Dear Friends of the American Monetary Institute,
We’ve successfully concluded our free monetary seminars in Washington, DC; Kansas City Missouri, and Springfield, Missouri. Next we leave for talks in the West in Portland, Seattle, Olympia and Albuquerque.
In Washington DC, we held good meetings with House of Representative and Senators offices, and noticed a definite shift in that they are now much more interested in hearing of our proposed monetary solutions, the American Monetary Act and the Monetary Transparency Act (attached). Here is the theme letter that we handed out to all:
April 9th & 10th , 2008, Washington DC Visits
What to do about the Banking System Crisis and our Faulty Monetary System
In the midst of the worst banking crisis in decades, the Bush Administration has called for reforms at the Federal Reserve System to start being formulated now, for implementation by the next administration. While some have already written this initiative off, we’re very encouraged by the proposal and hereby join in the process that can help formulate meaningful, necessary reforms of the Federal Reserve System.
The American Monetary Institute, the leading American think tank focusing on monetary reform has been working on these matters since 1996 and is uniquely situated to assist this process. Indeed it was foreseen and is an explicit part of our original mission statement.
We see this process as divided in two phases not necessarily separated in time, and dependent politically on the severity of the developing crisis:
1) The first, actually the secondary phase, focuses on better monetary information to be regularly gathered and published. The items we recommend are in the Monetary Transparency Act (attached). From the monetary viewpoint they are important statistics for evaluating both the performance and some of the hidden costs of the existing system. Politically the present crisis level makes supporting the Monetary Transparency Act a “no brainer,” as many have said.
2) The second, though actually primary phase focuses on needed structural reforms of our present monetary system. These substantial reforms are described in the American Monetary Act (attached) and address matters such as limiting interest rates; instituting direct U.S. funding of infrastructure including health care and education; and nationalizing the Federal Reserve System into the U.S. Treasury. While all other industrialized nations own their central banks and offer their citizens health and education opportunities, the present level of crisis is probably not sufficient to politically enact such structural reforms. This may change with the November elections, or a deepening crisis. However, the crisis is already sufficiently severe to bring forth a full discussion of those reforms and of the American Monetary Act. Lets do that!
Sincerely,
Stephen Zarlenga
AMERICAN MONETARY INSTITUTE
PO BOX 601, VALATIE, NY 12184
Tel. 518-392-5387, email [email protected]
http://www.monetary.org
Stephen Zarlenga, Director
Dedicated to the independent study of monetary history, theory, and reform
Monetary Transparency Act of 2007 (draft September, 2007)
The purpose of the bill is to increase the quality, completeness and public accessibility of present and new Federal Reserve research on the effects of monetary policy on the distribution of wealth in the United States, and its effect on the proportion of newly created monetary resources directed into various sectors of the economy. In other words, what gets funded (Real estate and Wall Street speculation?) and what doesn’t get funded (Infrastructure, education, health care?) by our privately controlled money (purchasing media) creation mechanism. The bill consists of the following:
1) New estimate of the overall money supply
The bill requires the Federal Reserve to devise, calculate and publish a suitable replacement for the discontinued M3 monetary statistic, in order to provide a transparent estimate of the nation’s total money supply.
Reasoning: It’s essential to have a reasonable estimate of the overall money supply. Providing this stat has long been a part of the Fed’s responsibility and they are clearly shirking it now. Why?
This provision is potentially important to bring in the millions of people in the investment community and investment advisory community – both writers and subscribers. They ALL asked “What is the Fed trying to hide?” when M3 publication was cancelled last year. It is crucial for this requirement to be in the bill. A 4 page essay on why that is necessary is available.
2) New Statistical analysis of the distribution of wealth in the U.S.
The bill requires the Federal Reserve to tabulate and publish a statistical description of the current distribution of wealth in the U.S. by quintile, including a further examination of the uppermost 1% sections by .1% each.
3) New credit institution “seigniorage” calculation
The bill requires that the Federal Reserve calculate and report the total annual seigniorage interest income received by financial institutions as a result of their being allowed to extend credit in excess of their own cash reserves, into circulation as purchasing media which serves as money. This amounts to a money creation privilege in our system. What’s it worth in dollars and cents?
4) The Value of Privilege
Not just to single out the value of banking privilege, the bill requires the Federal Reserve to estimate the value of major U.S. government granted privileges including:
spectrum broadcasting rights
mineral rights water rights pollution rights
airport take-off and landing rights,
fishing rights, crop quotas, grazing rights,
import quotas,
Oil depletion privileges,
Corporate abuse of the privilege of transfer or allocation of income and expense privileges for reporting (minimizing) taxable profits by assigning income to tax free jurisdictions and assigning expenses to taxable jurisdictions, thereby unfairly avoiding paying their fair share of taxes, shifting them to the rest of us.
Reasoning: The value of privilege is extremely helpful in answering the objection that would be raised, namely where will the resources come from for some necessary programs.
5) New more accessible statistical comparisons of where credit is being directed
The bill requires the Federal Reserve to tabulate and publish data showing the amount of credit and the percentage of credit now being created and directed into:
Public infrastructure;
Primary residences; Secondary residences;
Stock, bond, commodity, and derivatives trading;
Mergers and acquisitions;
Education;
Health care;
Plant and equipment;
Military expenditures;
Categories will be further analyzed by type, and location. Also whether it’s appropriate to analyze the direction of credit by gender, race, religion, and wealth status.
Data will also analyze the relation between credit extended to corporations and the jobs created by those corporations to measure whether the companies receiving the lion’s share of new credit are pulling their weight in job creation.
Reasoning: The two crucial problems with privately controlled monetary systems are First- the unnecessary interest cost added to the money creation process. This act addresses that factor in paragraph 3 above. Second problem is the misdirection of society’s monetary power, for example misdirecting monetary resources into real estate assets and Wall Street speculative games rather than crucial infrastructure such as protective levees and bridges. In July 2007 the ASCE reported that 10% of the nations 80,000 dams are in danger of failure! This paragraph 5 addresses that misdirection of society. These stats are therefore crucial to providing monetary transparency.
6) New calculations for the semi-annual Humphrey-Hawkins testimony
The bill requires that the Federal Reserve calculate and publish semi-annually the loss or gain, as applicable, in economic output due to the deviation of the previous year’s actual unemployment rate from the 4% level required by 15 USC 3101 et seq., known as the Humphrey Hawkins Full Employment and Balanced Growth Act of 1978, and including such loss or gain, in income by quintile.
7) New land value calculation
The bill requires that the Federal Reserve develop a market-based estimate of the value of residential, corporate and publicly owned land and report figures quarterly.
8) New GAO audit requirement
The bill requires the GAO to conduct a full audit of the Federal Reserve in every year before a Presidential election year.
9) Improvements to the Survey of Consumer Finances
The bill requires that the Federal Reserve undertake the Survey of Consumer Finances every year, instead of every 3 years.
10) New summaries of Total Credit Market Debt and Economic Growth
The bill requires the Federal Reserve to publish a 20 year historical summary of annual Total Credit Market Debt, in a visual bar graph format showing how much debt money creation was needed to produce 1 dollars worth of growth.
11) New public notification requirement
The bill requires the Federal Reserve to release these statistics at a quarterly news conference and the Survey of Consumer Finances and the total credit market debt report at an annual news conference.
12) Advance Warnings of developing problems
(Added September 07) A provision will be made for the FED to scout out in advance potential developing problems and recommend their solutions. For example – to have examined in advance the problems developing in the housing market before they struck, with recommendations for their solution.