To the Editor:
This is a letter I sent to U.S. Sen. Rob Portman, R-Ohio, recently:
Dear Sen. Portman: There is a way to cut federal spending without eliminating government services that people want preserved. The way is to reduce spending that goes to interest payments on government borrowing.
Interest will have to be paid, of course, on what the government has already borrowed, but the government does not need to borrow any more money. The monetary system in this country is insane. The system is such that private banks, the central banks, create money. When banks make loans, they create money; said the other way, when banks create money, they always create debt. The amount of debt they create, principal plus interest, exceeds the supply of money created. The debt can never be paid back.
The U.S. Constitution gives the government the authority to create money, but the bankers have cleverly convinced Congress to pass that authority on to them (the Federal Reserve Act, 1913), which is, perhaps, not surprising, since we know that in politics money talks. The struggle over who gets to create money goes way back in history, long before Columbus discovered America. Two times in our own history the government has asserted its right to create money.
The first time was in the colonial period when the middle colonies, led by Pennsylvania, created their own money, called Continental scrip. The growing colonies created money to keep up with the growing population, growing economic activity and ultimately the Revolutionary War. They paid for governmental expenditures with money they created and had little need to tax the citizens. They added to the money supply without creating debt.
The second time was when President Lincoln sought funding for the Civil War. The bankers of New York, who had ties with the British bankers, wanted exorbitant interest rates, leading Lincoln to have the government issue its own money, the greenbacks, which sustained growth in the country following the Civil War. It took the bankers about 50 years to wrest back from Congress the right to create money, but they did it with the Federal Reserve Act, which then brought us the Great Depression and the current unsustainable economic dilemma.
It is time for the government to take back its Constitutional authority to create money. It can use its own money to fund the infrastructure work the country needs, infrastructure that is required for the support of commerce in the private sector. Government can create jobs on its own and pave the way for the private sector to be able to create more jobs, all without increasing the federal debt.
The Super Committee, of which you are a member, should endorse HR 2990, a bill that will accomplish this. It will put an end to the unsustainable practice of creating money as debt, let bankers get back to the business of banking, rather than of creating money, and fund needed infrastructure without increasing the national debt. It will ultimately eliminate the national debt while retaining essential government services. Nothing else other than this kind of monetary reform will/can get us out of the mess we are currently in. Nothing else addresses the fundamental problem.
For more details about this matter, consult the American Monetary Institute at www.monetary.org.
John N. Howell
Clarks Chapel Road