The National Monetary Insanity Act

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by Robert Wenzel: 2010
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On
December 17th, Congressman Dennis Kucinich introduced H.R.
6550
: National
Emergency Employment Defense Act of 2010
on the floor of the
House.

The bill is
gaining supporters from many pockets of the internet. What this
indicates is that there is still a lot that needs to be done in
terms of educating the public about the basics of economics. This
bill is quite simply loony,

Passage of
the bill would create even more problems and chaos for the economy
than already exist, at an exponential rate.

The bill calls
for among other things:

To abolish
the creation of money, or purchasing power, by private persons
through lending against deposits, by means of fractional reserve
banking, or by any other means.

Now, there
is nothing wrong with stopping the issuance of loans where a bank
doesn’t have the funds on deposit to make the loans. i.e. fractional
reserve banking. That’s simply preventing fraud, but to call for
the limitation of loans where funds are on deposit is simply mad.
An economy grows because people save, deposit money in banking institutions,
where the money is lent out. To the degree the money is loaned to
the business sector, capital is available for further production.
There is simply nothing wrong with this at all.

The bill also
calls for the loans function to be turned over to the government:

To enable
the Federal Government to invest or lend new money into circulation
as authorized by Congress and to provide means for public investment
in capital infrastructure.

This is simply
central planning. Instead of money being placed in the hands of
multitudes of entrepreneurs via bank loans, this bill calls for
loans to be made by the government. The same government, I might
add, that funneled billions upon billions in TARP funds to elite
banks. Entrepreneurship will thus be replaced by a government power
structure that will dole out money based, of course, on influence.
Further, it appears that there is no limit set on how much money
may be printed for this mad adventure.

The bill goes
on:

To incorporate
the Federal Reserve System into the Executive Branch under the
United States Treasury, and to make other provisions for reorganization
of the Federal Reserve System.

The executive
branch has gained and continues to gain enormous power. The executive
branch now wages wars at will, this bill would give even more power
to control the entire economy. "He who has the gold" or
in this case, paper money, makes the rules. This is simply mind
boggling. It is giving the exeecutive branch the power to declare
a great economic war over its own citizens.

The bill also
calls for the inflationary idea of printing money to resolve any
deficit problems:

In General
– After the effective date, and subject to limitations established
by the United States Monetary Authority under provisions of section
302, the Secretary shall originate United States Money to address
any negative fund balances resulting from a shortfall in available
Government receipts to fund Government appropriations authorized
by Congress under law.

Even more inflationary,
the bill calls for paying off the entire U.S. debt by simply printing
money:

Before the
effective date, 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.

Read
the rest of the article

January
5, 2011

2011
Economic Policy Journal

The
Best of Robert Wenzel

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