the perfect should not be the enemy of the good.
So, what is the smallest piece that can achieve a switch .Is the kucinich bill something workable…. to just change this upper eschelon of monetary creation.

I also would expect that it would need to take the power from the banking community as a whole,in the sense only that a contraction of credit on the street is how the bankers usually seem to throw tantrums and make politicians pay for trying to end their free lunch,and they make life hard for the rest of us.I am not saying this transition of monetary system needs to change the normal functions of banking,commercial,savings/local or anything.I just mean that this type of thing is akin to picking a fight with people who have good jobs,and don’t want to lose those bonuses.
Just like Biddle did when Andrew Jacskon went after him and the bank of the US.Several years of calling in loans, contracting the money supply,the necessary effect on every other sector….This is standard and works well for them.

And now, even Kucinich is on his way out of congress.What will become of his bill?

That’s the task, just pull the curtain aside and reveal the great and powerful Oz for the parasitic con man that he is.

Because it’s such an outrageous scam, conceptualizing debt-based money is difficult for most people – especially the variant practiced today, where the bankers put the people’s wealth at risk to propagate the con.

Maybe part of the solution to communicating the scam to the people is to explain that what’s being proposed is to REPLACE the current con with what the people think is going on now – full reserve banking

You need to increase your visibility – or whatever the analogue is in the digital world. Consider appearances on some of the more popular internet radio venues. In many cases their audiences dwarf those of what is increasingly inappropriately termed the “mainstream media.”

Mr. Krugman, and the advisors to those on the political right share the same belief: The sanctity of this privately managed credit monetary system. No more evident was this then in October 2008 when Treasury Secretary Paulsen proposed a $700 billion bailout of the financial industry and the presidential candidates of the two major parties only issue was how to get to Washington fast enough to carry out this wrong policy.

But $700 billion was the tip of the iceberg. According to recently released information, the Fed has made $9 trillion in loans and now holds $2 trillion in assets (toxic? probably) to the financial sector in attempts to get money (credit) into the economy. http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm?hp
But none of this has worked. So why does Mr. Krugman tell us another $600 billion will?

Congressman Ron Paul was not a presidential candidate in October 2008, so one might only speculate on his position regarding this travesty. He argues himself a Libertarian. But the Libertarians trace back through the von Mises group to their principal supporter: Koch Industries. Without going to far afield, according to Wikipedia, Koch Industries is a conglomerate “with subsidiaries involved in manufacturing, trading, and investments.”

Trading and investments are what all of these conglomerates do. So there is little reason to believe Koch Industries’ desires something different from the present privately managed credit monetary system. General Electric, Reagan’s sponsor, is an example of these: it carries loans on secure residential real estate in Mexico at 18 percent.

Manufacturing creates products that fulfill our needs and comforts. But trading and investments are the means that transfer great wealth. It is done through the simple process of accounting. But that accounting only works if it is connected to a government chartered lending institution.

When we get to the banks and other lending institutions, we discover the true definition of money and it is not the surreptitious objects Mr. Krugman tells. It is true in the United States that pieces of green paper bearing portraits of dead presidents are money. But that’s because the Federal government stamps them so.

Government could as well stamp pieces of gold, silver, copper, iron or any of a host of materials and they would be money representing the stamped value. To stamp gold as money is the hype of the gold bugs; many professed Libertarians who deal in gold. To them and the others that trade in these things, that would be nice, as there would be another artificial item of wealth to go with the Federal securities for speculation.

But government could as well guarantee accounts as money. And in essence that is what government does through bank charters and account guarantees. We may see this a little better in a more personal setting.

Anybody that has kept a checking account should know that money is simply an accounting process: keeping a record of one’s money transactions. That is what banks do: keep a record of money transactions. Banks also transfer accounts in their record keeping. But through electronic banking, we do too by entering numbers on a computer screen.

The difference between our record keeping and our electronic transfers and that of the banks’ is that government guarantees the banks’. This is why the banks’ accounts are money and ours are not. And this is why we have to have our accounts also with the banks. But now we come to the gist of the issue:

According to Abraham Lincoln, ours is a government of the people, by the people, and for the people. So if it is our government that secures the accounts and stamps the counters that constitute money: Why is it that our government has passed the management of this most important component of our economic life to a privileged private group?

That question is not rhetorical. Certainly if we do not wish for this continual obscene transfer of wealth to the elites and if we do not wish to experience these periodic economic crises then it is us that should create our own money, which we can through the fiat of our government.

Many over the years going back before Ben Franklin’s tracts on money have argued the benefits of having government create societies’ money. There now is a bill before Congress by Dennis Kucinich that follows the ideas of Steven Zarlenga of the American Monetary Institute to do this: http://www.govtrack.us/congress/bill.xpd?bill=h111-6550.

I find many faults with the Kucinich bill, some cited here. But it is a long overdue beginning in monetary reform and both Mr. Zarlenga and Mr. Kucinich should be greatly commended for their efforts in bringing this idea this far.

A further point is that Dennis Kucinich and Ron Paul cooperated before: most memorably against the on-going wars and are alone in seeking to change the Fed: http://www.ronpaul.com/2010-09-13/ron-paul-and-dennis-kucinich-allies-against-war/

The Kucinich bill requires one hundred percent reserves on all demand deposit accounts. That would have been all that was needed to place full control of the monetary system in the government in 1933 when the Chicago plan was presented to the Roosevelt Administration.

However, things are far more complicated today in consequence of Federal deposit insurances on saving deposit accounts (as well as many other guarantees on investments); and a greatly different tax structure. The Kucinich bill is silent on both. If Federal deposit insurances are not eliminated on saving deposit accounts, the act clearly loses meaning.

As to the changed tax structure: in 1933 the income tax was highly progressive (relative to the revenues obtained), whereas today, it is excessively regressive. The latter is in consequence of a multitude of factors but mainly:

A capital gains tax, which coincides with the lowest income tax schedule while removing it from all other taxes; Greatly compressed income tax brackets to where the maximum is little more than twice the minimum, the latter falling into the poverty range; and a limit on the income taxed for social security. To establish a sound and equitable publicly managed cash monetary system, as I refer to it in “A Plan for America”, also requires changes in the tax structure.

Mr. Zarlenga wrote an excellent article a few years back, which he appropriately titled: “Economics: A Clandestine Religion Masquerading As A Science.” http://www.cooperativeindividualism.org/zarlenga-stephen_on-economics-as-a-science.html.

Federal deposit insurances are a violation of the law of liquidity preference, one of the few concepts that would place (macro) economics in the realm of science. Through this law the divide between money and credit is uncovered. Contrary to the musings of economists, including Mr. Krugman, there is a fundamental difference between money and credit.

A third point is the amount of new money needed to advance the economy and then how this money is introduced into the economy. In 1949, the money quantity, the Fed M1, was approximately 40 percent of GNP and the growth in GNP since then was approximately 7 percent per year.

If money and GNP had grown proportionally since 1949, then the money quantity for the projected 2009 GNP of $15.7 trillion would have been $6.25 trillion and the change in money quantity from 2008 to 2009 would have been $430 billion. That is a far smaller number than seems reasonably necessary to meet all the things the Kucinich bill proposes.

The Kucinich bill proposes to disburse the majority of the new money by passing it to the states and local governments. I disagree with this on two accounts: one drawing on the behavior of the economic system, and the other on our legal structure. As I see it, the Kucinich bill violates both accounts.

The constitution is clear in denying the Federal government the right to pass money to the states. That was understood by all of the presidents during the antebellum period and was the basis for many of the early New Deal measures found unconstitutional.

In this I suspect Mr. Paul and I are in agreement. If Mr. Kucinich eventually sees it so, I will feel progress was made. And if Mr. Paul understands money is the creation of government, as Mr. Zarlenga exposes, I will feel more progress was made.

As an engineer, I know that if I am to make a machine perform as I intend, I need to understand what drives it and how it responds to the driving force. Economics is no different. Here money and production are the issues: Is it money that drives production or is it production that draws money?

Clearly, if the economy is demand driven new money should be placed with consumers: which, according to our democracy, equality before the law, would be distributed equally to the people.

The question whether the economy is supply or demand driven would not be difficult to answer if we spend any time at all observing the economic system. But that would be true only if we were not confused by the present paradigm. But if for the moment we can separate ourselves from this paradigm, we should see it quite clearly:

When the entrepreneur’s widgets begin to back-up in his warehouse and he looks outside and finds it happening to others, he sees it not as an obsolesce of his product but rather as a general lack of sales in the community. And if he knows anything about human nature and history, he knows that when money becomes scarce people buy less and hold money tighter. That is the law of effective demand and it is akin in the economic world to an apple falling on one’s head in the physical world.

It is the force of gravity that pulled the apple toward the earth and it is money that drew the widgets from the entrepreneur’s warehouse. Here the economy is clearly driven from the demand side. The reason the force of gravity still exists is that bankers do not control the universe.

But bankers do control money, through issuing credits and retiring loans. When things look bad, mainly because they issued too much credit (gravity) when things looked good, they can only retire loans. That they must do if they are to retain their charters under existing law. Clearly loan-retirements exceeding loan-issuances contracts the currency and weakens demand. This is the essence of our current crisis.

Currency contraction was the cause of the slowed recovery during the Great Depression. A clear difference in these two events was in the initiation of the crises: by 1933, bank failures, destroying demand deposit accounts, brought the economy to its knees. So far, bank failures have not been the problem in the present crisis.

But as here noted, other differences make this crisis far more complex and far less amenable to the measures that worked during the Great Depression: And they are all in consequence of this wrong paradigm that the economy is supply driven.

Although our observations and logic (the two components of science) tell us that the economy is demand driven, the rhetoric from such as Economist Arthur Laffer in the early 1980s and Mr. Krugman now arguing the benefits of the $600 billion Fed bond purchase have imbedded many amongst us with this false notion that it is supply driven.

So in accordance with our economic laws and our democratic form of government, newly created money should be passed equally to the people. For the 2009 year, that would have been about $2,000 each. For the Fed $600 billion, it would be nearer $3,000 each.

But rather than passing $600 billion to the people and restraining the banks from credit issuances, that $600 billion will be passed to the banks where they can again do great damage should things begin to look better.

Not a point aside, given the low Fed interest rates, those bonds will be purchased above par, and when the Fed sells them, as a control on inflation, they will be below par. This is just another way the Fed transfers money from the government to the elites. – Jim

Here are the two most substantive reasons, based on the numbers reflective of the reasoning of Lord Kelvin, for not passing money to the states. Understanding these reasons begins with the fact that the states and local governments’ need for Federal government money to develop and maintain their infrastructure is totally bogus. It ends with the numbers that show just how disastrous this idea when implemented for some fifty years has been to these local communities (states included) both in terms of destroying their democracy and in placing a financial burden on them that obviously cannot be sustained.

One of the largest infrastructure projects the World has ever witnessed, notwithstanding the massive works of the Tennessee Valley project that has found no end, is the California State Water project, which I was part of. This project, which includes the 770 foot high Orville dam in northern California that collects the waters from the Feather river, some 700 miles of aqueduct with associated pump stations that carry this water across the Great Central Valley, the massive pump works at the southerly end of the Great Central Valley that lifts these waters over the Tehachapi Mountains, and then the four large reservoirs in Southern California where these waters are temporarily stored, began in the 1950s and was essentially completed in the 1960s and it has served the needs of the people of Southern California for the last five decades. Its funding was almost totally from State legislature appropriations and the sale of bonds.

But having the states and local governments create their own infrastructure was a common feature of that period some fifty to sixty years ago, unlike today or since the Great Society programs of the Johnson Nixon administrations came onboard. But then these communities that did these things did not support state and local governments with excessive salaries, bloated staffs, obscene laws, and to top it off retirement pensions that in truth double the cost of these already bloated staffs. But to continue:

I remember in the mid 1950s playing a basketball game against a neighboring county school in their new gymnasium. The reason I remember it so well is that the school I graduated from was built during the Depression years with a small gymnasium and a less than official size court: some even called it a cracker-box. Hence we were not conditioned to play on this official size court. Although we had a much smaller student body, my class graduated five theirs probably forty-five, and our inferior court, we still played this school even for the first half and might have beaten them had their referrers not fouled me out well before the game ended.

That game may not have been the impetus for three contiguous districts, of which ours was one, of more or less equal populations, to consolidate. But these three communities agreed to do so. They then floated a bond issue to finance the construction of a new high school with a state of the art gymnasium quite similar to the one we got beat on. And four years later, my coach with the team comprised of students from this consolidated district including those that formerly attended a nearby Catholic school now drawing from about the same populations as the school that beat us, and with a regulation court, won the State championship.

The point is that these communities were very cognizant of their needs and desires; and were willing to raise the money to achieve them independent of outside aid and I should add without outside interference. In fact much of the infrastructure in these communities, mainly roads and schools and their maintenance (they did not need large jails and the police force to man them as this county and every state and local government agency in the nation now have), was completed during the two decades following World War II. That is true of the county that I grew up in, which now has increased in population over this past half century by about 75 percent and its cost about 10 times, as we see next.

In 1950, state and local government expenditures combined was $27.9 billion, which constituted 9.8 percent of the $284.6 billion GDP. In 1957, the last year in which there is data in Historical Statistics of the United States Colonial Times to 1957, combined state and local government expenditures was $47.5 billion, constituting 10.8 percent of the $440.3 billion GDP of that year. Now we come to 2008 and find combined state and local government expenditures at $2.9 trillion constituting 20.1 percent of a GDP of $14.4 trillion. (The individual numbers for state and local government total $3.3 trillion, but some of that likely is double counting so it was assumed that a proportion of the states’ expenditures were through passage to the local governments at the same ratio as in the 1950s. Not having these numbers in a readily available or discoverable form is simply another adverse reflection on what all levels of our governments have become over this past half century).

But these numbers alone are not the full story. According to the Federal Reserve Bank of St. Louis, between 1950 and 2008, real GDP on average grew at 3.2 percent per year. That means that the states and local governments had really spent 12.7 times the amount that they spent in 1950 (in actual purchasing power) and 9.3 times that amount they spent in 1957 when the nation was most involved in building and improving much of its infrastructure. During this early period, much if, not all of this infrastructure, as relayed above, was financed through these local and state government agencies. In 2008 the population was about double what it was in 1950 but clearly schools, roads, public libraries, parks, etc were already built or if they came later they were built far more by the private sector than by these government agencies.

Not only do the states and local governments have an order of magnitude more money to spend while providing at best nominal additions and repairs to the nation’s infrastructure, they clearly provide lesser-valued services than they did some 50 years ago and in the process, they are now bankrupting these agencies. Clearly very little money that goes into these agencies will ever provide any value to their communities at large but rather will be used to service the outlandish salaries and retirements that these agencies have fostered onto these communities over the years. But these agencies did not do this alone; it required the Federal government grants to fully destroy the democracy that formerly exercised some rational control over them.

In fact a very strong case can be made that the financial crises we now suffer through was largely in consequence of these outlandish retirements (coupled onto these other excessive charges), which brought forth the connection between the Wall Street bandits and the inadequate pension funds that was argued (by the political leadership and others that created public opinion) would be made whole through “investments”.

Here I have offered a few numbers that demonstrate the covetous insatiable appetite the states and local governments now have for money. But it is a consideration of the numbers that is lacking in Kucinich’s bill; or as Lord Kelvin might have said, it rests on a foundation that has not advanced to the stage of science. That is its greatest flaw. And if it should per chance pass in its present form, it likely will evidence a disaster, which the powers that be will grab onto and will use in a manner that will surely prevent proper correction. So, in my opinion, it is most necessary, no it is imperative that these concerns be carried forth as part of Kucinich’s bill. I will provide more on this subsequently. But still, Joe, the nation needs your response to these items! – Jim

Joe – What gives? Your first response was within hours. Now nothing after days. You asked for my concerns on Kucinich’s bill. That was what I began to do with my last blog.

From where I see it, passing money directly to the people rather than to the states and local governments is just the beginning. But it is a very important beginning if we are to reclaim some semblance of democracy and right this economy by correcting this dysfunctional financial system. I will do a little more here on this issue. But if we cannot establish a dialogue, it may well be for naught, at least on this web site.

Let me begin by saying that control over the power of money as a means of control over government was seemingly recognized early on by the Founding Fathers, as evident in Section 7 of the Constitution, which mandates that: All Bills for raising Revenue shall originate in the House of Representatives. At the time the constitution was framed only the House members were to be chosen by the people.

But what the founding fathers may or may not have recognized is less important than the evident fact that the states in accepting money from the Federal government can only do so through coercion. Such is in consequence of the superior power of the Federal government. That was always a part of the Courts decision in the first years of the Great Depression that found many of Roosevelt’s programs unconstitutional.

More material is our experiences with many of the grants to the states and local governments (and others). Most everyone has heard of bridges to nowhere, roads that serve no traffic, etc. I as an engineer with employment in state and Federal government agencies and then in my own companies where I also expended considerable effort in attempting to achieve approval on a patented pavement system have learned much about how these agencies operate. In writing about this unique technology, I have also written about these experiences.

I was allowed to build one of my unique designs. It cost little more than half of the “comparable” conventional pavement. The theories supporting this unique system indicated that this pavement would have an unlimited life with at most only minor surface conditioning. That now has been proven without any surface conditioning to the extent 28 years of use and a ride quality today as good as it had when first placed in service can prove.

But we were not allowed to build more, Why? The question obviously cannot be answered beyond a reasonable doubt. But the preponderance of the evidence seems to do so. A conspiracy? No. More like an understanding amongst the politicians, the upper most levels of the bureaucracies, and those that provide the materials for these flawed systems and those that construct them.

There is a fourth membership to this team: professors from the universities. These professors that know how to play the game receive large grants for providing the fodder that supports the bureaucracies’ decisions, and it is the upper levels of the bureaucracies that are charged with formalizing the decisions.

This is not to condemn any of these (other than the professors). It is simply the nature of the beast. Ron Paul in his books acknowledges similar on-goings including those things that fall into my chosen field.

Achieving a sound and fair monetary system is not a difficult chore from a mechanics perspective. What makes it difficult if not impossible, in my view, is the same thing that prevented my invention from becoming an accepted part of the road building technology: The monopolization of the road building industry through the connection of the states to the Federal government, which began to take place in the 1960s and 1970s; and The fodder put forth by those at the universities that “meets the needs” of those that control the industry, in the case of money, it is the financial system that is now almost fully subservient to the mega-investment corporations.

Here I have given a few practical reasons for not passing money to the states but rather passing it directly to the people. Let me give one more reason for passing money directly to the people beyond the legality of doing so: to form a positive means of connecting the people to their governments. I believe the $600 disbursement that was part of the 2008 Bush stimulus package could have been a beginning in making this connection. That I suspect was a reason it was not continued.

Of course another reason for its discontinuance was that about 60 percent of this $600 was used to buy down debt, if we can believe one pundit. Buying down debt is what needs to be done but that is not what those in control of our financial system want. Although this is another issue it is closely associated with Kucinich’s bill.

There are many amongst us, particularly those in government elected and otherwise that give lip service to democracy but then have a phobia against doing those things that foster democracy.

Joe – what I have seen in your videos and in you response to my first blog tells me you are not amongst these lip service democrats but rather that you are one with an enquiring mind and a desire to solve problems. As I noted above, we need a dialogue if we are to find answers.

Jim

I agree with you that a national currency unit is a claim against an economic unit produced in that national economy. However, beyond the legal point as to what gives money value which we have complete agreement, I also see money from a different perspective. This comes from defining money more from its character as from its usage, the latter is more the common means of definition. To show this, I have extracted from my book. This is a little lengthy but I think it is necessary in putting at least a part of my views in perspective. It also helps in exposing one of my main disagreements with Kucinich’s bill.

“Money in a more restrictive sense is the legal medium of exchange being by law made payable for all debts public and private. In this usage, money is indeed unique. Where the medium of exchange is paper, the word fiat may attach. In a sense, the word fiat may be redundant, however it does add clarity due to the often-lax usage of the term money. In most common dictionaries, fiat money is also defined: as irredeemable paper money made legal tender by law. The term ‘legal tender’ is then defined as that: which may legally be offered in payment of a debt, which a creditor may not refuse. In this inquiry, the term money is often used as it is found. In such usage, money may not always mean legal tender.

“The inventions of money served by such socially esteemed items as wampumpeage, whiskey, and gold and silver coinage provided a standard of value, a store of value, and a medium of exchange that was recognizable solely on their appearance. In consequence, these items served as money independent of political boundaries or political associations. Such is the important attribute of commodity money. For such items as tobacco receipts, paper currency or bank notes to serve as money, they had to maintain their distinctive recognition, so as to prevent counterfeits, but also they had to be perceived as being backed by a value equivalent to that denoted on them. When the majority in a community holds that perception, these items serve admirably in the facilitation of commerce. This confidence makes such paper simply counters in commercial transactions.

“The logical extension of this concept that money is simply counters is that when these counters are made legal tender and placed in some form of public institution such as a bank or saving institution, for safe keeping and to facilitate payments, they become simply a record of transactions. Here we have the true definition of money as it exists in our modern industrial world: A series of accounts and counters, albeit very important and very unique in the means of their administration, security, and control. But in finality money remains no more and no less than markers and entries in a series of accounting ledgers made secure by the people through the fiat of their government.”

It is these markets and account entries that allow us access to those things that fulfill our needs and comforts. This I believe is your meaning of the economic unit produced in that national economy. The point is that all economic activity is for our consumption, that is, to fulfill our needs and comforts and we all ought to have some reasonable minimum access to the economic product.

This reasonable minimum access to the economic product by all, as I see it, is in the main the purpose of the Federal government and follows from the Declaration of Independence. Now to a component in Kucinich’s bill in which I take exception: How the created money is placed into the economy. There are many reasons, both legal and economic, for denying the means chosen in Kucinich’s bill. But certainly, in my view, a National Dividend in which the Federal government disburses a sum of money equally to the electorate best fits with the enumerated powers of the constitution and with what should be its purpose: To promote the general Welfare.

I have written much in my books and elsewhere on these issues including why the Federal government should not pass money directly to the states and local governments or to preferred special interests. In this respect, I am more in agreement with the Libertarians. This is not my only issue with Kucinich’s bill but I would like your comments before going on. Thanks again for your kind reply. – Jim

PS I like your videos particularly the format you and Pete use.

Thanks for your thoughtful commentary.

I am glad you understand the foundation of Stephen Zarlenga’s work – being first in the nature of money itself and second the collective national rights of a sovereign people to issue and control that money– vis, our Constitution.

I believe you seek to change or clarify a couple of my comments in the video.

First, 11.5.09 Part 2 that :
“what gives such money value is a claim on the taxpayer or the resources of the United States of America.”

I’m not sure if that is what I said. What I should have said is only one conjunction( I believe) off :

“what gives such money value is AS a claim on the taxpayer or the resources of the United States of America.”

I know that was not your issue, but it is mine – for the purpose of differentiation.

I was talking about the “value” of a national currency unit – it being a valid claim against an economic unit produced in that national economy.

Every time somebody creates something that is $US-denominated, it creates a claim against our national economy. That is the folly of the shadow-banking system. They create no wealth, but they create equivalent claims on our future wealth as the loan made to a company to produce food or shelter or infrastructure.

I believe your position here relates NOT to the issue of economic value, but of the “power” behind the currency.

“It is sovereignty and sovereignty alone that gives the Federal government its power and money its value,”.

I have no disagreement with that at all.
Sovereignty is what gives the money its power and legitimacy as a national currency – it is as a currency unit that it has the value of the claim on our national wealth. That is what currency units do.

Neo-Chartalists rather enjoy placing the discussion of the “value of money” as deriving from the government creating a claim on a unit of money (taxation) that can only be met by those owing a tax burden first acquiring the money. I disagree with that.

So, I totally agree that the “power” of the national money system derives from the actions of a sovereign government in its creation and issue, regardless of the method chosen.

You also say that I was incorrect to imply or claim(?) that it is the taxpayers that stand behind the government.
“I also take exception with the implication that it is the taxpayers that stand behind the government.”.

I’m not sure what I might have said about that.

But I again agree with the observation from your book about how we have, and do, come to terms over time with the rights and obligations of the people and the government as contained in the revisions to the Constitution.

I am in accord with what you have written. Is there something in my video that I need to change?

Finally, Jim, you wrote this:
“However I have concerns with Kucinich’s bill seemingly authored by Zarlenga that I have not seen in Zarlenga’s writings, your videos, or elsewhere. Hopefully we can begin a fruitful intercourse that will help to best achieve that which we all seek.”

How about if we leave all the other stuff to having been clarified and understood? Please expound here on what those concerns are. Hopefully, we can understand whether they imply a need to fix the Bill.

Thanks for opining here, Jim.

Joe

The United States of America is a republic deriving its just (sovereign) powers from the people with the Federal government administering those sovereign powers. One of those sovereign powers of course, as you noted, is: To coin money and regulate the value thereof… It is sovereignty and sovereignty alone that gives the Federal government its power and money its value, as it gives to the Federal government all its powers.

Consequently it is true that money derives its value simply from the fiat of government whether it is “created” by a private entity expressed as Federal Reserve notes, as is now the case, or whether it is created by the Federal government as is and was so with all U.S. coinage, Lincoln’s greenbacks, silver certificates, etc. This view is also consistent with Stephen Zarlenga’s assertion, drawn from Aristotle, that “money exists not by nature but by law”. In other words, the only way money can lose its value is by the government that created it loosing its sovereignty. That happened to Germany at the end of World War II.

I also take exception with the implication that it is the taxpayers that stand behind the government. That seems to be the universal view of those that form public opinion. But it is wrong. It is the people that stand behind the government, as it is from the people that the government in a republic derives its sovereignty. Here is an extraction from my book “A Plan For America, The Means to Economic Health and Preservation of Our Democratic Republic as Told by an Entrepreneur published in 2009 that sheds further my views on this important issue:

“It is taken as axiomatic that each generation has accepted the Declaration of Independence, as the cornerstone to their government and adopted the Federal constitution as it came to them with its accompanying amendments and then modified it through the constitutional amending process as each generation saw fit. In accordance with this axiom, the term “men” is taken to mean eligible electorate in consequence of the amending processes that have brought forth the Federal constitution to our age.”

Clearly the eligible electorate is something different from the taxpayer. Although a taxpayer may be an eligible elector, an eligible elector doesn’t necessarily have to be a taxpayer, though many are.

E. J. Miller, PhD

PS As to reforming our monetary system, my goals are the same as yours and Stephen Zarlenga’s and I am in much agreement with your views on our monetary system and specifically with the Federal government creating the nation’s money. However I have concerns with Kucinich’s bill seemingly authored by Zarlenga that I have not seen in Zarlenga’s writings, your videos, or elsewhere. Hopefully we can begin a fruitful intercourse that will help to best achieve that which we all seek.