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HYBRID PUBLIC MONEY INITIATIVE MONETARY REFORM TASK FORCE http://www.monetaryreform-taskforce.webs.com Ronald E Davis, PhD About the Presenter • Born in Oklahoma in 1945 • Attended Harvard College 1963-1967, Magna Cum Laude in Applied Math • Attended Stanford University for MS and PhD in 1980 in Mathematics • 10 years industrial experience in applications of Management Science • 30 years teaching experience in Management Science at SJSU • Self taught in the Federal Reserve System and monetary reform since 1975 "Give me control of a nation's money (supply) and I care not who makes the laws." • Mayer Amschel Rothschild [Mayer Amschel Bauer] (1744 -1812), Godfather of the Rothschild Banking Cartel of Europe • Source: • 'The Creature from Jekyll Island' (American Opinion Publishing), p. 218 Quotes attributed to Thomas Jefferson • • “I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised a money aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” “If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.” Federal Reserve System December 23, 1913 • • • • • Conceived and first draft written in a secret meeting at a JP Morgan estate on Jekyll Island, Georgia in November 1910 attended by bankers, an economist, and Senator Nelson Aldrich Created a two-tier system of money creation Federal Reserve Banks (privately owned) create monetary base when they buy government bonds and securities which become “reserves” for the commercial banks Commercial Banks (privately owned) create bank credit when they make loans based on the fractional reserve system Entire money supply (excepting coins and a few left over US Notes) issued on the basis of debt National Debt History 1940 - present Value (buying power) of the Dollar since 1913 The Money Trust What a funny little government Breaking through the wooden floor The Vultures’ Roost The Protectors of our Industries The Bosses of the Senate WHAT IS PUBLIC MONEY? • Money in the form of coins, paper money (US Notes), or electronic bank account credits, that is created by the federal government’s Treasury Department WITHOUT DEBT or INTEREST OBLIGATION, and either lent or spent into circulation Historical Examples in US History • • • Federal and State issued Continentals funded the Revolutionary War US Notes funded the Civil War (three $150 Million authorizations) • • • • • Legal Tender Acts of February 1862, mid-year 1862, and February 1863 Hepburn v Griswold case of 1870 ruled US Notes unconstitutional, however Knox v. Lee case of 1871 ruled US Notes constitutional and Parker v. Davis case of 1871 ruled US Notes constitutional and Julliard v. Greenman case of 1884 ruled US Notes constitutional US Notes circulated as paper legal tender without problem for over 100 years REAL OUTPUT STANDARD FOR MONEY • • • The backing for government created money is the goods and services exchanged in the macro economy, that is, the REAL OUTPUT of the economy; Inflation control is maintained by regulating money supply growth to the growth of the real output of the economy so that prices remain stable, thus preserving the value of the dollar The phrase “sound money” used to mean money that is convertible into gold or silver coins; in modern times, it means that the money creation process is subject to scientific control laws that serve to preserve the purchasing power value of the money over the long term THE FALSE DICHOTOMY • Choose between Private Bank Created Money (FED money), or • 100% Public Money (AMI NEED Act) • IT’S ONE OR THE OTHER! THE HYBRID PUBLIC MONEY SOLUTION • Create a PUBLIC-PRIVATE PARTNERSHIP in which • Monetary Base is created debt-free by the government (Treasury Dept) • Commercial Bank Credit is created as interest-bearing debt through loans by private banks, based on the fractional reserve system • No change in the FED except that monetary base is created debt-free by the Treasury Department rather than through debt-based bond purchases by the FED THE BLOOD TRANSFUSION ANALOGY • • • • • Money in the economy is like blood in the body; there is a certain amount of it, which has to be kept in proper proportion to the size of the body (economy) in which it circulates; Money flows in one direction while goods and services flow in the opposite direction; As new Public Money is created and spent into existence by the government, debt based money is retired as loans are paid off and not rolled over; The rate at which new Public Money enters the economy must be balanced with the rate at which old Private Money leaves the economy; The optimal blend of private versus public money remains to be determined, and is approached by a gradual increase in the public percentage and a gradual decrease in the private percentage THE HYBRID PUBLIC MONEY ACT of 2017 • • • • • • • • • • Title 1: Governmental Money Creation Powers Title 2: Monetary Creation and Control Authority Title 3: Funding for GDP boosting projects (infrastructure, technology, training) Title 4: Deficit Reduction and cancellation of Budget Sequestration Title 5: Debt Reduction via elimination of Intragovernmental Debt Title 6: The Office of Full Employment Title 7: The office of Poverty Alleviation Title 8: The Office of Conflict Resolution Title 9: Periodic partial audits of the Federal Reserve System Title 10: Monetary History Documentary productions TITLE 1: Governmental Money Creation Powers • • • • Congress delegates its power to create government money to the newly created Monetary Creation and Control Authority, per Title 2 of this act The MCCA has power to authorize the Treasury Department to create money in all three forms: coins, paper bills (US Notes), and Electronic Public Money (EPM) Money created by the government shall come into existence without debt or interest obligation, and shall be treated as income to the US Treasury account that runs in parallel to and is mingled with tax revenues. Money authorized by the MCCA and created by the Treasury Department may be lent or spent into circulation for purposes enumerated in the federal budget TITLE 2: Monetary Creation and Control Authority • • • • • • • An independent, permanent commission of experts, appointed by the President and confirmed by the Senate, augmented by numerous ex-officio members from Congress, the Executive branch, and the Federal Reserve System The main purpose of this body is INFLATION CONTROL (i.e. regulating the rate of monetary creation authorized for the Treasury Department) Review and approve full or partial EPM funding for GDP boosting projects Review and approve full or partial EPM funding for Full Employment, Poverty Alleviation, and Conflict Resolution projects Collect and extend the best macroeconomic models by incorporating an Inflation Prevention Inequality in them Fund creation of a new continuous time low dimensional stochastic dynamic control (NASA engineering) model of the macro economy for predicting and analyzing the impacts of monetary control variables on growth, employment, and inflation Prepare targets and forecasts of monetary aggregates and monetary base reserve requirements TITLE 3: Funding for GDP boosting projects • The MCCA shall evaluate and prioritize GDP boosting project proposals for EPM funding in the following areas, up to $1 trillion per year for four years • Evaluate and prioritize infrastructure projects • Evaluate and prioritize job training projects • Evaluate and prioritize production technology enhancement projects • Prioritization shall include consideration of GDP Impact Multipliers as a means of inflation control TITLE 4: Deficit Reduction for Budget Sequestration Cancellation • Effect monetary transfusion by replacing Federal Reserve base money with EPM as Treasury securities in the FED portfolio are redeemed when they mature; • Since this component of the national debt does not need to be rolled over, this is deficit reduction of sufficient magnitude to cancel the Budget Sequestration that went into effect March 2013 under the Budget Control Act of 2011 TITLE 5: Debt Reduction via repayment of Intragovernmental Debts • EPM shall be created to make monthly installments on all Intragovernmental Debts to be fully extinguished within three years • This insures that, in particular, Social Security and Medicare Trust funds become whole again and reduce fears that they will “run out” over time due to budget deficits in the federal budgets TITLE 6: The Office of Full Employment • Creation of a new office in the Department of Labor • Focused on job development for three groups of the unemployed • • • Veterans Homeless Formerly incarcerated • Success in these efforts will grow the GDP and therefore not be inflationary TITLE 7: The Office of Poverty Alleviation • Created in the Health and Human Resources Department • Focused on emergency care and efforts to locate and/or provide jobs for those living in poverty • When every person who wants a job has a job, poverty will cease to be a blight on our cities and rural communities TITLE 8: The Office of Conflict Resolution • • • • • Created in the Justice Department, with a secondary office in the MCCA Seeks win-win solutions for conflicts that can be obtained with modest amounts of EPM funding, for example Flint Michigan water supply, and Keystone XL and Dakota Access Pipeline projects Chicago (and other big city) gang violence Homelessness caused by bank evictions alleviated by government assisted refinance arrangements TITLE 9: Periodic Partial Audits of the FED • Provision for periodic GAO audits of certain key parts of the FED, focusing on • • • Ownership of the 12 Federal Reserve Banks to identify potential conflicts of interest Income and Expense and Balance Statements for the Surplus Accounts to identify potential sources of “hidden” funds Transfer of Math and Computer Models to the MCCA to facilitate development of new control theoretical models of the NASA variety TITLE 10: Monetary History Documentaries • Fund preparation of three Monetary History documentaries highlighting successful use of government created money in the past • • • Colonial, Revolutionary War, and Civil War periods Guernsey/Jersey Island in the 1817 – 2017 period Canada in the 1935 – 1975 period • Distribute to the voting and ex-officio members of the MCCA and make available to the public through the US Government Bookstore NEXT STEPS • Establish the Monetary Reform Task Force as a formal entity within the Treasury Department • Find sponsors and cosponsors for “real” legislation prepared by members of Congress • Rally public and Congressional support for the enabling legislation • Present the bill for signing by the POTUS