Higher taxes, higher prices, growing money shortages and economic stress are the results of Congress passing bad laws in 1864, 1873, 1913 and 1933, which changed our money from an evidence of wealth to an evidence of debt.
Today, our debt-for-money (monetized debt) system creates all new money as a debit to a loan account and a credit to a new or existing checking account. The new money comes into circulation as interest-bearing loans. Government, business, consumers– someone must borrow every penny or we have no money. However, when one borrows, only the principal is created, never the interest.
Our federal government cannot spend more than it takes in, unless it borrows and runs a deficit. It borrows by selling Treasury securities, e.g. bonds, notes and bills. The Federal Reserve Bank of Chicago’s publication, Modern Money Mechanics, the U.S. Treasury and other authorities state that bank reserves are created and destroyed when the Federal Reserve Bank buys and sells these IOUs. These reserves form the base upon which private commercial banks can expand our money supply by at least 6 times the reserve amount through the creation of loans.
As long as our federal government runs a deficit to replenish this reserve base, states, businesses and families can balance their budgets. However, for Congress to actually balance the budget, it must be committed to no longer borrowing by selling Treasury securities. The Federal Reserve Bank can no longer buy them. New bank reserves are no longer created. Maturing treasury securities are repaid and extinguished. Our money supply contracts! As our federal deficit disappears, so does our money supply!
A balanced budget would cure our deficit problem but leave us facing a $5 trillion national debt and $21 trillion private debt. Both would accrue interest while our money supply would shrink.
The problem is that today, contrary to our past, “money” is created when loans are made and destroyed when loans are repaid. History shows that balancing the budget causes recession and depressions. Under our current money system, deficit borrowing is necessary to keep our economy functioning. Each year, we must create more money as loans to pay the interest on last year’s loans.
The solution is to increase the money supply without increasing debt. We need to pass a money reform act not to balance the federal budget. We need legislation that converts our money system into one that creates and puts all new money into circulation as debt-free wealth to the people. We need a system based upon the principles used prior to our medium of exchange being switched to an evidence of debt (all bank credit).
If you would like to enjoy lower taxes, lower prices, greater savings, a secure retirement, greater buying power, widespread prosperity and greater peace of mind for yourself and all Americans, won’t you please devote a portion of your energies to understanding this problem and help to correct it? Byron Dale from the Coalition to Reform Money will come to the University to offer more information on this topic. The lecture will be sponsored by Students Against Fees Excess and the College Republicans. Dale will be speaking at 7:00 p.m. in 307 Coffman Memorial Union on Wednesday, Feb. 5.

Benjamin Powers is the president of Students Against Fees Excess