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A Guest's Contrarian Take On Dennis Kucinich's Recent Attempt To "End The Fed"

Tyler Durden's picture


Submitted by Arkady Kamenetsky of Right Condition

Dennis Kucinich finally shows the world why the Left is also against the Federal Reserve, gains support of Tea Party activist?

I have always mused and wondered out loud about the peculiar alliance
between the likes of Ron Paul - a small government sound money advocate
and people like Alan Grayson and Bernie Sanders who are admitted
socialists.  What is it about these two completely polarizing political
viewpoints that brought them together to fight the Fed?  In fact, I was
utterly shocked that some libertarians mourned the defeat of Alan
Grayson this past November citing his defeat as a loss in the battle
against the Federal Reserve.

At the time my speculation was rather simple.  Socialists resent the
Federal Reserve just as much as we do, however for entirely different
reasons.  We resent the Fed for several basic reasons.  The Federal
Reserve is a monopoly and controls the supply of money.  It centrally
plans interest rates and has a flawed mandate to create full employment
which is an illogical desire - because employment should always be
liquid.  Finally the Federal Reserve has a mandate of steady inflation
which erodes the value of the money we hold and crushes savings bringing
about a 95% decrease in the value of the dollar since the Federal
Reserve's inception.  Leftists like Grayson, Sanders and Kucinich hate
the Fed because it is a private bank and usurps the power of Congress.  I
concede that this is indeed a problem as the Federal Reserve actually
controls more of the US budget than Congress and does so through
unelected officials!   Yet the solution to our fiscal woes is to return
to sound money and to break down the monopoly, something the Left will
surely balk at.  Indeed, here comes a proposal from Rep. Dennis Kucinich
that finally confirms my speculation.

Read full bill at Kucinich's website, which he cleverly and so predictably in true liberal fashion dubs "the National Emergency Employment Defense Act of 2010".

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.

There you have it folks.  Dennis wants the power of the Federal Reserve
in Congress.  His ambitions are actually quite disturbing because he is
also pursuing the flawed concept of full employment, but now he has
added even grander ambitions - the one thing that the horrible Federal
Reserve prevented Congress from doing - creating money for the purpose
of spending it.   Granted with QE2 in full swing it becomes difficult to
make that argument, because buying US debt so that the US Government
can continue functioning is essentially the same thing, but at least our
total debt grows and Americans are still aware of the cost.  With
Kucinich's bill this aspect disappears as money will appear whenever
Congress wishes it to be so and the value imbued in this money will come
through Congress alone - a Chartalist dream come true.

The bill also offers an end to fractional reserve lending, a key
inflationary engine where banks lend to other banks at a fraction
thereby creating mountains of credit on top of a very small amount of
money.  On page 40 of the bill, money in deposit institutions must :  be held for the exclusive use of the account holder; and may not be used by a depository institution to fund loans or investments.

Yeah, that can work when the exclusive lending power now falls to
Congress!  Ironically, there are two ways to stop fractional
reserve lending.  One is to use sound money and prohibit paper from
being pyramided on top of the sound money much like it was done in the
1800s in America (and for 20 years under the Federal Reserve) and the
other way is for Government to take over lending.   Indeed on page 11,
the bill explicitly calls for:

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.

So not only will the Government take over lending as a whole, but they
will do so for what they dub to be 'good investment' or infrastructure! 
A central planner's dream come true.

This bill also has the support of blogger Karl Denninger a Tea Party
activist from Florida, who in my opinion seriously undermines his
credibility by not only defending the bill out of principle, but also on a Constitutional basis! 

But it would be a monstrous improvement over what we have now, and I
will remind Mush that in point of fact we had Colonial Script some
rather long time ago, and further, there is nothing in The Constitution that prohibits the Federal Government from issuing and fixing the value of fiat currency.  In fact, such is explicitly contemplated and expected by The Constitution. 

Bigger nonsense cannot be found.  Now unless Dennis Kucinich proposes a
return to the gold standard, the entire bill fails along Constitutional
grounds and in fact, this is the very reason the Federal Reserve
exists!!  The Fed has the power to create fiat money BECAUSE it is a
private institution, Congress could never do it and if they could -
there would have been no Fed in the first place.   There are two clauses
in the Constitution that completely disprove Karl's notions.  There is
also the history of the Continental which saw America's first paper
currency go up in smoke due to inflation. 

Keep in mind, anything not specifically enumerated in the Constitution is not allowed. 

Article 1 Section 8 contains the following:

[The Congress shall] To coin Money, regulate the Value thereof, and of
foreign Coin, and fix the Standard of Weights and Measures;

As you can plainly see, Congress has the power to create coins or
regulate other coins and ensure standards in weight.  Nothing about
paper here.  In fact, they go on and in Article Section 10 state:

No State shall enter into any Treaty, Alliance, or Confederation; grant
Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make
any Thing but gold and silver Coin a Tender in Payment of Debts; pass
any Bill of Attainder, ex post facto Law, or Law impairing the
Obligation of Contracts, or grant any Title of Nobility.

Which explicitly bans paper money on a State level or what they call
Bills of Credit and in fact go on and actually demand that payment of
taxes be performed in coin. In fact one could aptly call today's dollars
Bills of Credit. So by not enumerating the power to create paper money
for the Federal Government, while explicitly banning paper money on a
State level the Constitution packs a 1-2 punch that flat out destroys
paper money and insists on money as something that has tangible value.
Does that make me a gold bug? Not at all, use whatever you want for
money, just make sure it has value because as long as money has value
then no institution (Fed, Congress) can make it out of thin air.

Yet Karl insists that this bill is exactly what the country needs
because it promises to be neither inflationary or deflationary. His
faith comes from page 26 of the Bill:

pursue a monetary policy based on the governing principle that the
supply of money in circulation should not become inflationary nor
deflationary in and of itself, but will be sufficient to allow goods and
services to move freely in trade in a balanced manner.
The Monetary Authority shall maintain long run growth of the monetary
and credit aggregates commensurate with the economy’s long run potential
to increase production, so as to promote effectively the goals of
maximum employment, stable prices, and moderate longterm interest rates.

 Oh ok, so because Congress promises to make sure that the supply of
money and prices remains stable then instability will not happen? If
they promised us unicorns that crapped skittles within a bill does
everyone go out and buy a stable? In fact, Karl dubs this bill 'Delete
the Fed' yet the bill creates a new office called The Monetary Authority
which will have a chairman and appointed members (10 of them) chosen by
the president that will meet on a regular basis and determine the
correct supply of money. Whiskey-tango-foxtrot, we already have that and
it's called the Board of Governors. Instead of getting rid of the Fed
though, Kucinich is going to move the entire reserve system into the
executive branch. What a joke.

Essentially this bill takes the Federal Reserve, renames it, makes it
part of Congress and moves a private monopoly into a public monopoly. So
instead of having the spending habits of Congress show up on the
national debt, everything will now quietly happen through the power of
Congressional members who can order money creation any time they feel
like making an additional investment or building a Bridge to Nowhere.

As one last step before the final takeover, Kucinich plans to eliminate
our debt. Sounds lovely does it not? Page 19 describes the process:

Before the effective date, the Secretary shall commence to retire all
outstanding instruments of indebtedness of the United States by payment
in full of the amount legally due the bearer in United States Money, as
such amounts become due.

Elsewhere in the bill, Kucinich introduces a new money, called the
United States Money although I suggest we just call it a Zimbabwe Dollar
because that is it's destiny and we can save on printing costs. This
United States Money will invariably have a conversion rate to the
current US Dollar. In order for us to retire about 14 Trillion dollars
of private and public debt, imagine for a second just how many new USM
notes must be created? What will be the value of these USM notes? What
happens to the dollar's reserve status that we enjoy now? Let me answer
that for you: a metric ton, value will be non-existent and the one
remaining reason why America is protected from hyper-inflation will be
wiped out.

Mike Shedlock has also written a summary
about this bill and called out Karl Dennginer's support which has now
the potential to escalate into a blog war. This prompted Karl to call
Mish 'mush' and make wild statements about the Constitution.  Karl also
believes that if Ron and Rand Paul are for real than they will support
this bill otherwise they are empty suits and fakes.  I will tell you
this right now, Ron and Rand will never ever support this bill because
it is a hideous and disgusting piece of legislation.

Yes this will will destroy the top banking elite and their easy money
access through inflation, but this is no different than what North Korea
did to it's currency - a gigantic devaluation of the dollar along with
massive takeover by Congress over the last remainings parts of our

This is central planning on steroids and yet a Tea Party activist and well known blogger supports it. I am speechless.


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Thu, 12/23/2010 - 14:01 | 826454 midtowng
midtowng's picture

Yea. What a darn shame if Kucinich had his way and we actually went back to following the Constitution.

Thu, 12/23/2010 - 14:06 | 826470 ironymonger
ironymonger's picture

Socialists have a selective fidelity to the Constitution. That is to say none at all.

Thu, 12/23/2010 - 14:26 | 826523 Dumb Money
Dumb Money's picture

Could Free-Gold be a good compromise between Libertarians that want sound money and Socialists that want the printing press to be in the hands of elected leaders?  I think so...

Thu, 12/23/2010 - 14:39 | 826565 Shameful
Shameful's picture

Think that line of thinking through.  The money holds no value.  All value stored in things, like gold.  Add in a gov that loves to print.  Hello hyperinflation!  Now if you can get your employers to lock your salary into a set weight of gold your fine.  Otherwise the daily grind of getting your raise.

So could the libertarians acept it, yes.  We would be fine with the socialists melting down their system, but we also know they will pick up their guns and promptly loot us.  So it we have ironclad assurance of no looting, hell have a ball.

Thu, 12/23/2010 - 15:09 | 826640 Dumb Money
Dumb Money's picture

I think you missunderstand me.  What the "socialists" want is not necessarily paper money, but rather, they want congress to control monetary policy (a goal which can be accomplished through unbacked paper money like what Dennis is proposing OR it can be accomplished through Free-Gold).  Libertarians want money to be backed by something that holds its value.  Enter Free-Gold:


Free gold is not a gold standard because there is no set price at which paper notes can be exchanged for gold (the price of the gold held by the government floats against the paper in circulation and the Gov would be under no obligation to buy or sell gold except insofar as they are executing monetary policy: there would be no "window" at which holders of paper could force the government to exchange paper for Gov gold). The paper in circulation would represent a claim on government gold holdings: a claim which the government could (theoretically) wait forever to fulfill.

We could execute monetary policy on the basis of maintaining the purchasing power of the notes in circulation indefinitely.

FOFOA is awesome

Thu, 12/23/2010 - 15:24 | 826684 Shameful
Shameful's picture

Incorrect.  Socialists want value to which they can redistribute or use to their own ends.  Control of monetary policy can give them that value, but only so long as the currency is a means to store value.  In a system where the currency is openly known to be not a store of value then people will not wish to hold it.  They will instead use the currency to transact and dump it to buy real things.  The socialists would have the currency but no value.  See Zimbabwe.  All the money one could want and no value to it.  Money that has no value is by definition worthless.

And if the gov never fulfilled those gold withdrawals how well do you think the system would hold up?  Seems like De Gaule didn't beleive the US and their lies and helped crash Bretton Woods.  Would you trust a random stranger to hold onto your gold for you?  If so please PM me, ask around I'm a good trustworthy guy!

You cannot have a system that satisfies both the savers and the speculators. Cannot be done.  Hyperinflation is the result as the currency loses it's store of value feature.  Would you accept monopoly money or Zimbabwe money for your labor?  Why not?  It's a unit of exchange just like a value free currency is :)

Thu, 12/23/2010 - 15:43 | 826736 Dumb Money
Dumb Money's picture

"Socialists want value to which they can redistribute or use to their own ends."

All government spending redistributes value regardless of monetary policy.

"And if the gov never fulfilled those gold withdrawals how well do you think the system would hold up?  Seems like De Gaule didn't beleive the US and their lies and helped crash Bretton Woods."

This is confusing Free Gold with the gold standard.  In the 70s, you could exchange $35 for an ounce of gold at the USA's gold window BUT in london you could exchange $40 for one ounce (since this was the REAL rate of exchange).  The obligations that the US did not live up to under BW was the obligation to maintain a FIXED rate of exchange between paper and gold.  Under Free-gold no such obligation would exist and thus there would be no necessity for a "window" at which investors could call the government's bluff.

"Hyperinflation is the result as the currency loses it's store of value feature. "

The store of value would be the gold held by the government. Are you saying that this gold would become worthless?

Thu, 12/23/2010 - 15:55 | 826764 Shameful
Shameful's picture

Did you not say that the govs would not be bound to trade out their fun buxs for the gold? You can't have it both ways, they either kick up the gold or they don't. If they don't then it is same as now, purely faith based. If they do have a gold window, then no matter what the price will see a run at it, after all as they raise prices they telegraph they are inflating, which tells people to get gold, which drives up the price, which drives people to get gold, ad infinitum.

Freegold does not deal with the nature of government policy, which is in essence pillage. It is assumed the government will stop inflating because of risk on run of their gold, but that did not stop the US did it? You say they can move the price, but simple logic will tell you moving the price up causes a panic which further forces the price up. After all let us say that we had freegold now. And the price was $100,000 an ounce and you had $1,000,000. You notice some prices move and gold moves to 100,500 would you be more or less inclined to cash out? 120,000? 500,000? And as more people cash out more people want to cash out, it's like a bank run.

Thu, 12/23/2010 - 16:42 | 826893 Dumb Money
Dumb Money's picture

Under free-gold, if the price of gold went up when denominated in (free gold backed) paper, the gold that backs the paper would go up as well.  


Lets say that there is a micro-economy with four people: Mr. McGovernment (who has 3 ozt of Gold and a priniting press), Dick (who has 1 ozt of gold and 3 dollars), Jane (who has 5 dollars) and Ben (who has 7 dollars).  In this example the ratio of paper to (gov held) gold is 5:1.  Lets say that Jane is afraid the Mr. McGov is going to print more money and dilute the value of her dollars.  She goes over to Dick and offers him 5 dollars for his ozt.  When he overhears her offer, Ben immediately becomes afraid that his money is becomming worthless too and he goes over to Ben and says "WAIT! i'll give you $7!!!".  This raises the market value of government issued paper to gold to 7:1 (BUT remember: the ratio of dollars to gold in this economy is still 5:1). Hyper-inflation seems immanent.

This turn of events catches the attention and alarm of Mr. McGov since he doesn't want his printing press to loose its power.  He steps in and decides to sell one of his ozt to Ben to stop the Hyper-inflation in progress.  By doing this, Mr.McGov has withdrawn liquidity from the system (he retires the notes he recieved in exchange for his ozt).

Now here is what everyone has: Mr.McGov has 2 ozt and a printing press (which still works, thank God!), Ben has 1 ozt and $0, Jane still has 0 ozt and $5 and finally, Dick still has his 1 ozt and $3.  the ratio of gov-issued paper to gov-held gold is now 4:1 and no one has enough money to bid the price of gold back up to its previous (hyper-inflated) price of $7 per ozt.


A few things now become clear:

1. as people reject their paper for gold, the ability of the gov to manage monetary policy INCREASES rather than decreases (Under our current monetary policy and under a green back system, the ability of the Gov or Fed to manage monetary policy decreases as people reject their paper for gold).

2.  The fact of point number 1 means that it is not in Ben's interest to act as if he thinks there is going to be hyper-inflation.  In fact, Ben is actually worse off than he was before since the seven dollars that he had originally could have bought him more than what 1ozt of gold was worth.  In fact, it is JANE who is in the best position since her purchasing power, which used to be 1ozt of gold, has now risen to 1.25 ozt of gold.

Thu, 12/23/2010 - 17:36 | 827004 Shameful
Shameful's picture

Ok so you concede that the gov must actively step into the gold market.

Now as to your arrangement, this presupposes that the gov will not use the printing press, because as you point out kicks of a panic to the metal.  How does this square with the soft money redistribution of the socialists, aka print and spend?  Free gold is hard money, or it devolves into hyper inflation as you point out.  The gov must either be exceptionally ware and not print or enter into hyper inflation at the drop of a hat.  Huh sounds like a rigid hard money system to me.

Freegold is not all things to all people.  Either it is the fires of hyper inflation or a exceptionally hard money regime.  There is no in between.  As a gold holder will do fine in either that's fine, but it's disingenuous to claim can have soft money system because of freegold.  In your system you point out the inherent fear of the printing press destroying the transaction currency.  In this way Freegold is not much differnet then a hard gold standard, it's just another way to spin it to make it new.

Thu, 12/23/2010 - 18:08 | 827055 Dumb Money
Dumb Money's picture

"Ok so you concede that the gov must actively step into the gold market."

I always have conceded this.  What i did not concede was that the government must step into the gold market on the whim of those who wish to exchange their paper for gov gold (notice that Jane and Ben had to go to Dick in order to get gold... the option of exchanging cash for the government's gold whenever one wants is not there).  Rather than the paper holders determining when their paper is exchanged for government gold, it is the government that decides (albeit it decides on the basis of the actions of the paper holders).

"Now as to your arrangement, this presupposes that the gov will not use the printing press, because as you point out kicks of a panic to the metal."

What my example shows is that the government IS free to use the printing press IN SPITE of the fact that it might kick off hyper-inflation BECAUSE the government is always equiped to manage monetary policy even if people start to reject paper for metal (it also shows why participating in the early stages of hyper-inflation by biding up the price of the metal would be against one's own interest in a Free-Gold system).


Thu, 12/23/2010 - 18:45 | 827104 Shameful
Shameful's picture

If the gov does not have a window open then clearly there will be a price found by the market.  So yeah they can hold all the gold they want and the paper transaction currency can melt in a fire.  If the gov does not dole the gold out then can see a panic like in your example and people losing faith and trading up.

Wait govs can consistently head of hyperinflations?  Then why worry at all about monetary policy?  I guess Bernanke really can raise rates in 15 minutes and stop it all.  I'm so relieved.

But for the sake of argument in your example what if they were not so quick on the ball to notice and sell gold into the market?  The price would move up and confidence would be lost.  Now how does money printing fit into that.  In a perfect gold market people would notice that new money sloshing around and start bidding for gold with fun bux.  So the gov has the option to unload gold to stabilize the fun bux or risk hyper inflation.  But like seen in 71 there comes a time when the gov either runs out of gold or no longer wishes to sell, what then? The gov must maintain static gold prices to keep confidence, so if they print they must have the gold to sell into the market to keep things placid.  If they lack the gold or willingness seems like the currency cost of gold sky rockets and people turn away from the paper.  So they can print so long as they have the gold to keep people calm...sounds a lot like Bretton Woods to me.

Thu, 12/23/2010 - 19:25 | 827164 Dumb Money
Dumb Money's picture

In Free-gold, the government has a bit more leeway to print funbux than it does under Bretton woods...



ok, lets take the same situation: Mr. McGovernment (who has 3 ozt of Gold and a priniting press), Dick (who has 1 ozt of gold and 3 dollars), Jane (who has 5 dollars) and Ben (who has 7 dollars).


First, let's examine what would happen if they were under a (bretton-woods-like) gold standard with an exchange rate set by law to  $5 per ozt (with an open gold window of course), and the gov decided to print more paper money.


Mr. McGov prints 3 extra dollars.  He gives $2 to Dick for digging a hole and $1 to Jane for filling it.  There are now six dollars in circulation for every ozt held by the government. Jane realizes that the government is printing unbacked dollars and decides that she wants exchange her dollars for gold.  If she goes into the free market and tries to buy gold from Dick, he's probably going to charge her $6.  She therefore goes to the government for a better deal and exchanges $5 for 1ozt (the legally fixed rate of exchange).  When everyone else sees her doing this, they realize that their dollars are unbacked and quickly go and drain all of the government's gold reserves.  In the end, everyone (except Mr. McGov) has 1 more ozt but Jane has 1 worthless dollar and Ben has 2 while Mr. McGov has a worthless printing press and no gold.  These 3 extra dollars were "unbacked".


Now let's take the beginning situation and see what happens when the government prints money in a free gold system.  This example begins with the (not fixed) rate of exchange of $5 per ozt.


Mr. McGov prints 3 extra dollars.  He gives $2 to Dick for digging a hole and $1 to Jane for filling it.  There are now six dollars in circulation for every ozt held by the government. Jane realizes that the government is printing dollars and decides that she wants exchange her dollars for gold.  Unlike the first example, she cannot go to the government because there is no open gold window and no legally fixed rate of paper/gold exchange.  She must find her gold in the free market.  She therefore goes to Dick and attempts to buy his gold from him for $6 per ozt.  Ben sees this and realizes that HIS money is being devalued as well.  He therefore steps in front of her and offers $7 for Dick's ozt.  Here's where Mr.McGov steps in and sells one of his ozt for $7 (seems a lot like my very first example doesn't it?).  In the end Ben has 1ozt and $0, Jane has 0 ozt and $6, Dick has 1 ozt and $5 and Mr.McGov has 2 ozt and a functional printing press.

Thu, 12/23/2010 - 19:37 | 827186 Shameful
Shameful's picture

Ok so in your second example what happens to Jane and her $6?  Does she stop trying to buy gold or she now priced out because the gold ran up to $7 confirming her fears of devaluation?  The gov stepping in there did not stem the fear of all participants, only set a new higher price level which again proves the fears of those trying to buy.  Is she now barred from buying gold because of the new price level?  The only thing about your example is the gov setting old outside the ability of the people to get the currency sufficient to buy it by racing the price super high, which feeds back into fear and panic.  People react emotionally to price swings after all.  How would you feel about your currency if you watched gold jump about 40% tomorrow?  Not to comfortable I would guess and I hazard a guess you would be looking to move that currency ASAP.5/

In fact it's not much different then now, except for the phony paper market.  But pull that phony paper market away and see a rocketing increase in gold, particularly after a bloody and public revaluation and people will be watching that press like a hawk.  So if they try to pull a stunt like in your example they will notice a massive % increase in price and lose confidence.  After all the paper devalued 40% to gold in your example, and that is your example not mine, a good reason not to get stuck holding the paper.

Fri, 12/24/2010 - 01:53 | 827625 fiddler_on_the_roof
fiddler_on_the_roof's picture

So long as Govt has sufficient Gold in this "freegold" system, it can buy or sell Gold to be the price at equilibrium to the money printing. If Jane/others tried to buy it for more than $6, Govt will sell the Gold and take out the cash which in effect drains money and prevents price rise. The only Question then is proper valuation of Gold with respect to outstanding money.

Fri, 12/24/2010 - 02:04 | 827636 fiddler_on_the_roof
fiddler_on_the_roof's picture

Excellent writing - "Dumb Money". you have surely enlightened many who read your comments with open mind.

For this to work

(1) Govt should always know the correct price of Gold with respect to Currency and step in

   whenever it goes out of range.

(2) If people speculate too much upwards in Gold, Price of Gold can come down.

(3) Increase in Taxation can also bring Gold price down (which is opposite action of money printing)

(4) Before all this freegold to happen, People's mindset should first change and assign Gold as Money. ie Gold will price the Currency correctly.

(5) Whenever this gets out of whack, People or Govt will step in. If Govt tries to cheat by printing, people will raise it's price and if Govt tries to fight it "unreasonably", all it's Gold will be drained.


Thu, 12/23/2010 - 16:12 | 826798 trav7777
trav7777's picture

unfortunately, the Consitution gives Congress PLENARY authority over the monetary power.  In fact, the Fed Act should be unconstitutional.  Congress is solely authorized to regulate the value of money and it cannot (see Clitton v. City of New York) delegate its authority to another branch or private actor.

Fri, 12/24/2010 - 11:30 | 827961 Oh regional Indian
Oh regional Indian's picture

Spot on Trav. Plenary, to clarify, means full. So, Mr. Contrarian is both right and wrong. Dennis K.'s proposed bill is on solid constitutional grounds but with an unfortunate liberal twist, making it in-feasible and im-practical.

What I find even stranger is that with full and open knowledge of what is going on at the Fed and the words and work of people like Congressman McFadden and Lindbergh back in the 20's and 30's, and every speech and act on congressional record, that anyone believes for a minute that someone like a fako-liberal DK will be able to put the mighty FED in place.

What is the point of all this back-and-forth on constitutionality or not of proposed acts when it is in fact ON RECORD that the Fed Reserve Act was passed in near-fraudelant conditions (later much bemoaned publicly by Woodie Wilson) and that the IRS establishing 16 amendment was never ratified by the requisite number of states.

Why then all this talk? Talk talk talk. As if the FED will roll over and die for this gnat on an elephant's ass after it has pretty much controlled the destiny of th eplanet openly from 1913 out and by much the same set of actors for a few centuries before?

The illegality of the scam is open record.

Why has nothing been DONE about it? Can anything be done? Now?

Masterful that they've reduced everyone to mental masturbation.





Thu, 12/23/2010 - 17:41 | 827011 theperegrine
theperegrine's picture

Putting Congress in charge of monetary policy would create a worse scenario than the one we already have.   But it might merely create a layer of abstraction....the foxes would still be running the henhouse, they'd just have to train the hens to echo their arithmetic convincingly.


To whatever extent Congressional agents *could* be held accountable by voters, we'd have a supremely dumb mob in charge of interest rates and QE.  We don't learn enough in our public school civic classes to grasp this material.


I'm certain Kucinich means well.  There are no obvious solutions to the problem of corruption.

Thu, 12/23/2010 - 14:42 | 826574 midtowng
midtowng's picture

The compromise would be going back to a bi-metal standard, like the Constitution said.

It didn't say gold standard. That's what the eastern banks wanted. It said bi-metal.

Thu, 12/23/2010 - 14:57 | 826612 Dumb Money
Dumb Money's picture

Free-Gold is not a gold standard.

Thu, 12/23/2010 - 17:17 | 826961 AnonymousAnarchist
AnonymousAnarchist's picture

Dennis means well but he is naive (if you don't know what I am talking about, watch the zeitgeist series). Whether the institution with the money monopoly is called the Fed or the US government, the result is the same. As with everything, there should be a free-market in money. The market historically has chosen gold and silver but, if the market chooses something else, so be it.

Eliminate the Fed. Eliminate the state.

Thu, 12/23/2010 - 15:31 | 826705 FatFingered
FatFingered's picture

I'll take either Ron Paul's Free Competition in Currency Act of 2009 or Skittles coined directly from the unicorn's arse (multi-colored standard, of course). 

Thu, 12/23/2010 - 16:16 | 826812 trav7777
trav7777's picture

The constitution does NOT bind Congress to a bimetallism standard.

It merely prevents the States from tendering anything other than gold or silver coin for the payment of debts.

Congress is free to coin and regulate the value of Money.

Thu, 12/23/2010 - 16:36 | 826872 Dr. No
Dr. No's picture

Midtown is kinda right.  The articles of confederation outline "alloys".  I know, the AOC are dead, but the same people wrote the new one and no doubt some of their intents got washed away like all political processes.

Thu, 12/23/2010 - 21:07 | 827316 A Nanny Moose
A Nanny Moose's picture

Bi-metalism, with its fixed rate of exchange would fail....again.. The rate of exchange must be allowed to float freely, otherwise you are subject to Gresham's Law.

Eliminate legal tender laws. Allow competing currencies. The rules in the Constitution are for government to follow. They place no limits on private entities unless fraud is committed.

Thu, 12/23/2010 - 21:48 | 827382 StychoKiller
StychoKiller's picture

A Nanny Moose FTW!!

Fri, 12/24/2010 - 08:04 | 827810 Freewheelin Franklin
Freewheelin Franklin's picture

What libertarians want, and I can't speak for all, is competing currencies, with no legal tender laws, and real free banking.

Fri, 12/24/2010 - 08:11 | 827814 Freewheelin Franklin
Freewheelin Franklin's picture

Free banking:


a regime where note-issuing banks are allowed to set up in
the same way as any other type of business enterprise, so
long as they comply with the general company law. The
requirement for their establishment is not special conditional
authorization from a government authority, but the ability
to raise sufficient capital, and public confidence, to gain
acceptance for their notes and ensure the profitability of the
undertaking. Under such a system all banks would not only
be allowed the same rights, but would also be subjected to
the same responsibilities as other business enterprises. If
they failed to meet their obligations they would be declared
bankrupt and put into liquidation, and their assets used to
meet the claims of their creditors, in which case the shareholders
would lose the whole or part of their capital, and the
penalty for failure would be paid, at least for the most part,
by those responsible for the policy of the bank. Notes issued

under this system would be “promises to pay,” and such
obligations must be met on demand in the generally accepted
medium which we will assume to be gold. No bank
would have the right to call on the government or on any
other institution for special help in time of need. . . . A general
abandonment of the gold standard is inconceivable
under these conditions, and with a strict interpretation of the
bankruptcy laws any bank suspending payments would at
once be put into the hands of a receiver.

- Vera C. Smith, The Rationale of Central Banking (1936)

Fri, 12/24/2010 - 08:12 | 827815 Freewheelin Franklin
Freewheelin Franklin's picture

Free banking:


a regime where note-issuing banks are allowed to set up in
the same way as any other type of business enterprise, so
long as they comply with the general company law. The
requirement for their establishment is not special conditional
authorization from a government authority, but the ability
to raise sufficient capital, and public confidence, to gain
acceptance for their notes and ensure the profitability of the
undertaking. Under such a system all banks would not only
be allowed the same rights, but would also be subjected to
the same responsibilities as other business enterprises. If
they failed to meet their obligations they would be declared
bankrupt and put into liquidation, and their assets used to
meet the claims of their creditors, in which case the shareholders
would lose the whole or part of their capital, and the
penalty for failure would be paid, at least for the most part,
by those responsible for the policy of the bank. Notes issued

under this system would be “promises to pay,” and such
obligations must be met on demand in the generally accepted
medium which we will assume to be gold. No bank
would have the right to call on the government or on any
other institution for special help in time of need. . . . A general
abandonment of the gold standard is inconceivable
under these conditions, and with a strict interpretation of the
bankruptcy laws any bank suspending payments would at
once be put into the hands of a receiver.

- Vera C. Smith, The Rationale of Central Banking (1936)

Fri, 12/24/2010 - 08:12 | 827817 Freewheelin Franklin
Freewheelin Franklin's picture

Damned squirrels

Thu, 12/23/2010 - 14:36 | 826557 Ray1968
Ray1968's picture

Never trust a liberal... even you agree with him on a point or two.

Thu, 12/23/2010 - 14:43 | 826575 midtowng
midtowng's picture

Never trust someone who believes in labels.

Thu, 12/23/2010 - 17:55 | 827035 LowProfile
LowProfile's picture

Liberal, conservative, who really gives a fuck as long as they keep it contained within their own county/town/city.

It's just when one or the other tries to force the state or country to obey their will that shit gets fucked.

Fri, 12/24/2010 - 12:55 | 828053 Vendetta
Vendetta's picture


Thu, 12/23/2010 - 23:02 | 827469 Lord Koos
Lord Koos's picture

Conservatives can be very selective as well.

Thu, 12/23/2010 - 14:07 | 826472 Temporalist
Temporalist's picture

He is no Constituionalist he just wants to create a socialist state.  Polar opposite of the intention of the Constitution.  I like Kucinich but not his leftwing policies and one can almost see the gears turning in his mind on how to create and spend money that the U.S. doesn't have.

Thu, 12/23/2010 - 14:08 | 826476 Clint Liquor
Clint Liquor's picture

Kucinich wants to follow the Constitution? That's means only Gold and Silver money. Cool!

Thu, 12/23/2010 - 16:18 | 826819 trav7777
trav7777's picture

Are you people ILLITERATE?

This is like the half-dozenth person who has ERRONEOUSLY said this just in this perusal of the comments!

The Constitution, per Article 1, Section 8 sets forth Congress's PLENARY authority to coin and regulate the value of money!  It says jackshit about gold and silver

Thu, 12/23/2010 - 14:22 | 826514 TheJudge2012
TheJudge2012's picture

Kucinich made Ron Paul's Hall of Shame list when he voted against his audit.

Always good to question the little frauds motives.

Thu, 12/23/2010 - 14:27 | 826528 TheJudge2012
TheJudge2012's picture

Bernie Sanders killed Ron Paul's audit in the senate. Ron Paul picked the wrong person to sponsor his bill in the senate.

Thu, 12/23/2010 - 14:26 | 826520's picture

What a darn shame if Kucinich had his way and we actually went back to following the Constitution.

Kucinich introduced legislation to ban all pistols and all semi-auto firearms.

Thu, 12/23/2010 - 16:24 | 826830 gloomboomdoom
gloomboomdoom's picture

that is a good thing!

Thu, 12/23/2010 - 19:29 | 827170 Bendromeda Strain
Bendromeda Strain's picture

So don't buy one...

Fri, 12/24/2010 - 21:25 | 828947 UninterestedObserver
UninterestedObserver's picture

Wow more proof of what a monumental douchebag  you are!

Fri, 12/24/2010 - 12:59 | 828061 Vendetta
Vendetta's picture

H.R. number?

Thu, 12/23/2010 - 14:32 | 826541 TumblingDice
TumblingDice's picture

tl;dr ?

Thu, 12/23/2010 - 14:56 | 826609 JonNadler
JonNadler's picture

to restore the authority of Congress to create and regulate money


'Create'? How about 'coin', Dennis, big diferencia, you know.

Thu, 12/23/2010 - 15:17 | 826662 Armchair Bear
Armchair Bear's picture

The Constitution mandates a silver standard, not gold.  But if we did "go back" to a gold standard, is there even any gold in Ft. Knox left - or just plated titanium bars?  

Thu, 12/23/2010 - 19:21 | 827154 goldsaver
goldsaver's picture

The Constitution mandates a silver standard, not gold


Thu, 12/23/2010 - 18:29 | 827083 DocLogo
DocLogo's picture

Well said, midtowng. At least we'd be able to hold Congress accountable rather than having to deal with the tryanny of a private, foreign corporation. Yes, I said foreign.

Thu, 12/23/2010 - 14:03 | 826461 Rogerwilco
Rogerwilco's picture

What's not to like? It "works" for China, and if it becomes law here all that's needed to put a cherry on top is for someone in the Executive to tear up that 220 year old, obsolete document stored at the archives. Hell, nobody pays attention to it anymore.

Thu, 12/23/2010 - 14:08 | 826473 Temporalist
Temporalist's picture

It works for China because they can line people up in a firing squad or make them disappear.

Thu, 12/23/2010 - 14:51 | 826592 breezer1
breezer1's picture

what about the hotubs?

Thu, 12/23/2010 - 15:07 | 826644 Temporalist
Temporalist's picture

Sure they will drown in hot tubs too...or did you mean a Hot Tub Time Machine?

Thu, 12/23/2010 - 21:15 | 827329 A Nanny Moose
A Nanny Moose's picture

Drown? Where is our creativity? Why not just drop in a Chinese made toaster, and call it a suicide??

Thu, 12/23/2010 - 14:05 | 826469 razorthin
razorthin's picture

If monetary authority is Congress, at least we can vote their asses straight way.

Thu, 12/23/2010 - 14:10 | 826482 Rogerwilco
Rogerwilco's picture


True, but how long do you think it will be before the congress critters buy the votes they need? We are essentially there now with the influence peddlers and lobbyists mostly hidden from public view. This would let it out into the open.

Thu, 12/23/2010 - 14:08 | 826475 the rookie cynic
the rookie cynic's picture

The Federal Reserve actually controls more the of US budget than Congress does. Okay, so who voted for Bernanke? Not me, not you. Weird.

Thu, 12/23/2010 - 14:23 | 826515 Rogerwilco
Rogerwilco's picture

If we had a President instead of a feckless teevee watcher, the Fed might not be as bold. Until we get one, constitutional governance is on hold.

Say what you want about him, Bernanke knows how to fill a vacuum.

Thu, 12/23/2010 - 14:36 | 826558 malikai
malikai's picture

Yes, but the problem is what he fills that vacuum with.

Thu, 12/23/2010 - 17:45 | 827020 Waterfallsparkles
Waterfallsparkles's picture

But, Bernanke is filling the Vacume with all of our Tax Dollars and giving it to the Banks.

Thu, 12/23/2010 - 15:19 | 826671 Al Huxley
Al Huxley's picture

You do realize that the President was hired by and works for the Fed's owners, right?

Thu, 12/23/2010 - 16:19 | 826820 DaveyJones
DaveyJones's picture

well said. Those silly little letters after their name mean absolutley nothing  

Thu, 12/23/2010 - 21:29 | 827356 Miles Kendig
Miles Kendig's picture

Yep. Letterism reminds me of numbersim when I hear some official wearing it out.  "We used X amount of whatever" .... without addressing the fuck up

Thu, 12/23/2010 - 14:08 | 826477 lunaticfringe
lunaticfringe's picture

Good gawd. Here we go again with the gold standard thesis. Fiat currency can work and did work, Lincoln's greenback. It is the QUANTITY of money that causes booms and busts. I get the gold standard theme. It serves as a control on the quantity of the money supply. There is no reason that a government cannot issue its own currency as long as the Quantity is rigidly supervised and controlled. That government has screwed up everything it supervises and tries to control does not strengthen my argument. I see that.

Thu, 12/23/2010 - 14:11 | 826480 Dr. No
Dr. No's picture

Why not let the market decide?  Why does the government need to mandate which medium of exchange?

Thu, 12/23/2010 - 14:16 | 826491 hugovanderbubble
hugovanderbubble's picture

Intervention is called...

Euphemistically speaking " Manipulation" to the big ones become bigger and the mid small ones dissapear...


No Free Market, no Mark To market...this is all a scam.

Thu, 12/23/2010 - 16:39 | 826883 Dr. No
Dr. No's picture

Why the junks?  People are offended at the thought of not letting goverment decide the best form of money?  The constitution is a political document and you would be foolish to hold every word as gospel.  Religious nuts do the same thing.

Thu, 12/23/2010 - 14:19 | 826503 Beam Me Up Scotty
Beam Me Up Scotty's picture

We are still on a defacto gold standard.  Thats why gold is almost $1400 an ounce.  You treat the dollar like its the constant and gold is appreciating, when it actually is gold that is the constant, and the dollar is depreciating. 

Thu, 12/23/2010 - 16:22 | 826826 THE DORK OF CORK
THE DORK OF CORK's picture

The dollar was depreciating even after Volcker's high interest rate policey but the monetory aggregates kept going up - indeed the went ballistic by the late 80s.

But Gold declined - Why ? ,

The interest rates favoured capital depletion which was turned into interest income and in the 90s equities increased via labour arbitrage.

These returns could beat Gold over the short term because they were short term investments which purposely did not count capital and human depreciation.

Now its over - Gold will eat up all that wasted money printing which achieved nothing over the long term.


Thu, 12/23/2010 - 14:20 | 826504 Beam Me Up Scotty
Beam Me Up Scotty's picture

We are still on a defacto gold standard.  Thats why gold is almost $1400 an ounce.  You treat the dollar like its the constant and gold is appreciating, when it actually is gold that is the constant, and the dollar is depreciating. 

Thu, 12/23/2010 - 14:25 | 826513 dwdollar
dwdollar's picture

Anybody who thinks a fiat system could work but doesn't believe it should be left up to the government or private bankers should check out Bitcoin.

Thu, 12/23/2010 - 14:52 | 826593 Temporalist
Temporalist's picture

While the idea is nice I don't like digital currency for the same reason I don't trust gambling websites or the Fed...they can conjure up money for people without anyone being the wiser.

And what currency is the bitcoin?  55 what?  Measure against what?  Protected by whom?  Regulated by whom?

Thu, 12/23/2010 - 15:18 | 826667 Bendromeda Strain
Bendromeda Strain's picture

Why wouldn't you trust it?

If you have version 0.3.9 or lower, please upgrade for an important security update!

Oh... never mind. Just like that "security" clown that Erin Burnett interviewed (wrote a NYT editorial "Turn in your bin Ladens") who wants to get rid of cash, once you can't physically withdraw your money from a system - it owns you.

Thu, 12/23/2010 - 15:50 | 826753 Temporalist
Temporalist's picture

Yes exactly keep real money outside the system.  Many of the greatest investors, analysts say to keep money outside the system.  The idea to watch and track people's purchases is an indictment on everyone.  Terrorist until proven otherwise.

Thu, 12/23/2010 - 16:27 | 826838 gloomboomdoom
gloomboomdoom's picture

Erin has been correct more often than the ZH, folks.

No "Double-Dip", she was right!


Thu, 12/23/2010 - 16:18 | 826821 dwdollar
dwdollar's picture

"And what currency is the bitcoin?  55 what?  Measure against what?  Protected by whom?  Regulated by whom?"

It's fiat so it's backed by nothing, just like gold.  It's protected by hackers who have invested time and wealth in it.  It's regulated by the community.  Until you can transport gold atoms across the world at the speed of light, something like Bitcoin is a great alternative in the modern world.

Thu, 12/23/2010 - 19:32 | 827177 Bendromeda Strain
Bendromeda Strain's picture

It's fiat so it's backed by nothing, just like gold.

Cripes - ZH commenters are starting to make my head hurt. Gold is payment in full.

Thu, 12/23/2010 - 16:55 | 826925 thrashaholic
thrashaholic's picture

they can conjure up money for people without anyone being the wiser.

Quite the opposite with bitcoin, actually. There is no 'conjuring' of money - at least not in the printing press sense, and everyone knows it when it happens - it's built into the system, it is planned for and happens on a known time schedule. It is too complicated to explain in detail here, unless you happen to be a cryptoanalyst or a computer programmer (a real one).

It is measured against anything you like, of course, just like all currency. Right now it can be traded for many different currencies, or traded for tangible goods and services by itself. It is protected by the system's design, ( It is essentially a cryptographic proof of work system, there is no way to "cheat" ) and by the community / network. It is regulated by math and physics. It has no master, and no central point of creation or failure. It is open source as well, which provides another layer of security through transparency.

You should, you know, actually read about it before you dismiss it. It has its flaws, like all things, but they are being worked on.

Thu, 12/23/2010 - 14:23 | 826516 Shameful
Shameful's picture

Do yourself a favor and look up the Union inflation during the civil war.  I don't know about you but massive yearly inflation is a turn off when you are trying to sell a system to someone.

Thu, 12/23/2010 - 18:02 | 827012 Max Hunter
Max Hunter's picture

That's because the greenbacks were being used to fund a war not assets.

Say this, tomorrow the government issues 3 trillion dollars of DEBT FREE money. Every single penny of that money HAD to be spent on public works i.e. bridges, roads, dams, utility upgrades, you get the point. Meaning, every new dollars spent PRODUCED something. This would not be inflationary. As long as it would not hit the system with too much demand (for goods) at one time.

If (like Lincoln) we simply printed trillion to by soldiers, guns and bullets, it could prove to be inflationary. Keep in mind, the greenback settled down after the war and kept its value..  It was taken out of circulation by the bankers, which caused the great depreciation depression of the 1870's. This forced them (by threat of revolt) to start making silver dollars again. Bankers didn't like silver dollars.. A miner could go to a mint and have coins struck taking the banker out of the equation. I think most of you know all of this.

Thu, 12/23/2010 - 18:19 | 827071 Shameful
Shameful's picture

So you telling me that increasing the supply of something does not diminish the value of the existing stock?  So what about the finds of gold in the new world and it's effect on Europe?  What about the Comstock lode?  If there was 1,000,000,000 original Picasso's out there how much would each one be worth?

3 trillion?  Hell why stop there?  Why not 1 billion quadrillion dollars?  After all if it's not inflationary that should be enough to get into Star Trek tech in a few weeks right?  Everyone will have a fleet of Bentleys and palatial estates, those are real things.  I will point out the public works being done in Japan and it generating next to nothing on return, so how can you be so sure it would be productive?

Explain to me how 3 trillion is created and spent without diminishing the value of the dollar?  You claim it would be productive, well doesn't that new money weaken the old.  And who will decide how the money gets spent, the government.  If central panning worked so great then where is the USSR?  Did it fold because it was to amazing and efficient?  did they not have 5 year plans to build infrastructure.  And who could forget Mao's Great Leap Forward?  What 50+ million Chinese dies...must have been from "joy" at such amazing system.  Overwhelmed by ecstasy...or starvation, they get confusing.

You are trying to delude yourself into thinking the laws of supply and demand and scarcity can be ignored if someone "good" is manning the printing press.  It can no more be ignored then gravity can.  What's wrong with letting the people decide what is money and not holding a gun to their head?  Anyone who wishes to use the gun for "good" is a tyrant in disguise and no better then our current masters in intentions.

Thu, 12/23/2010 - 18:47 | 827107 Max Hunter
Max Hunter's picture

You extrapolated quite a bit from my comment.

If there is an increase in goods that reflect the increase in money than the inflation from that money should be tempered.

I'm not saying it would be easy and that fraud wouldn't find its way into it, but then again, hasn't fraud found its way into our current system? Is our current system not inflationary?

Debt free money can work. I'd take my chances with it in a heartbeat..

Thu, 12/23/2010 - 19:05 | 827131 Shameful
Shameful's picture

Who will be the central planner?  You say inflation will be tempered, but you are counting on goods being produced.  What if they are not, or they are not the goods people want?  Again you did not address the problems with central planning.  If you are going to propose central economic planning then please rebut my examples of their tragic results.

As to fraud, it would be a shrine to fraud.  I can only imagine the no bid contractors licking their licks at 3 trillion dollars in projects.  Look at our system and you tell me how efficient such a centrally planned building process would be in our crony capitalist system.  Look at our conmen...congress and tell me what would happen.

Oh sure our system is terrible, even worse then the system you want.  But I don't want to move out of the raging nuclear inferno to be roasted alive in a foundry.  Given a choice I'd rather not be roasted alive by inflation :)

The system that is best and most certainly will work with a minimum of fraud is allowing people to pick their own money.  Why not give freedom a chance?  Do you really trust any gov to point a gun to your head and say "Use this currency" even if it is debt free?  Under your system it's 100% sure thing there would be epic inflation, and I would keep my money in commodities and profit off it, but you would force misery on people when instead they could be free to choose their own path.

Thu, 12/23/2010 - 21:29 | 827362 A Nanny Moose
A Nanny Moose's picture

+1 quadrillion

Thu, 12/23/2010 - 21:58 | 827398 StychoKiller
StychoKiller's picture

Apparently only you and "A Nanny Moose" understand:  "Government is not reason, it is not eloquence -- IT IS FORCE!" -- George Washington

Thu, 12/23/2010 - 14:38 | 826562 Husk-Erzulie
Husk-Erzulie's picture

as long as the Quantity is rigidly supervised and controlled...

Can't be done reliably for any length of time- simply not in the nature of any government.  Fiat doesn't work.

Thu, 12/23/2010 - 14:56 | 826604 Temporalist
Temporalist's picture

Agreed.  The "as long as the Quantity is rigidly supervised and controlled" is like saying "as long as people control themselves, something they have proven they cannot do time and time again."

Thu, 12/23/2010 - 14:57 | 826610 TumblingDice
TumblingDice's picture

Dude, you have got to stop arguing for yourself. It is not good for your mental health.

Your point about fiat not being the problem is well taken though. It is a false assumption that gold is somehow special and immune to manipulation of its perceived quantity and value. The value of gold is almost completely determined by mutual perception. As long as people can perceive an object as having value it can serve as a unit of transaction and as long as this perception is standardized the said object can serve as money. In order to standardize the perceived value people have relied on the steadfast quantities of gold and now we rely on some twisted balance of past, present and future debt.

Anyways, the point is that the quantity in the current system, as grotesque as it is, is determined in a way that is actually preferable to this alternative since the current system has some semblance of market structure: so much money is made to cover previous debts and create new ones at a certain pace for inflation targets. In the proposed solution the quantity of money would not be controlled by the demand of the market but rather by the demand of Congress. It transfers the competition for money from the ability to make it to the ability to get elected.

It is all madness in the end. I see that this bill tries to control the quantity of money by eliminating fractional reserve banking but that is a suckers game and just plain ol' stupid. The quantity of money can't be controlled by the market and it certainlly can't be controlled by the government.

Thu, 12/23/2010 - 15:09 | 826650 Sean7k
Sean7k's picture

This experiment has been done before. Study history please. Britain- Corn Laws- 1746. The same restraint was put on the "amount of money in circulation". At the first sign of deflation, the bankers and merchants screamed, the unemployed raised their voices and the government's resolution crumbled. Money was printed and inflation ensued.

Unless monetary substitutes are tied to specie that can be called, they will always be inflated and abused. End of story. There are exactly zero instances otherwise and a thousand that prove this point.

All governments are systems of abuse for the benefit of an elite. Bar none. Every form of government results in the curtailment of liberty and expansion of tyranny. Bar none. 

It would be nice if people would just get this into their heads, so we can discuss where we go from here.

Thu, 12/23/2010 - 15:36 | 826722 Husk-Erzulie
Husk-Erzulie's picture

I agree.  SPECIE, all the critters need do is mandate it.  The only objection to specie based money in the past has been its inability to match rapid rapid growth in demand thus limiting an economy in a rapid growth phase.  I think allowing some fractioning by banks and adjusting the reserve rate to expand supply would be okay.  Similarly a simple tax policy can be guided by the need to withdraw excessive supply.  The goal should be to allow healthy growth and still maintain the value of the notes in grannies mattress.  It is perfectly possible to have a sound money system in this country, we only need the vision.....where O' where is Old Hickory, damn I miss that guy.

Thu, 12/23/2010 - 21:44 | 827379 A Nanny Moose
A Nanny Moose's picture

"...inability to match rapid rapid growth in demand thus limiting an economy in a rapid growth phase."

Growth? At some point we reach the very real ceiling of a finite system. At that event horizon, growth is no longer possible. There is either growth, or decay. hypertrophy or atrophy. So, is growth really that great. Is a limit on growth, if natural, really that bad?

The amount of money in the system is always correct. Prices adjust accordingly. The key lies in allowing parties engaging in voluntary exchange, to choose a mutually agreeable unit of value in which that exchange takes place.

Thu, 12/23/2010 - 22:03 | 827407 StychoKiller
StychoKiller's picture

Is the surface of a planet the right place for an expanding technological civilization?

Figure out the answer, the solution becomes obvious...

Thu, 12/23/2010 - 14:22 | 826495 Shameful
Shameful's picture

Finally! A fight over the printing press. Of course either side will use it to benefit themselves and render America destitute, but at least we might see a fight over who gets to claim the scalp. Kinda like watching two guys argue over who is going to murder you, not really good but at least some people are paying attention :)

Oh and on the plus side with the printing press in the public it means all the investors and foreigners get to see the awful horrific things we are doing. Will either force us to behave, or most likely Zimbabwe out. But at least it would end the farce that is Fed independence, not ideal but if it's Zimbabwe Ben or Kucinich I have to go with the man who will burn the system down in public...ok more in public Zimbabwe Ben is pretty public about it to. Ok how about publicly listing their misdeeds and balance sheets...

Thu, 12/23/2010 - 14:32 | 826543 traderjoe
traderjoe's picture

I agree. I'll take a public, interest-free, debt-free script over a private, fractional reserve interest-bearing debt-money any day of the week. In the end, we really should (and perhaps already do) have multiple competing currencies. Private and public. 

I'll take the destruction of the Fed by the left or the right, and let the chips fall where they may. 

As the End the Fed meme gains traction it demonstrates over and over that we will NOT repay our debts in their present form. A new currency is coming...


Thu, 12/23/2010 - 16:30 | 826846 gloomboomdoom
gloomboomdoom's picture

No, a new currency is NOT on the way. NOT. Got it? good.

The US dollar in its currency form will still exist when you, I and the other person exit Spaceship Earth

Thu, 12/23/2010 - 22:04 | 827410 StychoKiller
StychoKiller's picture

Sorry, but resorting to absolutes indicates faulty reasoning.  Check your premises.

Thu, 12/23/2010 - 21:47 | 827381 A Nanny Moose
A Nanny Moose's picture

All that's left is to sell your vote to the highest bidder.

Thu, 12/23/2010 - 14:21 | 826505 SwapThis
SwapThis's picture

I can't imagine a worse interpretation of Article 1 Section 8 contains the following:

[The Congress shall] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To say that this can't effectively be a authorization to print hard backed paper money is rediculous.  I have in my hand a $1 silver note from the US Gov presses circa 1935.  Worked ok then.  Just why would it not work now??

A good idea is a good idea and Mr K from OH has had several I can think of, I am not going to back away from this one based on what has been put forth above.  Love to hear any more coherent arguments against, do you have any?

We need to end Fractional Reserve Banking controlled by a private organization and we need hard money that is, as much as possible, immune to wild swings in value or outright debasement, in order to reward savers and attract investors.  I am also stunned but pleased to see this put forward.

Thu, 12/23/2010 - 20:40 | 827239 Goldilocks
Goldilocks's picture

The fascist business model may indeed have issues with the interpretation of … “fix the Standard of Weights and Measures”.

Seems to me that all useful commodities (those that are uniform & fit with the concept of equal weights & measures) should be monetized by themselves (as opposed to being placed in a basket of currencies) … & we trade / barter them, with them.

Thu, 12/23/2010 - 14:21 | 826508 lunaticfringe
lunaticfringe's picture

Stolen content here. The lost quatrain of Nostradamus. What does it mean?

Thu, 12/23/2010 - 14:22 | 826510 docj
docj's picture

Essentially this bill takes the Federal Reserve, renames it, makes it part of Congress and moves a private monopoly into a public monopoly.

Well, that right there is a pretty solid point.  The principal, and only as far as I can see, advantage being rather than answering to one unelected hack (Benron) said public monopoly would have to answer to (allegedly) elected hacks (CongressCritters).

Hard for me to see this therefore as anything other than the "Incumbents Will Never Have To Raise Money Ever Again Act of 2010".

Thu, 12/23/2010 - 14:23 | 826511 wcvarones
wcvarones's picture

Denninger is not a Tea Partier.  He shares some Tea Party concerns, but has actually ranted quite often against the Tea Party because he doesn't think the Tea Party is sufficiently concerned with the dirty banksters (as a Tea Partier and bankster-hater myself, I think Denninger is misinformed).

Thu, 12/23/2010 - 18:15 | 827064 mynhair
mynhair's picture

Denninger is a douche.  He voted for OBambi without doing his due diligence.

(How the fuk a person did not see that lawyer moron for what he is, escapes me.)

Sat, 12/25/2010 - 08:24 | 829485 ToNYC
ToNYC's picture


Brother Obama was better than the rich woman's kept Senator McNasty, heiress to the largest Bud distributor, and he, the privileged son of an Adimral with a 'tude of his own and not gratitude, the size of an assault craft up his bum at all times.

Thu, 12/23/2010 - 14:25 | 826524 Max Hunter
Max Hunter's picture

Pretty biased article to say the least... One clue, the Continental was almost worthless because of British counterfeiting.

I hardly think this bill is absurd, unless you are a banker and want to defend statis quo with every ounce of energy you have..

I've seen other ideas similar to this one, it could work.. But it would put people that trade paper wealth (skimming 20% of our economy) and destroy our production out of business. So it will never be considered.

Thu, 12/23/2010 - 14:40 | 826566 Apophis
Apophis's picture


I suppose it was folly to hope for some constructive debate of this bill.  Cue the petty infighting and name calling...


Thu, 12/23/2010 - 14:28 | 826531 the grateful un...
the grateful unemployed's picture

great, now we're channeling Fox News. Kuchinich wants Congress, a bicameral body, to have control of the money supply, and that is a LEFT wing idea? Oh crap, I read something from this guy at Forbes who claims the banks have control of the money supply, and they can triple it by buying securities?

i know you can pyramid loans, and you pyramid securities as long as you keep buying on margin, but the money supply? I guess anything is possible. 

Thu, 12/23/2010 - 14:29 | 826533 deagle44
deagle44's picture

Listen to Denninger only if you want to lose money.

Thu, 12/23/2010 - 14:39 | 826564 chumbawamba
chumbawamba's picture

Listen to Denninger only if you like to feel compelled to reach out and wrap your hands around someone's neck to throttle them verily.

I am Chumbawamba.

Thu, 12/23/2010 - 16:32 | 826848 gloomboomdoom
gloomboomdoom's picture

Karl is a millionarie... and you are what exactly?

Online we are all tough guys, no?

Thu, 12/23/2010 - 17:18 | 826963 Husk-Erzulie
Husk-Erzulie's picture

I am Chumbawamba..........Dumbass

Thu, 12/23/2010 - 19:51 | 827204 trav7777
trav7777's picture

yeah, who made his money in the .com bubble.

He's a rentier-seeker who loves paper because it allows his money to "make money" simply by existing.

He wants precious cash and higher interest rates out of self-interest. 

Told people to sell into a "5 wave impulsive move" when gold was $900

Thu, 12/23/2010 - 14:35 | 826552 Jerry Maguire
Jerry Maguire's picture

There are some seriously out-of-whack opinions being aired over on Ellen Brown's blog about this stuff:



Thu, 12/23/2010 - 14:40 | 826569 Clapham Junction
Clapham Junction's picture

Yes but,

  The Muni bond idea is not far fetched and would indicate that over the next few months a very small spec in munis might work. I'm talking high yield shit here, the kind of stuff the fed loves to buy.

Opinions?  I don't see why it is unreasonable to believe the FED will bail out states or cities.

Thu, 12/23/2010 - 15:05 | 826639 thepigman
thepigman's picture

Because too many of them are going

to go bust. Here's the first.

Thu, 12/23/2010 - 15:32 | 826704 goldsaver
goldsaver's picture

Exactly according to plan. You forget that the fed "loaned" the ECB $8T in lines of credit and currency swaps. Buying up all municipal bonds and state debt would be a walk in the park for the fed. Then it would be a matter of going IMF on the states.

So, you wanna new park? Well, how about you sell the land to my buddy here and I'll my bank friend to loan you the money, capishe?

look at how the IMF took control of most of South America and you can easily see the same plan in action here in the US.

Thu, 12/23/2010 - 17:01 | 826936 Jerry Maguire
Jerry Maguire's picture

I think you're basically right.  It's way too early to let the munis fail, if that time will ever come.  It's more like the borg from star trek, all necessary failing entities will be "absorbed".  If they stopped trash collection they'd have riots.  If they stopped pension checks they'd have riots.  If they stopped paychecks they'd have riots.

They're going to avoid riots for as long as they can, and if that means buying up municipal debt at 100 cents on the dollar that's what they'll do.

They can keep things going maybe another ten years that way, unless something else intervenes.  What the "something else" might be is anyone's guess:  big war, maybe, like in Korea. 

When I say "they", btw, I mean no one in particular.  My true thoughts are that the author of this mess is not a regular mortal human being or any group of them.

In the meantime, Merry Christmas.




Thu, 12/23/2010 - 14:36 | 826553 chumbawamba
chumbawamba's picture

Just some (perhaps interesting) thoughts:

1. Inflation under the Keynesian system can be thought of as a long-term permanent debt jubilee.  If we are afforded full understanding that the value of our savings will inflate away (i.e. de-value against goods) over time as the Fed continues to grow the money supply parallel with certain driving factors, including an education into how to "arbitrage" this inflation with regards to our debts, then we would at least have a fighting chance, and with that understanding fully in mind, Keynesian economics might actually be tolerable, rather than the "shabby secret of the welfare statists" that it is.

I wish I could take credit for this "insight", but I picked it up from one of the commentors at the <a href="">JSMineSet Facebook group</a>.

2. The ultimate solution is to simply take away the ability of central governments, or ANY government, to issue currency exclusively.  We live in a modern age, with color laser printers, 3D printers and home CNC mills.  We can manufacture our own tokens, chits, paper currencies, etc.  We don't need government to do it for us.  We can create and destroy our own fiat currencies quite nicely, thank you.

Let the market decide what money is, as it has always done faithfully in the past.  Whether it be gold or silver or copper, or a combination of these and other metals, the market can decide what money is.  When gold or silver become too scarce, there are other metals and alloys that will fit the bill.  In fact, we already have such a system: they're called "coins".  True coins should be worth their actual face value, otherwise they are merely tokens, but by removing face value altogether, and allowing the value of the coins to float along with their market value, our money becomes more real than real, alive almost.  It will become true money.

Just thoughts (no, not FOFOA ;)

I am Chumbawamba.

Thu, 12/23/2010 - 14:44 | 826577 Shameful
Shameful's picture

Great to see you back!

I agree the market would be the best mechanism. However the current oligarchs and power brokers will NEVER give up their power over money and the profit therein willingly. It will have to be pried away from them and I expect them to use any means necessary to keep it. After all when one has found a source of endless free goods and services I imagine one would be loathe to give it up.

Thu, 12/23/2010 - 15:05 | 826624 chumbawamba
chumbawamba's picture

Hey Shameful!

It doesn't need to pried away from them.  You simply give back to them what's theirs.  Render unto Caeser the things that are Caesar's.  Put the Federal Reserve Notes you have back into Caesar's system and render it into gold, silver and copper.  Don't transact in Caesar's currency, and it renders unto irrelevance.

F. Tupper Saussy - The Miracle on Main Street


I am Chumbawamba.

Thu, 12/23/2010 - 15:33 | 826709 Shameful
Shameful's picture

Right if the people as a whole decide to walk away from the Devil's currency it would die.  But what 90% of people out there have no idea what is going on?  What % would pull triggers and enforce the slavery at the barrel of a gun?

Not only do we face a very real, very organized evil, but also an incredibly indifferent public.  I do what I can and keep my assets in the metals (gold, silver, lead, copper, steel, brass), but that's more a act of self preservation then protest to be honest.  I expect the dollar only to die when they decide to go truly hog wild and our creditors finally head for the hills.  Then I shudder to think what the ignorant mass will do and what schemes they will fall for.

Thu, 12/23/2010 - 16:54 | 826924 jimijon
jimijon's picture

Just received five proofs of my new coin! You should definitely check it out once I get the rest... It has the whole Render bit...


The Ultimate Flip Coin!

ok, end of my excited shameless plug

Thu, 12/23/2010 - 17:41 | 827013 chumbawamba
chumbawamba's picture

Sweet titties!

Thu, 12/23/2010 - 20:29 | 827258 goldsaver
goldsaver's picture

Can we get closeups? And when will they be available for sale?

Thu, 12/23/2010 - 22:15 | 827420 StychoKiller
StychoKiller's picture

That site page does not render properly under Firefox and Kubuntu -- the letters are huge and overlaid on each other!  Suggest you remove all the Internet Explorer-specific code(s) from the page.  The page(s) do render properly under Google's Chrome browser, though.

Thu, 12/23/2010 - 15:15 | 826658 Sean7k
Sean7k's picture

Shameful, you merely have to repeal legal tender laws. Everything else will happen naturally.

Thu, 12/23/2010 - 15:28 | 826697 Shameful
Shameful's picture

Right, so what group of conmen...err congressmen will be pulling off that stunt?  If such talk gets serious then I expect a scene replay out of Dark Knight where officials keep getting killed under mysterious circumstances.    They will do anything to keep the reigns of power on.  And when it's only abut manipulating a handful of corrupt people it's easy as pie, can print the money to bribe them with.

To me seems more likely the the dollar will burn in the fires of hyperinflation far before we see legal tender laws go.  But you are right, but I cannot see how to get from here to there with the system we have.

Thu, 12/23/2010 - 15:41 | 826732 Sean7k
Sean7k's picture

Yes, it would be revolutionary, but it is simple to understand and simple to do. It is a simple law to write. One line. It is easy to explain. Yes, they would kill anyone who was brave enough to carry the standard. Or, we could kill them first?

Thu, 12/23/2010 - 14:52 | 826598 Marla And Me
Marla And Me's picture

This is the best holiday surprise I could have had.  Welcome back my friend.  By the way, did you request Tyler put your account on hold while you were gone?  We were unable to track your old posts during your absence.  Glad to see you back here.

Thu, 12/23/2010 - 15:02 | 826632 chumbawamba
chumbawamba's picture

Naw, shit just happened.

It's nice to be welcomed back.


Thu, 12/23/2010 - 15:28 | 826698 SwapThis
SwapThis's picture

Chumbawamba sighting today made my day...

Fri, 12/24/2010 - 00:19 | 827560 Miles Kendig
Miles Kendig's picture

And mine.  Have fun dude

Fri, 12/24/2010 - 03:26 | 827712 chumbawamba
chumbawamba's picture

Festive Kwanza!


Thu, 12/23/2010 - 15:07 | 826641 linrom
linrom's picture

Inflation under the Keynesian system can be thought of as a long-term permanent debt jubilee.

Debt grows in excess of inflation rate. At some point where it can't anymore, you'll get debt/deflation Depression.

Thu, 12/23/2010 - 15:09 | 826649 malikai
malikai's picture

I like your posts. But I will not take Chumbawamba dollars. I won't take Kucinich dollars, neither. I want tangible value which is standardized, so I can trade it with others. Do you think the market could provide that?

Thu, 12/23/2010 - 22:19 | 827431 StychoKiller
StychoKiller's picture

The Market(s) could and would, PROVIDED that the Govt sticks to it's Constitutional mandate and verifies the weights and measures of the circulating currency, which is ALL they should be ALLOWED to do!

Thu, 12/23/2010 - 14:43 | 826570 strannick
strannick's picture

So he prefers the Corporate Bankster Fascism of the unaccountable FED to Congress-run Democracy?

Hes right in that Hitler did get the trains to run on time. Unfortunately, they were headed to concentration camps.

Thu, 12/23/2010 - 14:42 | 826573 trav7777
trav7777's picture

this article is a godawful apologia for the Fed system.

Look, moron, Congress is SUPPOSED to have a public monopoly on the coinage of money.  It's in the Constitution.

I say give the power back to Congress...let them fuck up and then we will actually have to sit down as a nation and make some harder choices.  If they zimbabwe us, what is the fucking difference?  Life goes on.

Brazil's on its 3rd currency in 20 years.  They seem to have found the strength to carry on.  The Fed system is and always was set up to provide for banking profits as a result of lending out the money supply.

They earn a vig off of every dollar of credit/money in existence.

Thu, 12/23/2010 - 15:04 | 826636 Temporalist
Temporalist's picture

Might the reason Brazil has the ability to resurrect itself so strongly and frequently be because they have oil?

Thu, 12/23/2010 - 16:25 | 826832 trav7777
trav7777's picture

Do you want a picture of some Colombian notes I have picked up?  Argentina had a currency collapse too.  Mexico.  Hell, almost all of them, Chile, Venezuela...who hasn't?

Life goes on, really.  People will just migrate to a more respectable currency until the government gets its act together.  Eventually, there are revolts, vote outs and some sanity comes.

But at least you know what you're getting.  Having to BORROW our money supply from bankers just makes them rich and we still get fucked.

Thu, 12/23/2010 - 14:45 | 826580 flacorps
flacorps's picture

The most fungible thing of real value is energy, whether expressed in BTUs or Joules or what-have-you. With it you can plant, harvest, mine, transport, and otherwise create, obtain or extract value from almost anything else.

Assuming we were to devise currency that represented claims on units of energy and institute policies that made producing those units of energy as painless as possible for the producers (only reasonable restrictions designed to control their frank first-order externalities), we could expect a great deal more energy to be produced over the ensuing decades. We need not tie ourselves to a metal or to another set of commodities.

Energy is a more fundamental form of wealth than anything else except biological necessities in times when such are in short supply.

Thu, 12/23/2010 - 15:04 | 826637 Dr. No
Dr. No's picture

Most marketable commodity: energy.  You are right on.

Thu, 12/23/2010 - 15:06 | 826643 chumbawamba
chumbawamba's picture

Put it into coin form and you just might be on to something.

I am Chumbawamba.

Thu, 12/23/2010 - 15:35 | 826718 goldsaver
goldsaver's picture

Right, we are going to trade goods in kilowatt denominated currency? And exactly who determines the value of the token you use to trade and who controls the deposits or units of energy? What you are describing is carbon trading at its core. Just another ponzi.

Thu, 12/23/2010 - 15:47 | 826746 Sean7k
Sean7k's picture

Money must be able to store value, by being durable and unchanging. It must also be something that is acceptable to all parties in an exchange. Energy cannot do this. Once used- it becomes mass. You would be exchanging the Federal Reserve for the Energy Reserve.

People do not need to decide what money will be, the market will determine it all on it's own if allowed the freedom to do so. Eliminate legal tender laws.

Thu, 12/23/2010 - 16:29 | 826844 trav7777
trav7777's picture

energy becomes

Thu, 12/23/2010 - 16:43 | 826895 Dr. No
Dr. No's picture

Do you believe an exchange of a piece of paper, legaly redeemable for a piece of property, is considered the gold standard or do you need actual physical metal to exchange hands to call it a gold standard?  If you think a legal instrument, with claims on property, is a "gold standard", then why not energy? 

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