Most Popular

Fatally Flawed End the Fed Campaign Would Allow Congress to Print Money

Politics / US Politics Dec 22, 2010 - 07:27 AM GMT

By: Mike_Shedlock

Representative Dennis Kucinich has introduced a bill to end the Fed. Unfortunately his proposal grants Congress ability to create money at will for virtually any purpose. Kucinich specifically mentions full employment, stabilizing social security, and to "lend new money into circulation as authorized by Congress and to provide means for public investment in capital infrastructure".

In other words Kucinich want Congress to have the power to print money into existence for any reason it wants. Here are a few snips from Kucinich's End the Fed Bill that show what I mean.

IN THE HOUSE OF REPRESENTATIVES Mr. KUCINICH introduced the following bill

To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money, modernize and provide stability for the monetary system of the United States, retire public debt and reduce the cost of public investment, and for other public purposes.

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.

SEC. 201. ENTRY OF U.S. MONEY INTO CIRCULATION.

The Secretary shall cause United States Money to enter into circulation by and through any of the following means:

Any origination or disbursement of funds to accomplish Federal expenditures authorized and appropriated by an Act of the Congress.

Any disbursement to retire outstanding instruments of indebtedness of the Federal Government or the Secretary of the Treasury as such instruments become due.

Any exercise of "lender of last resort" emergency authorities under the emergency procedures specified in section 305.

Any other means, and for any other purpose explicitly authorized by an Act of the Congress that becomes law after the effective date of this Act.

Support for the Bill

I saw this bill a few days ago thinking it was so insane no one could possibly stand up in favor of it. I was sadly mistaken.

I am hoping Karl Denninger's excuse is he failed to read the entire bill. Otherwise I am at a loss to explain Dennis Kucinich: Delete The Fed

I'm stunned.

Really.

Dennis Kucinich, which many people have (properly) labeled as one step removed from a communist in the past, and who has a reputation as having a hard-core left slant in his politics, has just written up and introduced a bill that will fundamentally restore the free market - for real - to banking and credit.

We're about to find out if people like Ron and Rand Paul really stand for what they claim, or if they're empty suits. If they do, then I expect to see them on the Tee Vee within hours demanding passage of this bill, and joining with Mr. Kucinich in making sure that it is immediately reintroduced in the new Congress - and passed.

If that does not happen then these two claimants of a demand for "sound money" have been immediately and permanently exposed as FRAUDS, as will any so-called "Tea Party" members of Congress.

This is a bill that must become law.

I'm Stunned Too

Denninger is not the only one who is stunned. I am stunned that anyone could support this preposterous idea, assuming they read it and are sober.

Neither sound money nor the free market comes from printing money into existence. Arguably the only thing worse than the Fed printing money out of thin air is Congress printing money out of thin air for the purpose of full employment and/or any other absurd ideas Congress has.

The last thing we need, the very last thing we need is Congress lending money into existence to pay the bills or to do anything it wants for any reason. Those looking for hyperinflation can find the roots of it in that bill.

Kucinich did mention abolish fractional reserve banking, in a clumsily worded paragraph difficult to interpret precisely. A second paragraph was more precise "fractional reserve lending is ended".

I am 100% in favor of eliminating fractional reserve lending.

Ironically, Denninger once challenged me on that score, defending the practice. Please see Fractional Reserve Lending Constitutes Fraud for the debate.

Hopefully Denninger has changed his mind.

All things considered, and in spite of horrendous flaws, it may be a plus that someone has actually submitted a bill in Congress to end Fractional Reserve Lending. Now all we to do is throw away the entire rest of the bill and let Ron Paul draft a proper bill ending FRL as the central idea.

Fractional Reserve Lending Is Fraud

There are two easy to read, and free online books that make the case.

• What Has Government Done to Our Money?
• The Case Against the Fed

Here are hardcopy versions you can order.

• The Case Against The Fed by Murray Rothbard
• What Has Government Done To Our Money by Murray Rothbard
• End The Fed by Ron Paul

If you haven't read them, read them. If you have read them, read them again. Then meet with your legislative representatives and get them to read the books. Better yet, buy them a hardcopy so you can be sure of it.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Comments

respondent01 23 Dec 10, 00:02	Fatally Flawed End the Fed Campaign Would Allow Congress to Print Money Perhaps the issue is the ridiculousness of rent-seeking behavior by the fed; it being a private entity that prints/conjures money from thin air, and charges real interest on it! Such an absurd concept should never have been allowed to exist in the first place. Now if congress takes over the money creation function, clearly like in any scenario, market discipline and the reality of currency debasement and the attendant effects would help guide their thinking on the limitations of any entity to engage in unabashed printing.
jay 24 Dec 10, 17:38	fatally flawed Fatally flawed? Why? It is Congress that has always had the authority coin or print money. The Fed is unconstitutional. Instead of passing this bill Congress should just repeal the federal reserve act.
Seth Barani 26 Dec 10, 05:18	Congress lending money? I don't get it. You saying "Congress lending money" to Treasury? There is no lending there. Federal Reserve has been a huge scam orchestrated on Americans. It is plain robbery of taxdollars, to convert paper with ink into guaranteed Treasury securities and milk it for interest. Congress printing money to pay for unemployment is NOT worse than Congress borrowing the same money from Fed to pay for unemployment.