…And Private Creation Of Money Is Unconstitutional, Charges Congressional Candidate J. Moromisato.
“Government, possessing the power to create and issue currency…need not and should not borrow capital at interest as a means of financing governmental work and public enterprise.” (Abraham Lincoln)
Denver, CO – October 4, 2010 — Statement by J. Moromisato, candidate to the U.S. Senate for Colorado.
Article I, Section 8, of the U.S. Constitution, states that “Congress shall have Power … To coin Money, regulate the Value thereof, and of foreign Coin,…”
Obviously, the representation of money has changed, but the concept is the same: money is the means of payment (‘tender in payment of debts’ in the Constitution). In The Founder’s time, the means of payment was gold or silver coins. With the proliferation of banks and other lending institutions, banknotes became the representation of money.
And with the advent of electronic communication, money became preferentially a string of numbers in a lending institution’s ledger or computer database.
Just in case anyone doubts that the power to ‘coin money’, granted to Congress, extend to the printing of banknotes, or to the creation of bank-deposit money, The Founders inserted in Art. I, Sec. 10, of the Constitution, the following: “No State shall…; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;…”
In other words, our founding fathers were well aware that things other than gold and silver may be used as money, and thus set in the Constitution a prohibition for the State to create any of those forms of money, which is an implicit authorization for Congress to create those and other types of money for use in the country.
But if financial institutions could not create money and lend it, what would happen to the economy?
Financial institutions would still continue lending money, but they would be required to borrow their lending funds from the Fed. Thus, the Fed would become the sole creator of money in the country, and there would be very little change in the flow of credit into the economy.
The impact of this seemingly small change would be tremendous; For one thing, it would stabilize the financial system and make it fail-proof. Individual institutions may still fail if they take in too much risk, but that would have little if any effect on the other institutions.
The biggest impact would be on government financing; government would be able to raise taxes on the rich, without affecting the flow of credit—which now depends on the savings of the rich—and fiscal deficits would become things of the past.
The Fed would be able to lend directly to government at all levels, under Congress approved rules and limitations; and would replace the current national debt with a combination of new low interest securities and purchases of outstanding securities.
Once government has control over the flow of money in the domestic economy, it would be able to do the same with the flow of dollars in the global economy. For that, it would have to achieve a balance in our foreign trade. The Denver Plan calls for a temporary tariff on ALL imports from over-exporting countries (China, Japan, Germany, Venezuela, etc), but only until the accumulated bilateral trade becomes balanced.
About J. Moromisato
Born in Lima, Peru, J. Moromisato became an American citizen in 1985. He has a doctorate in high energy physics and worked as teacher and researcher until December 2004. Shortly before retiring, he returned to graduate school to obtain a master’s in economics. A Denver resident, Moromisato is the author of The Origin of Wealth and Poverty (2007), The Coming Age of Freed Money (2010). And The Denver Plan to End Unemployment (Oct 2010).