[CTRL] TOWARDS IDEAL MONETARY REFORM LEGISLATION

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TOWARDS IDEAL MONETARY
REFORM LEGISLATION

An Introduction to
Monetary Reform Principles

by Patrick S.J. Carmack, B.B.A., J.D.

Why draft model reform legislation with little to no chance of enactment
under the present circumstances? Nobel Laureate in Economics, Milton
Friedman, offers two reasons:

...it is worth discussing radical changes, not in the expectation that
they will be adopted promptly but for two other reasons. One is to
construct an ideal goal, so that incremental changes can be judged by
whether they move the institutional structure toward or away from that
ideal.
Similarly, Pope John Paul II mentions another yardstick for measuring
economic reform proposals:

[by] determining their conformity with or divergence from the lines of
the Gospel teaching...

Friedman continues:

The other reason is very different. It is so that if a crisis requiring
or facilitating radical change does arise, alternatives will be
available that have been carefully developed and fully explored.

Further, modern history is replete with instances in which the Hegelian
dialectic has been applied to the political and economic orders to
manipulate or soften-up governments to change in ways contrary to the
public good. This method usually involves the artificial (i.e. coldly
calculated) initiation of conflict of some kind after careful
conditioning of the elements of the society who could either obstruct or
implement the planned change; followed by a crisis (e.g. an economic or
political anomaly such as the stock market crash of 1929 or the oil
crises of 1974 and 1979); which is then "interpreted" by controlled mass
media to direct the responses to the crisis into pre-planned avenues and
away from correct responses such as careful analysis of the causes and
criminal indictment of the perpetrators (Manipulation on the
personal/psychological order follows a similar pattern of stress,
emotion, counseling). Orwell noted this in 1984:

In governing the populace, unrest cannot be averted. Therefore, it must
be channeled and cultivated.

The following quotation of David Rockefeller, then Chairman of Chase
Manhattan bank, speaking at the June, 1991 Bilderberger meeting in Baden
Baden, Germany (a meeting attended by then-Governor Bill Clinton) is
illustrative of the media control mentioned above:

We are grateful to the Washington Post, the New York Times, Time
Magazine and other great publications whose directors have attended our
meetings and respected their promises of discretion for almost forty
years. He went on to explain: It would have been impossible for us to
develop our plan for the world if we had been subjected to the lights of
publicity during those years. But, the world is more sophisticated and
prepared to march towards a world government. The supernational
sovereignty of an intellectual elite and world bankers is surely
preferable to the national autodetermination practiced in past
centuries.

In light of such scheming, it surely makes sense to attempt to
anticipate the dangers involved and to prepare means of escaping them.

If man lets himself rush ahead without foreseeing in good time the
emergence of new social problems, they will become too grave for a
peaceful solution to be hoped for. - Pope Paul VI

Also, such a discussion can encourage the development of authentic
reform movements based on the conclusions reached, which would otherwise
have no focus or rallying point. Finally, though the mass media would
blind us to the sufferings of the 3rd, and now 4th, world by ignoring it
and redirecting our interests to sports and fantasy and our compassion
to seals and snail darters, nevertheless we will always have the poor
with us on this planet, those who suffer the ravages of extreme poverty
while we dwell in relative plenty. The number of unemployed people has
grown rapidly around the world and was estimated by the International
Labor Organization to be over one billion by 1994. In fact, the present
debt-based monetary system inevitably results in vast accumulations of
wealth in fewer and fewer hands, which necessitates extreme poverty for
vast numbers of mankind. In 1997, 441 billionaires owned as much of the
world’s wealth as the poorer one-half (50%) of mankind (2.4 billion
people). Consistent with one’s state-of-life, we must come to the aid of
the increasing multitudes of our impoverished fellow men.

Let us all set to work, for at this time a grave duty is imposed upon
the consciences of all; a duty for all, employers and employees,
citizens and farmers, moralists, pastors and their flocks, to help
resolutely in the solution of the economic problem that distresses us.
Universal suffering puts it in the front rank and bestows upon it a
character of sacredness.

These words of French Cardinal Verdier during the Great Monetary
Contraction (a.k.a. the Great Depression) are fully apropos to the
situation in over four-fifths of the world today, where extreme poverty
is ubiquitous and deepening very rapidly. There children are born into a
Great Depression which only worsens as they grow up in it.

[Consider] the reality of an innumerable multitude of people - children,
adults and the elderly, in other words real and unique persons, who are
suffering under the intolerable burden of poverty. There are many
millions who are deprived of hope due to the fact that, in many parts of
the world, their situation has worsened. Before these tragedies of total
indigence and need, in which so many of our brothers and sisters are
living, it is the Lord Jesus himself who comes to question us... (Cf.
Mt.25:31-46) - Pope John Paul II

Even in the U.S. and Canada the middle class is rapidly being squeezed
down into poverty as the poor increase in numbers daily, despite the
employment of both spouses now, often holding second and even third
jobs, being forced to warehouse their children in institutions.

The philosophers’ ideal of secure, modest wealth widely diffused to all
classes is being supplanted by the two extremes, both harmful to mans’
spiritual development, of extreme wealth or extreme poverty. As Mahatma
Gandhi noted: Materialism and morality have an inverse relationship -
when one increases the other decreases.

We are very rapidly becoming a world composed exclusively of the very
few, very rich, and the very many, very poor. The middle remaining
cannot hold. Modern technology and mass media has vastly increased the
ability of the super-rich to sustain this process to historically
unprecedented orders of magnitude. However, some of the effects of this
growing disparity in wealth even have the super-rich concerned enough to
propose novel "solutions" such as National Security Council Study
Memorandum 200 which defines a program aimed at reducing the populations
of 13 nations targeted for their raw materials needed to maintain the
ruling elite’s lifestyle, including Brazil, India, Columbia, Mexico,
Ethiopia and Egypt:

How much more efficient expenditures for population control might be
than [expenditures for] raising production through direct investments in
additional irrigation and power plants and factories ... (NSSM 200,
April, 1974).

Reducing targeted populations to a bare subsistence level by withholding
investments, in effect forces less expensive population control on them
while reducing to a minimum the labor costs of producing raw materials.
Interestingly, since the passage of NAFTA, despite the transfer of
hundreds of thousands of U.S. jobs to Mexico, Mexican labor wages have
fallen by nearly 50%.

There has also been afoot for some time the "debt-for-nature" scheme
proposed at the 4th World Wilderness Conference held in Denver, Colorado
in 1987 of forcing nations to transfer national parks and undeveloped
areas (up to 30% of the world’s wilderness - 12 billion acres) to a
World Wilderness Trust or similar U.N. agencies (and thereby effectively
losing sovereignty over part of their national territory) which would
function as a collection agent for the IMF, the World Bank and private
banks and would operate as follows:
1.Creditor banks transfer 3rd world debt to the World Conservation Bank
(a new bank with a "soft" name) thereby relieving the debtor nations of
their debt to the original banks;
2.at full book value (even though these loans now have market values as
low as 6-25 cents on the dollar and cost the banks nothing to create due
to fractional reserve banking - the legally required reserve ratio on
such loans being typically 0%);
3.in return for such debt relief, the debtor nations would transfer to
the World Wilderness Trust natural resource assets of equivalent value
(World Heritage sites such as the Amazon basin or the gold-laden hills
around Yellowstone will likely be included at some point);


the World Wilderness Trust will eventually allow development by the
World Conservation Bank in order to pay the private banks full value for
the transferred debts.

Obviously, this scheme, which is already being implemented in Bolivia,
Costa Rica and Ecuador, simply interposes a new bank to act in the name
of the international community (or the U.N.) as collection agent for the
private banks and their jointly run banks (e.g. the IMF and the World
Bank), thereby obscuring the stark reality of de facto foreclosure
proceedings by private banks against whole national territories. This
transforms a politically unpalatable worldwide land grab by private
banks into a "conservation transfer" to a body that appears to be a
neutral conservation agency of some kind. One of the remarkable features
of such institutions is their immunity to popular influence and their
hostility to democracy and human need. Widespread economic exploitation
of these transferred territories by the private banks will be authorized
by the new bank owners, absent the many inconveniences of national
sovereignty, regulation and authentic environmental control.

Similar schemes propose every imaginable means, referred to as "
substitutes for war", to exploit or eliminate the poor through coercive
forms of demographic control including poverty, famine, forced abortions
and sterilization, euthanasia and eugenics, the introduction of new
diseases, environmental pollution, etc., and, of course, war itself. A
goal of 300-500 million people worldwide (less than 10% of the current
world population) is a common theme. Selected, smaller numbers are far
easier to manipulate and control, besides, having reduced those on the
bottom to unemployment, total desperation and utter destitution, they
have no more material utility and being in unresigned and irreligious
poverty are too susceptible to authentic "reactionary" alternatives or
disturbance. Obviously, such "solutions" are morally repugnant and sound
reform alternatives must be presented, which do not destabilize the
entire financial system with the attendant risks of a generalized
crisis.

What Christianity forbids is to seek solutions ... by the ways of
hatred, by the murdering of defenseless people, by the methods of
terrorism ... - Pope John Paul II

The granting of loan extensions, rescheduling, rate reductions or
partial remission of debts, though helpful, are at best temporary
stop-gap measures merely delaying the day of reckoning. Of course, a
debt jubilee (total remission of debts) would entirely solve the problem
for the present, but is more than unlikely as few creditors take a
broad, selfless or charitable enough view to support such a solution.

Rather, too many creditor banks foist policies on their nations, which
assume the shape of a ruthless war on the poorer nations, and on the
poor in their nations, financing projects over-priced through the
fraudulent complicity of corrupted politicians creating odious debts.
For example: during the decade 1980-90 Latin American countries paid
$418 billion in interest on original loans of $80 billion.

By the end of 1990, 3rd world debt had passed $1.3 trillion — over $200
for every living person on earth. This debt had increased by 30% in
three years. Debtor nations had total arrears of $26 billion in
interest. The Financial Review (October 4, 1990) pointed out that much
of the debt was owed to private banks, and that:

...the swelling of arrears has drawn concern from the IMF, where some
officials complain that banks are successfully pressing the IMF to
become their debt-collection agency...

Nations endowed with power are creating new forms of relationships of
inequality and oppression, perverting the use of modern technology and
global organizations for this purpose, rather than seeking just revision
of loan terms or fundamental reform.

Since most modern money is created by banks as bank loans with an
equivalent debt, all nations trade from a position of indebtedness. As a
result, nations attempt to export more than they import, deliberately
seeking an imbalance of trade, trying to gain a surplus of foreign
revenues to reduce their indebtedness. This has caused international
trade and foreign relations, to descend from trade for mutual benefit,
to thinly disguised economic warfare.

Ever mounting debt has pressured agriculture to become dominated by the
production, processing and distribution of every-cheaper food with
declining nutritional content, to the increasingly severe detriment of
peoples’ health and contrary to clear consumer preference. Large
businesses with wasteful mass-production techniques and using large
scale transport as a competitive marketing strategy are given an
advantage in the intensely competitive financial conditions created by
debt-finance. This has culminated in the current ascendancy of huge,
bank dominated multinational corporations.

The developed nations have come to rely on private debt to provide their
money. This typically involves massive and mounting housing debt via
mortgages. Such mortgage debt prevents the majority of people from
outright ownership of a home.

Many potentially prosperous 3rd world nations have had their development
distorted by the global debt-based financial system. These nations have
been entrapped into endemic debt of a wholly false and illegitimate
nature, obligated to multinational banks such as the IMF and World Bank
whose guiding principles and policies have been designed to support the
export drives of the wealthy, developed nations, themselves forced by
debt to maximize export revenues.

The terrible poverty this forces on debtor nations limits the
development of their peoples, and their intellectual and cultural
development is narrowed to the limited exigencies of their daily
struggle for survival.

Absent authentic monetary reform, debtor nations unable to pay their
debts will ultimately be left with five (5) options:

1. To increase exports in order to increase foreign exchange revenues.
Where this is possible, it transforms the citizens into de facto workers
for foreign banks which siphon the national production out of the
country, further impoverishing the people. Increased commodity
production saturates markets and reduces prices, partially or wholly
defeating the purpose. In any case this is rarely possible, as exports
have usually been maximized already.


2. This necessitates submitting to the IMF-imposed rape of their
national resources and the starvation of their people while surrendering
their national sovereignty by degrees.

This is the option recently taken by the S.E. Asian nations (South
Korea, Indonesia, Thailand, Philippines). This is, of course, a closed
loop back to debt. Of the $123 billion IMF S.E. Asian bailout, Chase
Manhattan bank is in line to receive $32 billion; J.P. Morgan for $23
billion; Bank of America for $16 billion. This $71 billion will never
reach S.E. Asia, as it is transferred from the U.S. Treasury, to the
IMF, to the Wall Street banks. The IMF bailout saves their bad loans to
these nations.

Courtesy of the U.S. government, some such foreign debt is being
transferred ("monetized") to U.S. taxpayers for payment via increased
taxes and inflation. Interestingly, Congressional leaders were told by
the Clinton Administration that unless they agreed to fund the IMF
bailout of banks which make loans to South Korea, there was danger of
invasion of South Korea by North Korea — war blackmail.

3. Unilaterally to repudiate their foreign debts.

This action incurs the danger of being followed by trade strangulation
(necessitating barter agreements in foreign trade, as was successfully
conducted by the Axis powers and later by Rhodesia), and military
invasion (e.g. witness the fate of these defaulter nations: Haiti,
Somalia, Iraq, the former Yugoslavia [Bosnia et al.] invaded by U.S. and
U.N. armed forces acting as unwitting, de facto mercenaries):

Tote dat bar! Lif dat bale!

Try to buck the system, and you land in jail!

It is no easy task to break free of debt, nor of the international
banking system. Lacking preponderant military strength, a well-armed
populace (like the Swiss) is a necessary precaution to exercise this
option successfully, if indeed it is still possible.

4. To seek legal repudiation of their foreign debts, based on the
doctrine of "odious debts".

This is an established international law principle permitting debt
repudiation when a government incurs a debt without the informed consent
of its people, and which is not used in the legitimate interest of the
State.

Ironically, this doctrine was first used by the U.S. to repudiate Cuba’s
debts after the U.S. took Cuba from Spain. The jurist who coined the
phrase "the doctrine of odious debts", held that debts incurred to
subjugate a people or to colonize them should also be considered odious.
This doctrine shifts responsibility to the lenders, neither to corrupt
nor to utilize corrupted politicians and governments to initiate loans,
and allows collection from the despots who wasted the funds — both
desirable changes.

Of course, an independent, uncorrupted judiciary is a prerequisite to
obtaining legal repudiation with this legal theory, which is extremely
unlikely when corrupted politicians appoint politically subservient
judges to the World Court who would hear such cases. A national legal
repudiation on this ground would be a good start though, and could be at
least legally valid, but might be a practical nullity, resulting in the
same consequences as a unilateral repudiation without a recognized legal
basis (#3., above).

5. To issue sufficient quantities of the national money specifically to
retire the international debt.

Since most revenues obtained from foreign loans are shortly spent (often
wasted), partly domestically and partly in foreign countries, the
results are usually inflationary (in both the country of origin —
usually the U.S., and in the recipient country), partially multiplied by
private domestic (and foreign) banks through fractional reserve banking
loans. Therefore, while issuing sufficient new money to retire foreign
debt would work, it would also result in hyperinflation where the
foreign debt is great in relation to the economy, particularly due to
the subsequent multiplier effect of any high-powered money in a
fractional reserve banking system. This ruinous negative effect has been
felt by numerous nations which inflated to retire foreign debt.

Of course, the technical solution to avoiding such hyperinflation lies
in the  domestic prohibition of fractional reserve banking, coupled with
simultaneous, proportionate foreign exchange regulation, which would
require the banks to absorb the new money as increased reserves in a
transition to full reserve banking.

This response amounts to legislated domestic monetary reform, which is,
therefore, not an option "absent authentic monetary reform" (like the
first four options above [i.e. 1-4]) but, rather, is authentic monetary
reform.

In short, if nations find the first four options, above, unacceptable,
then they will be forced to consider authentic monetary reform, which
brings us back to the subject of this article in order to describe this
type of reform.

Having set forth the rationale for drafting model monetary reform
legislation, where does one begin? A careful study of the fundamentals
of our economic system and of the reforms proposed by scholars is a
logical starting point.

The draft legislation following was influenced by numerous sources
including the writings and declarations on this subject of: President
Abraham Lincoln; former Congressmen Charles A. Lindberg, Louis T.
McFadden, Robert H. Hemphill, Wright Patman, Francis H. Shoemaker, Jerry
Voorhis, Henry Gonzales and former Senator Elmer Thomas, all courageous
supporters of banking and monetary reform legislation; Thomas A. Edison;
Irving Fisher; Henry C. Simons and the old Chicago School of Economics;
Nobel Laureate Frederick Soddy, M.A., F.R.S.; Gertrude M. Coogan; G.K.
Chesterton and the Distributist school; Rev. Denis Fahey, C.S.Sp.; Major
C.H. Douglas and the Social Credit school; W. Cleon Skousen; Popes Leo
XIII, Pius XI, John XXIII, Paul VI, and John Paul II; the Pontifical
Commission Justice and Peace; Nobel Laureate Prof. Milton Friedman;
Murray N. Rothbard; E.F. Schumacker; Peter Cook; Theodore R. Thoren;
Richard F. Warner; Charles and Russell Norburn; George Tolley and a host
of others, as well as the historical experience of reform legislation in
various nations including the U.S. during the Civil War; Britain during
WWI; Sweden in the early 1930's; Portugal from 1931 to 1974 (when it had
no national debt); Canada in the mid- 20th century; the Isle of
Guernsey, and many others.

Certain economic reform principles emerge from the study of their
proposals. The first and most important is made salient from the fact
that there is grave danger to society, worldwide, which must be
addressed, when a handful of men hold the power of life and death over
national economies as is certainly the present case. As Pope Pius XI
pointed out in the Encyclical Quadragesimo Anno (1931):

. . . the power to create money and to expand or contract the money
supply at will carries with it too great an opportunity of economic
domination [and therefor ultimately of tyranny], to be left to private
control without injury to the community at large.

Similarly Prof. Friedman:

The power to determine the quantity of money...is too important, too
pervasive, to be exercised by a few people, however public-spirited, if
there is any feasible alternative. There is no need for such arbitrary
power ... Any system which gives so much power and so much discretion to
a few men, [so] that mistakes - excusable or not - can have such far
reaching effects, is a bad system. It is a bad system to believers in
freedom just because it gives a few men such power without any effective
check by the body politic - this is the key political argument against
an independent central bank.

Similarly Rev. Dennis Fahey, C.S.Sp.:

If a private group exercise the power to originate the exchange-medium
and then manipulates the volume of it, that group becomes a power
greater than the government itself. It becomes a super-government,
paralyzing the efforts of the lawful government for the common good.

It is perfectly idle to talk about a democracy or a republic when the
sovereign power is being exercised de facto by a small group of
international bankers not committed to the long-term development of the
country, who manipulate public opinion and politicians though their
money and media control; the worst of whom seek to arrogate to
themselves the exercise of absolute power. What are nations without
justice but bands of robbers. - St. Augustine

And remember, where you have a concentration of power in a few hands,
all too frequently men with the mentality of gangsters get control.
History has proven that. All power corrupts; absolute power corrupts
absolutely. — Lord Acton

Congressman Lindbergh noted this nearly seventy years ago. These Money
Changers, he said,

have become bold, aggressive, vindictive and merciless and command the
people to support them.

Therefore the first monetary reform principle to emerge is that control
over the monetary system must be taken back out of the private hands who
have usurped the power of the State by deceit, bribery and intrigue for
their selfish or ideological ends, and be resumed by the State. From
this it flows that money creation by private persons must be prohibited,
thus fractional reserve banking must be prohibited, and full reserve
banking mandated by law.

Resolving this danger over the long-term demands that the monetary
system be so arranged as to facilitate the production, distribution and
exchange of material goods and services in view of supporting the
virtuous life of all of the members of society. This requires a
stabilized (i.e. not manipulated) price level, while avoiding the
opposite end-of-the-spectrum problem of government favoritism in
lending. This summarizes as follows:
•Sound monetary reform requires the issuance of all money (legal tender)
by the State, exclusively; in amounts calculated to stabilize the
general price level; without debt obligation to private persons; with
all lending to be performed by private legal persons, exclusively; while
safeguarding the widespread ownership of private property.


Let us separate these principles (numeric), with their implicit
corollaries (alphabetic):

Monetary Reform Principles
Act Sections
1.) Require the issuance of all
    money (legal tender)
    by the State, exclusively; 7.
Corollaries

a. this implies the prohibition of all
  private money creation;
14.
b. this implies the prohibition of
  fractional reserve banking;
14.
c. this implies the requirement of
  full reserve banking;
9.
d. this implies withdrawal from
  international banks with credit/
  reserve-creating authority (such
  as the IMF SDRs);
15.2.) in amounts calculated to
stabilize the general price level;6.
Corollaries

a. this implies avoiding inflation
and deflation, a condition for
steady and healthy economic
growth, as government policy;
6,7.
b. this implies the abandonment of
a single commodity standard (e.g.
gold) inasmuch as no commodity
is available on the same time as
all goods in general (besides the
problems of hoarding, manipulation
through export, etc.);
7.
c. this implies a fixed relationship
or rule between the quantity of
money and goods;
7.
d. this may imply a war-time ex-
ception to #3, below;
8.
e. this implies government policy
to stabilize excessive fluctuation
of exchange rates;
16.3.) without debt obligation to
private persons;5.
Corollaries

a. this implies paying off national
debts (not necessarily intra-
government debt);
5.
b. this implies requiring full reserve
banking;
4.
c. this implies the issuance of all
money (medium of exchange) by
the State;
7.4.) with all lending to be performed
by private legal persons, exclusively;
Corollaries

a. this implies the prohibition of all
government lending (e.g. contrary
to communist and national
socialist legislation);
7.
b. this implies the prohibition of us-
urious rates of interest, which
defeat or prevent the beneficial
effects of lending and create
obstacles to secure ownership
of property;
14.
c. #1, supra., implies that #4
would be limited by the amount
of funds the lender had or
obtains to lend;
9.5.) safeguarding the widespread
possession of private property.
Corollaries

a. this implies both the secure
(which implies permanent)
and modest possession of
private property by all
classes of people;
7, 14.
b. this implies a homestead exem-
ption from property taxation and
in bankruptcy;
7.
c. this implies that the power to create
money not be delegated to private
persons for their individual benefitby
the State since this results in vast
concentrations of property;
7, 14.
d. this implies that the right to
private property is subordinated
to the right to common use where
the danger of economic domination
of the community is too great to
leave it in private hands.

These principles are consistent with and are required by the
increasingly higher principles of subsidiarity, solidarity, justice (
i.e. legal, distributive and social) and equity.

Subsidiarity is the principle that states that one should not withdraw
from individuals and commit to the community (nor from a lower community
to a higher order of community) what they can accomplish by their own
enterprise or industry. Negatively put, it states that it is an
injustice, a grave evil, and a disturbance of right order for a larger,
higher organization or jurisdiction, to arrogate to itself functions (or
ownership) which can be performed efficiently by smaller and lower,
local bodies. The notion of rational decentralization and the
Distributist school derives from this principle. Subsidiarity is,
therefore, that principle which dictates to common sense that each man
select his own food, home, job and spouse and not be told which by some
capitol (or capital) bureaucrat. It reflects the nature of man and of
his unique personality which requires that men be not wholly subject to
the will of others, but retain their liberty and freedom from
oppression, economic imperialism, bureaucratic control and
centralization which dries up the wellsprings of initiative and
creativity.

Subsidiarity is also that principle which prohibits government lending
since this, unlike money creation, can be efficiently performed
privately, at the local level without danger to the common good. Needs
are best understood and satisfied by people who are closest to them, who
are also capable of perceiving deeper causes and needs due to their more
personal contact.

Unlike subsidiarity, which required some necessary definition here,
solidarity, justice and equity are at least commonly understood, if in a
vague sense, and these are not on the same level as our consideration
here, which is narrowly limited to considering practical monetary reform
legislation.

Interestingly, on January 1, 1998, in his Angelus message, Pope John
Paul II said,

The process of globalization under way in the world needs to be
orientated in the direction of equity and solidarity...it is
indispensable for everyone to strive for justice...

Following these basic principles of sound monetary reform, which are
available to common sense enlightened by modest reflection in this area,
non-experts are perfectly capable of judging reform proposals such as
that following. Indeed, by use of a peculiar esoteric jargon and pure
gibberish, central bankers and their economists have intimidated the
public from considering this artificially arcane subject area leaving
the field to their paid "experts".

Would such reform make monetary policy a plaything for politicians,
ending the independence of the Central Bankers? Yes, and so it should
be! Quoting Prof. Friedman again: This is an argument for, not against,
eliminating the central bank’s independence. The economic order is
properly subject to the political, not the reverse as is the case
presently.

Elected officials with political accountability should run the country,
not bankers busily betraying their nation’s autonomy and sovereignty.
Further, capital is a mere instrument, a means of production at the
service of man and his labor, not the reverse. It should be subject to
him, not he to it. This is simply to express the obvious primacy of man
over things.

This draft Act has gone through numerous technical revisions based on
suggestions from numerous sources, and more are invited. In particular,
we are grateful for suggestions received from Prof. Milton Friedman. The
principles contained herein are equally applicable to Canadian (or other
national) draft monetary reform legislation, though the particulars
would vary considerably.

Points of controversy in details will doubtless include the following:

1. Whether to abolish or fundamentally reform the existing Federal
Reserve System;

2. Whether to require banks to have their reserves in the form of cash,
government securities, or Treasury deposits;

3. Whether the State, or private persons, ought to purchase the bank
liabilities the banks must liquidate in order to transition to full
reserve banking;

4. Whether future monetary growth should be partially discretionary (
i.e. but based on a known rule) with some national Monetary Authority,
or non-discretionary and based on a fixed rate of growth, and if the
latter, at what fixed rate (but having any definite and unambiguous rule
is more important than which rule is settled upon);

5. Whether bank reserves ought to earn interest or not, and if so, how
much;

6. Whether prior bank profits ought to be disgorged, and if so, whether
via a nationalization and re-privatization of banks or by confiscation
or tax-surcharge.

The endnotes of the draft Act following, briefly address these points.
We regard the choice of such options regarding these points as
non-essential to sound monetary reform.

Novel reform proposals, such as: computerized barter systems based on
market pricing; the creation of new forms of private monies; using
bearer certificates tied to inflation-indexed and non-indexed bonds, or
futures widely indexed to result in a relatively constant stable price;
localized or municipal currencies, now in use in fifty-two U.S.
communities (e.g. the "Bread" [Berkeley Region Exchange And Development]
labor certificates), which were issued in c. 400 local communities
during the Great Depression; the widespread establishment of State-owned
banks (e.g. the very successful State-owned Bank of North Dakota); and
discounted private organization debit cards; are not considered here as
they seem presently too speculative, localized or costly to replace
national currency and demand deposits. But that may change before we
know it, and these proposals all merit further discussion and
refinement.

Other non-monetary reforms, such as: increased utilization of credit
unions; a new Homesteading Act, instead of allowing idle farmland and
abandoned urban buildings to remain so; single parent’s cooperatives to
assist them and their children to achieve self-sufficiency; tax
incentives for micro-mass transit such as community vans; micro-lending;
tax reduction including abolition of property and land taxes; and many
other worthy ideas have been put forth, which certainly would help
society cope with the problems created by the present corrupt banking
system, but these go beyond our topic here.

The fundamental, basic economic reform needed — the abolition and
recriminalization of usury, is closely related to our topic, but beyond
its specific scope. Let it suffice here to state that it is usury,
defined as: the charging of interest on a loan which is not productive,
 which is the root cause of the evils of fractional reserve banking and
the debt finance system, which are merely "refinements" of it, as is
compound interest and money manipulation in general. Usury is not merely
the charging of an excessive or unlawful rate of interest. Unless
addressed, usury inevitably leads to these other evils, which are our
focus here, and to the decay of justice and civilization.

Regarding a gold standard: there is no unanimity as to what type of gold
standard to consider. However, except for a true gold standard - in
which either gold coin or gold deposit certificates circulate as money -
the others are easily manipulated. But even a true gold standard can be
manipulated in a variety of ways, as history demonstrates, and has only
this appeal: that it would certainly be better than the current state of
affairs in that it is one step more difficult to manipulate its quantity
than a purely fiat currency.

However, even a true gold standard has numerous problems (including its
relative inelasticity in relation to GNP, GDP or similar yardsticks,
resulting in, at least in the short-term, inflation and/or deflation)
and would not be preferable to true reform as set forth in the draft Act
following, for a number of reasons which we cannot discuss in detail
here.

In any case, without the simultaneous abolition of fractional reserve
banking (and the retirement of the national debt), adoption of a true
gold standard would simply be changing the form of high-powered money
from Federal Reserve Notes to gold - a largely meaningless change.
Whereas, with the adoption of full reserve banking, including a fixed
rate of monetary growth, any commodity standard (e.g. gold) becomes
problematic and a potential obstacle to authentic reform. For these
reasons, the political support for it is very slight, and was even in
the exigencies of the Great Contraction. This seems unlikely to change.

Concerning implementation: the fundamental causes of the world debt
crisis are not economic, but philosophical, theological and moral. We
cannot expect economic justice in a society that murders innocent
children in the womb and idolizes money. So authentic reform cannot be
reduced to a technical or drafting problem, which is, however, our
specific focus here. Nothing serious or deep is accomplished exclusively
by changing techniques, laws or governments.

It is obvious that no change of system or machinery can avert those
causes of social malaise which consist in the egotism, greed, or
quarrelsomeness of human nature. What it can do is to create an
environment in which those are not the qualities encouraged. It cannot
secure that men live up to their principles. What it can do is to
establish their social order upon principles to which, if they please,
they can live up or not live down. It cannot control their actions. It
can offer them an end on which to fix their minds and, as their minds
are, so in the long run, and with exceptions, their practical activity
will be. — R.H. Tawney

The well being of families, the security of the nation, the happiness of
humanity — these can be conceived only in terms of the ordered use by
individual persons of their God-given virtues and the objects to which
these correspond. There is no such thing (save in metaphor) as a sinful
(or "holy") nation or system; there are only nations and systems
composed of individual persons either in revolt against nature, right
reason, justice and good, or who by reason of their personal virtue are
in harmony and union with nature, right reason, justice and God,
radiating their personal virtue into the national or systemic life.

So the reform of society and of systems must begin with the reformation
of the individual morals of the individual persons who comprise society.
Hopefully, this will be initiated before our remaining freedoms, which
are indirectly tied to our economic independence (including our national
economic independence and sovereignty) are so far gone as to be
irretrievable and injustice degenerates into irremediable conflicts.

No leader in public economy, no power of organization will ever be able
to bring social conditions to a peaceful solution, unless first there
triumphs moral laws based on God and conscience. — Pope Leo XIII

Institutional reform follows on individual reform, which experience
teaches is often predicated on trial or crisis. Crises bring to the
surface deeper disorders not otherwise discovered. A better world cannot
be built in the midst of crisis, but it is precisely in time of crisis
that the anvil is hot for shaping the kind of world peace may provide.
Of course, the international bankers know this too, and plan to create
and use crises for their own ends, as mentioned above.

Nevertheless, is very unlikely reform will advance in the U.S. until
economic crisis deepens and touches larger numbers of our citizens,
either suddenly, in a major upheaval (i.e. a severe economic depression
or war) or by gradually spreading impoverishment due to continually
increasing inflation/taxation/and interest on debt. The false sense of
economic and social security to which our citizens presently cling will
be increasingly tested and shaken, either way.

As Aristotle noted in his Politics:

For war compels men to be just and temperate, whereas the enjoyment of
good fortune and the leisure that comes with peace tend to make them
insolent. Those then who seem to be the best-off and to be in the
possession of every good, have special need of justice and temperance.

So realistic opportunity for authentic reform may present itself in the
context of an economic/political crisis in which increasing numbers of
our citizens, hitherto untouched, personally experience the harsh
consequences of the lack of justice and charity in the present economic
system, since the changes needed are ultimately of the heart and are
therefore personal.

Let us glimpse our future, through the eyes of a Brazilian viewing their
present:

The third world war has already started. It is a silent war. Not, for
that reason, any less sinister. This war is tearing down Brazil, Latin
America and practically all the Third World. Instead of soldiers dying,
there are children. It is a war over the Third World debt, one which has
as its main weapon interest, a weapon more deadly than the atom bomb,
more shattering than a laser beam.

Despite their country’s fabulous national wealth, 40% of the Brazilian
population go hungry whilst seven million children work as slaves or
prostitutes.

The relentless activity and ceaseless agitation against justice and
right order financed by the Money Changers need not unduly discourage
us. This apparent vitality masks the restless spirit injustice
generates, which seeks to salve the conflicted conscience by resolving,
consciously and subconsciously, to justify its actions externally, in a
torrent of words and works. Inner conflict thus leads to outer
conflicts, where increasingly aggressive (even murderous) forms of
coercion are employed against the outer world, and ultimately against
themselves (e.g. neurosis, alcoholism, suicide) to bend the truth of
justice to their denial of it.

In short, injustice ultimately creates internal conflict in the
individuals (and groups) so acting, as well as in their collective
efforts, as they attempt to repress those portions of their own
consciousness and of their own groups (and others), which condemn their
injustice. This repression requires increasingly greater efforts to
maintain (as each act of repression increases the injustice,
necessitating even more repression), thus diverting their energy to
destructive ends and away from the creativity necessary to maintain
their position and power. In fact, so draining is this effort that most
people are not capable of the deception, the tight-rope walking, the
consistent criminality and repression required to maintain a great evil
conspiracy.

In contrast, a conscience at peace naturally tends towards an unworried,
calm approach to life, yet this is a sign of strength and integrity, not
weakness. Of course, complacency, the opposite extreme, is to be
avoided. It is therefore necessary to work simultaneously for the
conversion of hearts and for the reform of systems, with the emphasis
much on the former. As Pope John Paul II put it:

We are all called, indeed obliged, to face the tremendous challenge ...
because the present danger threatens everyone: a world economic crisis,
a war without frontiers ... every individual is called upon to play his
or her part in this peaceful campaign, a campaign to be conducted by
peaceful means, in order to secure development in peace.

Our part of this development in peace may begin with a prudent,
clear-eyed objectivity to determine what actions are appropriate to the
real situation before us. This cannot be achieved except by an attitude
of ‘silent contemplation’ of reality, during which the egocentric
interests of man are, at least temporarily, silenced. In that silence,
the knowledge of truth may be transformed into decisions corresponding
to reality. However, it is the province of true religion to define this
for those so drawn and to revealdistinctly religios responces to this
crisis.

The author, Patrick S.J. Carmack, B.B.A., J.D., practiced corporate law;
is a former Administrative Law Judge for the Corporation Commission of
the State of Oklahoma; is a member of the bar of the U.S. Supreme Court;
and is the co-author of the two volume-video, THE MONEY MASTERS, How
International Bankers Gained Control of America.
-----
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris

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