American Monetary Act

The American Monetary Act / © 2006, until introduced. VERSION 10, February 21, 2006 / American Monetary Institute, P.O. Box 601, Valatie, NY 12184 / Stephen Zarlenga, Director. ami@taconic.net
http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm

Original words below are in black type. Comments by Martin R. Carbone <<martycarbone@yahoo.com>> are in blue type

AMERICAN MONETARY ACT

An Act to restore the Constitutional power to create Money to the Congress of the United States

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SEC 1. SHORT TITLE

This Act may be cited as the American Monetary Act

SEC 2. FINDINGS

The Congress finds that –

(1) The Federal Reserve Act of 1913 effectively ceded the sovereign power to create Money delegated to Congress by the Constitution to the private financial industry (why not say " The Federal Reserve System", instead of "the private financial industry?).

(2) This cession (use "giving up") of Constitutional power has resulted in a multitude of monetary and financial afflictions, including an uncontrollable national debt, excessive taxation of citizens, inflation of the currency, drastic increases in the cost of public infrastructure investments, excessive un- and under-employment, and erosion (it is more that an "erosion", it is at least an "abolition" or a "destruction") of the ability of Congress to exercise its Constitutional responsibilities to provide for the common defense and general welfare.

(3) The issue of means of exchange (why not say "money"?) by private financial institutions (but "private financial institutions" (banks) have basically always existed in common law and can't reasonably be abolished. In addition since the Constitution can reasonably be read as leaving the right to "Banking" to the people, it may be unconstitutional to deny the people the right to operate banks) as interest-bearing debts should cease once and for all. (You want to kill off all interest bearing debts?)

(4) The power of Government to create Money and spend or loan it into circulation as needed is similar but different in nature from the power to create and market instruments of indebtedness; (I do not see any difference. I think there is a difference between having the Governmnet issue the debt or private corporations issuing the debt -- and I agree with that -- but that is not what you wrote) it (what?) eliminates the need (for the United States?) to pay interest charges to financial institutions and removes their (The Federal Reserve System's?) undue influence over public policy. (I think that was originally a sloppily written sentence and my questions and additions (in blue) did not help make the senence any less sloppy)

I think Zarlenga meant to write that there is a difference between (a) Congress creating and spending money directly into our monetary system and (b) The Federal Reserve creating money and lending that created money to the United States who will lend and spend that created money into our monetary system. We are using system (b) now -- and that leaves The Government in debt to the Federal Reserve. Under system (a) -- any money spent into the system would (1) leave no debt behind and any money lent into the system would be (2) debt owed to the Government from the borrowers. I would agree to plan (a) -- but not to plan (b).

(5) Direct disbursement of United States Money can be readily and easily implemented, including replacement of Federal Reserve Notes and retirement of debt.

(6) The Federal Reserve System (FRS) shall be retained as a central bank of issue, a national fund processing clearinghouse, and a fiscal agent for the Government and should be incorporated within the US Treasury. It should no longer be utilized to introduce liquidity into the currency system through interest-bearing debts. (Why not do these things through the Treasury?) (Would you allow the existing FRS to operate as an independent corporation -- outside the checks and balance of the Constitution? That is not likely to work -- they must either be abolished or put under the direct unambiguous control of Congress or the President)

(7) Government policy with regard to monetary supply should be based on the principle of furnishing sufficient liquidity to support the reasoned sustainable expansion of the physical economy, providing for the common defense and general welfare of the United States, and full employment of the nation’s working population.

TITLE I – DISBURSEMENT OF UNITED STATES MONEY

SEC. 101 AUTHORIZATION FOR DISBURSEMENT

Not later than 90 days after the effective date of this section, all United States Government disbursements shall be denominated in United States Money, the nominal unit being the U.S. Dollar.

SEC. 102 LEGAL TENDER

United States Money shall enter into general domestic circulation as full legal tender in payment of all debts public and private.

SEC. 103 NEGATIVE FUND BALANCES

The Secretary of the Treasury shall directly issue United States Money to account for any differences between Government appropriations authorized by Congress under law and available Government receipts.

Note: The fact that Treasury will be able to make disbursements based on direct issuance of United States Money for negative fund balances reflects Congress’s Constitutional authority to “coin Money”, because Congress will then have the ability to adjust the amount of Money so created by regulating both appropriations as well as revenues from taxation and other sources. The focal point of power will be the House of Representatives as the initiator of revenue bills. Restoring to Congress its Constitutional authority will shift the ability to create Money and enter it into circulation from the private banking industry to our elected representatives, as the Constitution mandates.

SEC. 104 FORECASTING OF DISBURSEMENT REQUIREMENTS

The Secretary (of the Treasury) shall:

(1) forecast disbursement requirements on a daily, monthly, and annual basis;

(2) provide such forecasts to Congress and the public;

(3) integrate forecasts with the Federal budget process;

(4) maintain a sufficient research capability to continuously and effectively assess the impact of disbursement of United States Money on all aspects of the domestic and international economies;

(5) report to Congress and the public regularly on the economic impact of disbursements of United States Money and the status of the monetary supply.
(The Treasury is in the executive branch. Should not this be changed so it is under Congress, in the legislative branch? You do not want to unintentionally abridge the Separation Of Powers)

SEC. 105 MONETARY CONTROL

(1) The Secretary shall pursue the policy that the supply of money in circulation should not become inflationary nor deflationary in and of itself.

(2) Monetary supply targets shall be established by a Monetary Control Board consisting of nine public members appointed for staggered six-year terms by the President with the advice and consent of the Senate and reporting for administrative purposes to the Secretary. (and who will the Secretary report to ? See the last blue type.)

(3) Responsibility to regulate the monetary supply in reasonable accordance with targets established by the Monetary Control Board shall rest with the Secretary of the Treasury (under the control of Congress?).

(4) The Secretary shall report to Congress any discrepancies between targets and supply in excess of two percent at the end of each quarter.

SEC. 106. DISBURSEMENT IN LIEU OF BORROWING

(1) Disbursement of United States Money under this Act shall be made in lieu of borrowing (from the FRS) through Treasury instruments. (The previous sentence and the title of SEC. 106 is awkward. The word "disbursement" is used incorrectly. "Borrowing" is a way of getting money: "disbursement" is a way of spending money. The one can't be used "in lieu" of the other.)

(2) Such borrowing shall cease as of the date stated in Section 101 of this title, unless otherwise authorized by Congress;

(3) Nothing in this Act shall prevent Congress from exercising its Constitutional authority to borrow on the full faith and credit of the United States.

SEC. 107 ACCOUNTING

The Secretary shall account for the disbursement of United States Money and of current fund balances through accounting reports maintained and published by the Secretary and by departments and agencies of the Government. The General Accountability Office shall conduct an independent audit every second year. (The accounting shall use double-entry bookkeeping which tracks assets and liabilities as well as income and expense. In particular, government expenditures for national infrastructure will not be expensed immediately. Such expenditures will become bookkeeping "assets", each of which will be expensed in accordance with a dedicated depreciation schedule. This system is the standard system used by almost all businesses.)

TITLE II – RETIREMENT OF INSTRUMENTS OF INDEBTEDNESS

SEC. 201 COMMENCEMENT OF RETIREMENT

Not later than one year from the effective date of this section, the Secretary shall commence to retire all outstanding instruments of indebtedness of the United States by payment in full of the amount legally due the bearer in United States Money, as such amounts become due.

TITLE III – CONVERSION TO UNITED STATES MONEY

SEC. 301 CONVERSION OF FEDERAL RESERVE NOTES

(1) Not later than 120 days from the effective date of this section, the Secretary shall establish the capability of converting outstanding Federal Reserve Notes to United States Money of equal face value upon presentation to any domestic national or state financial institution by the bearer;

(2) Not later than 150 days from the effective date of this section, the Secretary shall provide a sufficient quantity of United States Money to the domestic banking system to allow for conversion of all book entries and cash-on-hand;

(3) Not later than 180 days from the effective date of this section, all financial institutions within the United States shall disburse funds only with United States Money;

(4) Not later than 180 days from the effective date of this section, all fund accounts within United States financial institutions shall be denominated only in United States Money;

(5) The Secretary shall promptly dispose of all Federal Reserve Notes upon receipt.

SEC. 302 RESERVE REQUIREMENTS AND INTEREST CEILINGS

(1) Not later than 180 days from the effective date of this section, financial institutions authorized to operate within the United States under any Federal or state charter may only lend money as a deposit institution without fractional reserve banking; (BIG MISTAKE -- There is nothing wrong with fractional reserve banking if (a) all loans are properly collateralized and (b) if the money is loaned to people who will use that money to create wealth such as developing property into farmland, building roadways, building research facilities and other worthwhile infrastructure. Please think this through. The fractional reserve system has built in safeguards that naturally pushes bankers into a very cautious lending mode. The problem is the Fed did not encourage caution because they knew government taxes would be used to bail the bankers out. Remember - under fractional reserve banking, every dollar lost by a bank, because of a bad loan, costs them the interest on at least $10 of loans they have to call back to keep their proper reserves)

(2) In order to initially bring reserves to a level equivalent to outstanding loans, financial institutions may at inception of this act, borrow United States Money from the Treasury; (??? see blue directly above)

(3) In ending fractional reserve banking, the Secretary is authorized to initially lend United States Money at interest to financial institutions for reserve purposes subject to regulations established by the Secretary.

(4) Not later than 120 days from the effective date of this section, the Secretary (of the Treasury) shall publish regulations for:

a) criteria to determine interest charges for utilization by financial institutions of public funds, procedures for determining and declaring insolvency of reserve borrowing portfolios, and policies and procedures for disposition of forfeited financial institution assets.

b) Checking type accounts; to implement a system of what is generally known as one-hundred percent reserve banking on all checking accounts. Effectively, checking accounts become a warehousing and transferring service for which fees are charged. This regulation will take effect over a one year period.

c) Savings Type accounts and Time Deposits; to establish reserve and other requirements for the continued lending of money at interest by banks.

d) other accounts; establishing appropriate regulations, to encourage private lending activity, but prohibit private money creation.

e) the computer accounting segregation of deposits of money, from the deposits of loans – i.e. from credit deposited in the system, with the intent to allow money, but not credit, to be loaned out. (forget (a) to (e) -- you are opening Pandora's box or a can of worms)

Note: It is anticipated that the money spent into circulation by the U.S. Government under Title V of this Act, will ultimately be deposited into the banks, where that money, not fractional reserves, will provide the engine for continued loans and necessary expansion. It is also anticipated that enough public spirited banking professionals will join with Treasury officials in assuring that these regulations are properly formulated recognizing realities within the banking industry, to assure a smooth transition. (This is not likely to work)

(5) The total amount of interest charged by a financial institution to any natural person borrower through amortization, including all fees and service charges, shall not exceed the original principal of any loan, except mortgages. (Has anyone in the history of mankind ever lent money a stranger without getting interest?? What is the lender's incentive? Why wouldn't he invest in the stock market -- or use the money to go into a business and hope to generate a profit from that business.)

(6) United States debt instruments held by banks will be credited to their reserve positions in calculating the amounts necessary to borrow to upgrade their reserves.

(7) The maximum interest rate of 8% per year will apply throughout the U.S. inclusive of all fees. (Does this square with # 5 above?)

TITLE IV – RECONSTITUTION OF THE FEDERAL RESERVE
AS A BUREAU WITHIN THE UNITED STATES TREASURY DEPARTMENT (Hooray -- but isn't the Treasury Department currently in the Executive branch. See Sec. 104-5 above. I hope you clear this up below.)

SEC. 401 RECONSTITUTION OF THE FEDERAL RESERVE

(1) No later than 90 days from the effective date of this section, the Secretary shall purchase on behalf of the United States all net assets in the Federal Reserve System at current market value denominated in United States Money.

(2) The Federal Reserve in its role as a central bank of issue, a national fund processing clearinghouse, and a fiscal agent for the Government shall be reconstituted as a bureau within the United States Department of the Treasury.

(3) The Federal Reserve shall be administered by a commissioner and deputy commissioner appointed for six-year terms by the President with the advice and consent of the Senate.

(4) The Federal Reserve shall administer on behalf of the Secretary the monetary targets established and authorized by the Monetary Control Board and shall administer lending of United States Money to authorized financial institutions in order to assure one-hundred percent reserve banking, also known as deposit banking, within the United States.

TITLE V – INFRASTRUCTURE MODERNIZATION

SEC. 501 DIRECT FUNDING OF INFRASTRUCTURE IMPROVEMENTS

Note: Since the banks will not be creating new money and it is crucial in an expanding economy and population base that new money be added into circulation, this will be done through direct funding of infrastructure, social, education and health programs on a per capita basis assuming an equitable distribution throughout the nation. (Uh-oh -- This is likely to cause all sorts of trouble. It is way better to lend the money to entrepreneurs who will put up collateral and pay back the loans from profit they will make on the projects, the success of which will be naturally controlled by the free market. You are essentially planning to put in a system based on the concept that congress can build infrastructure more efficiently than a company driven by a desire to make profits in a free, competitive, market. Be careful.)

Not later than 90 days from the effective date of this section, the Secretary shall report to Congress on opportunities to utilize direct funding by the Government to modernize, improve, and upgrade the physical economy of the United States in such areas as transportation, agriculture, water usage and availability, sewage systems, medical care, education, and other infrastructure systems, to promote the general welfare. This will be done with substantial intrinsic ecological sustainability and quality of life considerations. In particular to promote throughout the U.S. a harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion. (OHMIGOD)

Note: these ecological, sustainability and quality of life considerations are derived from the European Central Bank treaty protocols, which examined the questions extensively.

SEC. 502 INTEREST FREE LENDING TO LOCAL GOVERNMENTAL BODIES

Not later than 180 days from the effective date of this section, the Secretary shall provide recommendations to Congress for a program of interest-free lending of United States Money to state and local governmental entities including school boards and emergency fire services for infrastructure improvements under their control and within their jurisdictions, based on per capita amounts or other criteria to assure equity as determined by the Monetary Control Board.

SEC. 503 FARMING PARITY PROGRAM

Not later than 120 days from the effective date of this section, the Secretary, in cooperation with the Secretary of Agriculture, shall provide recommendations to Congress for a program of farm parity payments of United States Money to family farmers in order to assure diversity of quality domestic food sources and products and maintain the socially beneficial existence of family farming operations within the United States.

SEC. 504 INITIAL MONETARY DIVIDEND TO CITIZENS

Not later than 90 days from the effective date of this section, the Secretary, in cooperation with the Monetary Authority shall provide recommendations to Congress for payment of a Citizens Dividend as a tax-free grant to all U.S. citizens residing in the U.S. in order to provide liquidity to the banking system at the commencement of this act, before governmental infrastructure expenditures have had a chance to work into circulation. (It seems to me that many of your proposals are derived from the thinking of the Austrian School of Economics, (which I happen to think is as good as any other theoretical plan) -- but increasing the money supply by gifts to the public is, according the Austrian School absolutely certain to cause severe inflation.)

The American Monetary Institute would like to thank the following persons for their helpful comments on previous drafts of the American Monetary Act: Mr. Ken Bohnsack; Prof. Robert Blain; Mr. Richard Distlehorst; Mr. Ben Gisin; Mr. Greg Mihalich; Prof. Nic Tideman; Mr. Randy Cook; Mr. Charles Walters; Mr. David Hershey; Prof. Glen Martin; Mr. Dan Sullivan; Mr. Byron Dale; Mr. Steven Looney; Mr. Greg Young; Dr. Lewis Coleman; Mr. Jack Biddell; Mr. Don Bethune; and last but not least, Mr. James Robertson. Responsibility for the program as a whole rests with the American Monetary Institute Charitable Trust, a 501(c)3 organization founded in 1996 for the independent study of monetary history, theory and reform. Please see http://www.monetary.org where you may email your observations on this proposed legislation as well as your donations to assist in educating our citizenry on these important questions. After comments lead to further refinements, the Act will be prepared for introduction as a bill into the House of Representatives and the Senate of the United States of America.

Further comment on the Act is invited by email to ami@taconic.net or martycarbone@yahoo.com

In my humble opinion Zarlnga's ACTis doomed. At the top of this page is what I sent to Zarlenga in response to his posted notice that he wanted comments on the ACT.

I thought I was being helpful -- but he got furious and demanded to be taken off my email list.

In my contact with Zarlenga, I have decided he is a terrible person -- and should not be trusted any further than you can throw him.

It seems to me he simply loves being a "leader" and owner of a website.

What a small ambition for someone who is obviously smart and a very good writer.

Unfortunately -- he does not think logically.

I think he is doing way more harm than good. Beside advancing his own slightly goofy ideas, he is suppressing the ideas of everyone in his group by the failure to consider alternatives.

It is my belief that all of the real thinkers in his group will ultimately drift away and that group will achieve nothing.

It is a shame that he is perverting his talents.

Please check out <<http://www.howto-ville.com/Money%20Section/onepagesilverbulletplan.html >> and tell me what you think of the plan (please do not comment on the fact that I am not carrying Zarlenga's torch).

Unity and loyalty to a movement can be wonderful -- except when the leader's ideas are goofy.

Marty Carbone