy is clearly doing some speculating but also some of it does check out. An entertaining read anyway. Check out the links.

[Finster]

The American Monetary Act, a three part reform to bring our money system under proper public control agrees in its main features with the Chicago Plan:
(the latest formulation of the Act is viewable at
http://www.monetary.org/amacolorpamphlet.pdf)

First: It incorporate the Federal Reserve banks into the U.S. Treasury where money will be created by the government as money, not as private interest-bearing debt; and will be spent into circulation to promote the general welfare and monitored to be neither inflationary nor deflationary.

Second: It removes the banks privilege to create purchasing media through the fractional reserve system. Fractional reserves are elegantly ended by the U.S. government initially loaning banks enough money at interest to bring reserves to 100%, converting all the past monetized credit, into U.S. government money. Banks then act as intermediaries accepting deposits and loaning them out to borrowers, what people think they do now.

Third: It Spends newly created money into circulation on infrastructure, including education and healthcare needed for a growing society, starting with the $1.5 trillion that the American Society of Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding all levels of government.



Full article here:
http://www.monetary.org/chicagoplan.html

Hmmm ...

I haven't heard of this before, but the first two points sound an awful lot like something I posted a few days ago:

I didn't mean to sound like I was picking on you if I did, Marv. When in doubt, always better to ask than wonder! Far as ka-poom goes, EJ is the expert on that. I think my ideas mesh with it, but my terminology is different and EJ is considerably more detailed and a far better prognosticator.

The question of this "not debt backed system" is probably good fodder for a thread of its own, and there are several variations on the theme. The short version basically involves the Treasury becoming the issuer of the currency. It puts money into circulation by spending more than it takes in, and removes it by taking in more than it spends. It targets some level of real purchasing power of the dollar to determine which and how much of it it does. There is no permament debt. Meanwhile, the banking system does not create money, but merely acts as an intermediary between savers and borrowers. No institution can lend money that another has a claim upon, for example, reserve requirements on demand deposits would be 100%.

The third point should be eliminated. While I agree infrastructure spending is a legitimate activity of the government, it has nothing intrinsically to do with a monetary system. It should remain up to Congress how to allocate whatever dollars are being spent dependent on the exigencies at the time.

It would be far better to roll that into a consumption tax and rebate plan such as the FairTax (http://www.fairtax.org/site/PageServer). Either the tax rate or the rebate checks (which would be the same for every individual), could be adjusted to govern the money supply.

[bart]

Hmmm ...

I haven't heard of this before, but the first two points sound an awful lot like something I posted a few days ago:

Very much so Fin, and we've discussed it on that other board (whose name shall not be mentioned ;)) a few times too.


The third point should be eliminated. While I agree infrastructure spending is a legitimate activity of the government, it has nothing intrinsically to do with a monetary system. It should remain up to Congress how to allocate whatever dollars are being spent dependent on the exigencies at the time.

Sort of... but do consider that its a Monetary Act and proposed plan. I read their basic point as suggesting that Congress pay close attention to the facts as cited by that engineering group rather than go porking around.


It would be far better to roll that into a consumption tax and rebate plan such as the FairTax (http://www.fairtax.org/site/PageServer). Either the tax rate or the rebate checks (which would be the same for every individual), could be adjusted to govern the money supply.

My main concern about the FairTax and similar proposals is the high potential that it would just be added to the current tax structure, rather than replace it. I don't disagree with the concept in general, but all we need is to have the current structure "enhanced" again.

[Finster]

Very much so Fin, and we've discussed it on that other board (whose name shall not be mentioned ;)) a few times too.

Sort of... but do consider that its a Monetary Act and proposed plan. I read their basic point as suggesting that Congress pay close attention to the facts as cited by that engineering group rather than go porking around.

I agree that Congress should pay close attention to the engineering group and not go porking around. But it still needs to be kept separate from the monetary issue.

Another point: There are many infrastructure projects that are better handled at the state or local level. It's mostly just large-scale projects like interstate highways, rails, rivers, etceteras that need to be handled at the federal level. Just one more reason to keep it out of a federal monetary act. The latter would likely become the controlling point on which the decision about what level to handle it at rather than fundamental factors.

My main concern about the FairTax and similar proposals is the high potential that it would just be added to the current tax structure, rather than replace it. I don't disagree with the concept in general, but all we need is to have the current structure "enhanced" again.

Not possible. The FairTax requires elimination of the current tax structure. If it doesn't eliminate the current structure, it's not the FairTax, it's something else.

[bart]

I agree that Congress should pay close attention to the engineering group and not go porking around. But it still needs to be kept separate from the monetary issue.

Sort of agreed again... but federal debt and expenditures are very much part of the full monetary system.

I submit that the distinction between fiscal and monetary policy, while useful, can seriously confuse the overall money situation.


Another point: There are many infrastructure projects that are better handled at the state or local level. It's mostly just large-scale projects like interstate highways, rails, rivers, etceteras that need to be handled at the federal level. Just one more reason to keep it out of a federal monetary act. The latter would likely become the controlling point on which the decision about what level to handle it at rather than fundamental factors.

Agreed.

Not possible. The FairTax requires elimination of the current tax structure. If it doesn't eliminate the current structure, it's not the FairTax, it's something else.

In theory, of course.
The "special" folk in D.C. are very good at being "something else" though...

[Rajiv]

Another proposal that seems to be interesting is the one posted by Marvenger - Detailed gold based monetary system development (http://itulip.com/forums/showthread.php?t=6652)

the NESARA - The National Economic Stabilization and Recovery Act

[bart]

Another proposal that seems to be interesting is the one posted by Marvenger - Detailed gold based monetary system development (http://itulip.com/forums/showthread.php?t=6652)

the NESARA - The National Economic Stabilization and Recovery Act

I hope to get a chance to review it, but I'm less than thrilled about any gold based monetary system (although not against it being part of a monetary system to help build confidence).

The basic problem with a gold based system is that, in very broad terms, gold is limited in quantity much more than human productivity and population growth is. Net and on the longer term, its significantly deflationary.

[Finster]

Sort of agreed again... but federal debt and expenditures are very much part of the full monetary system...

Of course they are, but they don't belong in a monetary control act. Military operations are also federal expenditures, but no one's arguing they should be in a monetary control act.

In theory, of course...

No, in actuality. The FairTax is not merely a consumption tax concept, it is an actual legislative proposal. Specifically, the FairTax Act is set forth in HR 25 and S 1025. If passed, this pending legislation would, among other things, repeal the sixteenth amendment. See http://www.fairtax.org/site/PageServer?pagename=about_main.

[bart]

Of course they are, but they don't belong in a monetary control act. Military operations are also federal expenditures, but no one's arguing they should be in a monetary control act.

Military ops are just part of the budget, not part of debt assumption and creation in order to counteract deflationary forces. I don't believe point 3 was in the Chicago plan prior to the current financial mess.



No, in actuality. The FairTax is not merely a consumption tax concept, it is an actual legislative proposal. Specifically, the FairTax Act is set forth in HR 25 and S 1025. If passed, this pending legislation would, among other things, repeal the sixteenth amendment. See http://www.fairtax.org/site/PageServer?pagename=about_main.

True, and I think you also understand my concerns about Congress changing it too.

[jtabeb]

I hope to get a chance to review it, but I'm less than thrilled about any gold based monetary system (although not against it being part of a monetary system to help build confidence).

The basic problem with a gold based system is that, in very broad terms, gold is limited in quantity much more than human productivity and population growth is. Net and on the longer term, its significantly deflationary.

Not if it is put into competition with the existing paper FIAT currency system (and run parallel).

That way you get "good" deflation in things like everything you actually need to buy with wages.

And you get "good" inflation for devaluing debts.

Best of both worlds if you ask me.