The American Crisis: To Free a Lender-Owned Nation (Part 1)

[1] The success of Lincoln's civil war greenbacks in saving the Union rendered ridiculous the prior ridicule of New York bankers, who overplayed their hand when they refused to buy the then losing government's bonds, except at a 36% discount.   See: History Of The Legal Tender Paper Money Issued During The Great Rebellion , Senate Sub-Committee of Ways and Means, 1869.    "Greenbackers" sought to reinstate   these "true greenbacks" -- i.e. United States notes, as opposed to conforming national banknotes.   For the spirited debate, see: Greenback Cathecism, Pomoroy (1876); The Greenback Dollar: Its History and Worth, Benjamin Heath (1877); Treasonable Documents Circulated Among the "Greenback Clubs, "Harvard Honest Men's League" (1878); and, in a lighter vein, Treasured Notes, by the author:

After a Greenback platform election victory in 1912, Greenbackers rejoiced at the restoration of Lincoln's greenbacks, by passage of the 1913 Federal Reserve Act.   In due course, they learned better.   Ironically, over half of the Senate debate addressed complaints of prejudicial impropriety, for want of a joint reconciliation proceeding. Happy Greenbackers squelched these complaints.   Led by William Jennings Bryant, they had victoriously insisted on the one word that to them signified true United States notes.   The notes must issue as "obligations of the United States."  As applied, this has meant only that the United States print them, and back them with its good faith and credit.  The public pays for losses, the banks keep profits.   That Greenbackers fought for this is sick.   The understood mixed-currency promise was solemnized by the proud last words of Congress, anointing the Federal Reserve Act in sending it for President Wilson's immediate signature, on December 23, 1913:   

"A bill to terminate certain special privileges and advantages heretofore conferred by Congress , and not disturb any existing right in money and property, but in the future to favor the United States government, for the benefit of all the people equitably, to the same extent that Congress has by law in the past favored the members of the Money Trust exclusively."  

Why shouldn't this declaration govern?  Plainly stated original intent trumps literal mistake.  So let's all agree to a prima facie fair 50-50 public-private money-base split, with carefully crafted tolerances/impermanent variances.  In the collective and individual interests, who can deny that we need both forms of economic lifeblood, or that we need to stop fractious argument, real soon?

[2]  Purpose of constitution is the free market, so the free market is implicit in otherwise noncommercial clauses (aka "laissez-unfair").  

[3] Full suites of organizational entities contributed, as cited in each GAO report, and as shown by separate reports.   See, e.g., the Senate Appropriations Committee's Sacagawea Golden Dollar Program S. HRG. 107--638 pages 53-55   (2002); and the Congressional Budget Office's Creating a New One-Dollar Coin , (1995), and Presidential $1 Coin Act of 2005 (2005).   I make this point mindful of a December 6, 2011 letter from Fed chairman Bernanke to two congressional committees, including the sponsor of the 2011 GAO coin-swap report.   As follows, Bernanke entoned that such comprehensive investigations surely had settled matters beyond intelligent doubt:

"The articles recycle information that has been disclosed to the Congress and the American people in various forms for some time, and has been the subject of investigations, reviews, and reports by the Congress, the Government Accountability Office, the Congressional Oversight Panel, the Special Inspector General for the Troubled Asset Relief Program, and others. Moreover, the disclosure issues raised in these articles have already been addressed and settled, first by the Federal Reserve through a variety of reports and public postings, and then by Congress after a public debate."

But there is compelling cause for doubt.   The Fed's underpinning rationale is apparently the very same silly rationale that, re the coin-swap question, assumes that reducing debt is not a benefit to the borrower!   Sorry, folks.   It seems the bailout is properly sized at $29 trillion.   The Fed's numbers reportedly define full repayment as debt rolled over with interest fully paid -- which of course is full non-repayment!   See The $29 Trillion Bail-Out: A Resolution and Conclusion and my comment quoting this excerpt:

"Also note how silly Hamilton's argument is: net lending is zero on loans that are rolled-over, hence we must logically conclude that the Fed actually lent nothing, did not bail-out financial institutions, and that Wall Street resolved its problems with no help from the Fed. He actually sent his critique to me and invited comment. I did write a short comment, along those lines"he did not publish it."

[4] This language is not intended ad hominem.   I imputes civil standards of objective proof, per dictionary definitions of "idiotic," "servility," and "parasitic."   The term "Monied interest" is as employed by the Framers. See footnote 9.

[5] 12 U.S.C. - 290 assigns "the net earnings derived by the United States from Federal reserve banks[], in the discretion of the [Treasury] Secretary, to supplement the gold reserve held against outstanding United States notes, or [reduce government debt]."

[6] The state of U.S. coins and currency, July 20, 2010 testimony of Louise L. Roseman, Director, Division of Reserve Bank.

[7]   "[F]ools and bullies" is not pejorative but descriptive of a rationale that presumes the government so lacking the acumen and self-control in which the Fed excels, as renders the government unworthy of its very own full faith and credit, and makes it unthinkable that that the nation not gift its full faith and credit to the Fed -- even where money issues mechanically.   All of which is deemed obviously and culpably shown by the ballooning public debt -- as though the debt had not ballooned on the Fed's watch, after, inter mega-alia, a loud and clear 2004 FBI report of   "epidemic" subprime mortgage fraud.   The herein accepted fundament of "independent" monetary policy is assuredly not assured by a mostly secret Federal Reserve System dominated by private banking interests.   See, e.g. Federal Reserve Directors: A Study of Corporate and Banking Influence , 1976:   " As the study makes clear, it is difficult to imagine a more narrowly-based board of directors for a public agency than has been gathered together for the twelve banks of the Federal Reserve System."