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Spending and lending money into the system (Plan C)
1) We believe The Federal Government can easily take back control of the money supply from the Federal Reserve System and thence-forward use the Fed efficiently by changing the rules under which the Federal Reserve System will operate.
2) With that control, the Government will be able to lend and spend money into our economic system by focusing on wealth generating national projects which will each pay for itself over time. We are thinking of repairing, building and rebuilding roads, bridges, waterways, rail-lines for people and goods, aqueducts, water storage facilities, water pipelines across the country, schools at all levels, sustainable energy programs, research programs and such. The Federal Government has the existing Constitutional right to create money in that way. See <<http://www.howto-ville.com/Money%20Section/banking&economicspageone.htm>>
3) Other worthwhile programs can be started for any profitable program -- with an accompanying mandate that the completed operating program would be turned over to States, local municipalities and private ownership on long term self-liquidating leases. See:
<<http://www.howto-ville.com/Money%20Section/banking&economicspageone.htm>>
4) In fact, as we read the Constitution, the people have the right to start banks. See next paragraph. Some “experts” debate this. They say the Constitution gives Congress the right to “coin money” -- but does not give Congress the right to “print money”. They argue further that because the Constitution does not say “print money” that means all paper money which is created by Congress is not legal under the Constitution. Right now, that point is moot -- because paper money is not created by Congress -- it is printed by the Treasury under the system used by the Federal Reserve Board which is not mentioned in the Constitution and therefor has no Constitutionally defined status.
Note that Article I, Section 10 of the Constitution shows “No State shall ... coin Money; emit Bills of Credit (the preceding 4 words mean “issue paper money”) ....” That prohibits States from printing money. Note that the 10th Amendment shows “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” In Summary -- that means printed money is either Constitutionally valid because of either (a) “coin money” means “print money” or (b) in any event -- the People can print money. It is only the States that are prohibited from -- emitting “Bills of Credit”. If we are right -- the people can start banks and create money directly under a charter or license from the Federal Government.
On this website, We have the current requirements for opening a bank in California. They are extremely liberal and simple. No new laws are needed to put Plan C into existence -- such a system could be started tomorrow with no need for new legislation.
5) All projects would be carried as assets on the country’s books and expensed over time in accordance with a dedicated depreciation schedule.
6) We know this is a little mind boggling. Because of the laws of physics, we all tend to think you can’t make something from nothing, therefor, you can’t “make money out of thin air”. But that thinking is fallacious. In fact, laws of physics teach that Matter and Energy can neither be created nor destroyed -- but they can be made to change form.
7) Fractional reserve banking essentially allows wealth to change form. A farmer can turn money into turnips and back again to more money if that farmer uses borrowed money to grow turnips that he sells for more money than he borrowed. Doesn’t that make sense?
8) But what about the theories of the Austrian School of Economics? They seem to teach that adding money to a monetary system always causes inflation. That would be true if the added money did not create wealth. But if the new money creates enough wealth to pay the money back and still have a surplus -- there will be no inflation.
9) According to Ellen Brown’s book, “Web Of Debt” (page 100) government spending as suggested here has been done successfully in other places -- notably the Island of Guernsey (South of Great Britain) from 1816 until the present day. The following is from Ellen Brown’s book.
“In 1994, Dr. Bob Blain, Professor of Sociology at Southern Illinois University, wrote of this remarkable island: In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey’s debt was 19,000 pounds. The island’s annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment. Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island’s money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation.
Guernsey has an income tax, but the tax is relatively low (a “flat” 20 percent), and it is simple and loophole-free. It has no inheritance tax, no capital gains tax, and no federal debt. Commercial banks service private lenders, but the government itself never goes into debt. When it wants to create some public work or service, it just issues the money it needs to pay for the work. The Guernsey government has been issuing its own money for nearly two centuries. During that time, the money supply has mushroomed to about 25 times its original size; yet the economy has not been troubled by price inflation, and it has remained prosperous and stable.”
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