A Report to the Banking Committees of the U.S.A. House and the Senate Friday, September 12, 2008 My wife and I intend to make this material into a report and deliver copies to every member of both Congressional Banking Committees -- sometime in May of ‘09. Your advice is requested. Please help us sharpen our arguments.
The Five Most Important Banking Problems ... and ... The Simple Legislative Action Congress Can Take To Solve Those Problems Problem #1: An Excess of Money in the Money Supply Will Lead To Inflation Problem #2: Banks Do Not Suffer When They Make Bad Loans Problem #3: The Government Does Not Use Double-Entry Bookkeeping Problem #4: Contract Laws Are Not Routinely Applied To Monetary Transactions Problem #5: The People of “We The People” Are Not Encouraged To Start Banks ------------------------------------------------------------------------------------------------------------------ Problem #1: An Excess of Money in the National Money Supply Will Lead to Inflation Discussion: Lots of people have a deep-rooted belief that a significant increase in the money supply will always lead to inflation -- which is a devaluation of money. We think that is nonsense. If the newly created money is put into the system in such a way as to increase wealth (those things that we value and which lead to a better average life) -- the added money will not be inflationary. Action Needed: Laws should be passed that will specify banks will primarily lend money to people who have a good plan to create wealth with that money. Problem #2: Banks Do Not Suffer When They Make Bad Loans Discussion: The “fractional reserve system” is often seen as being the main source of economic problems, because it “(a) creates debt-money out of thin air, (b) leads to an unhealthy increase in the money supply and (c), inevitably, inflation”. I believe these three negatives are always the result of lending wherein the banks escape the natural control of the fractional reserve system on their lending. Under the present system -- the banks sell off most of their loans (to Freddy and Fannie) and escape what should be their loss when loans go bad. That can easily be corrected by laws which forbid the selling-off of loans by the creator of those loans. Action Needed: Laws should be passed that will mandate banks must not transfer ownership of the loans they create before the term of each loan is reached. Problem #3: The Government Does Not Use Double-Entry Bookkeeping Discussion: The government should change to a double-entry bookkeeping system wherein all transactions involve (1) assets, (2) liabilities , (3) income and (4) expense. Such a system is universally recognized as being the only way to keep track of the financial status of any enterprise. The main advantage of doing this is that government “spending” on worthwhile infrastructure would not immediately be considered an “expense”. The money spent in this way would go into an “asset” account that would be counted as an expense in accordance with a dedicated depreciation schedule. Action Needed: Laws should be passed that will mandate double-entry bookkeeping on all monetary transactions. Problem #4: Contract Laws Are Not Routinely Applied To Monetary Transactions Discussion: All monetary transactions should be considered contracts and should be analyzed in terms of contract law. Reasons and expected results follow. (a) Contracts have a long legal history in English Common Law and an extraordinary written record in our law books -- both statutes and case law. (b) Definitions for all words and principles used in contract law are well established in law books. (c) If we establish that all paper money is essentially a contract between two human entities, it should be relatively easy to describe “paper money” in legal terms and perhaps accounting terms -- because the law is very familiar with accounting. (d) It can be convincingly shown that barter was originally, and still is, simply a contract between two traders. (e) The use of gold and silver to facilitate trading could also be shown to be a contract. (f) The law generally and specifically prohibits the Federal or State governments from interfering with contracts unless the contracts violate existing laws. (g) Consideration of the above naturally leads to a reasonable conclusion that traders can either use paper money or gold in their transactions as long as (a) they both agree that they understand the terms of the contact, and agree to those terms and (b) the contract does not violate any law (h) Since the government may not interfere with private contracts under our laws, the government should not pass laws that would prohibit or mandate the use of paper money or the use of gold as money. Both should exist unhampered by government interference. Action Needed: Laws should be passed that all monetary transactions should be covered by Federal Contract laws Problem #5: The People of “We The People” Are Not Encouraged To Start Banks Discussion: Congress should encourage the establishment of banks by common people and groups of people -- such as community organizations, charities and such. The Constitution gives that right to the people. (add more discussion) Action Needed: Congress should pass Federal Laws that will encourage The People and their institutions to start banks. I invite your comments on all of the above. Help us refine our thoughts. Martin R. Carbone / 5123 Don Rodolfo Drive / Carlsbad CA / 92010 [EMAIL PROTECTED] http://www.alphabeticalist.com --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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