America does not need to rely on banks to have liquidity. We can have liquidity by creating money and ‘spending’ it into circulation rather than creating money as loans and ‘lending’ it into circulation. We can ‘own’ our money rather than ‘owe’ our money. Simply have the Treasury create the new money as book entries just as the banks create all money now. However, these new numbers then get ‘spent’ into circulation not ‘lent’ into circulation to pay for production that benefits all of society equally (perhaps public roads and bridges) in lieu of taxation or bonding (borrowing).

This solution simply ‘spends’ new money into circulation rather than ‘lending’ it into circulation. It will immediately provide ‘liquidity’ without more debt, without more taxes and turn our financial crises around, directly helping we the people with the money going directly to the producers first.

The money supply increases with productivity gains. No inflation! No new debt! No new Taxes! Tax reductions! Liquidity! Cash Flow! High-paying jobs! Commerce! Life!

Let’s stop beating the ‘special interest debt horse’! Loaning all new money into circulation and the resulting unpayable, compounding debt it creates has almost killed us. More borrowing will only make our growing problem worse. One cannot pay debt with more borrowed money and get rid of debt. Money produced, as a representation of wealth to all of society is the only workable, just and true solution.

We gave our Congress the authority to “coin money” and to “provide post roads”

‘Spend it’ don’t ‘lend it.’

Rising debts and increasing bankruptcies are the result of Congress suspending the free-coinage of metals INTO MONEY and switching us to bank credits as our medium of exchange. These acts converted America from a Wealth monetary system, where people created money for society’s benefit through the fruits of their labor, to a monetary system where now, ALL NEW MONEY IS CREATED AND LOANED INTO CIRCULATION AS INTEREST-BEARING DEBTS. Since this system ONLY CREATES THE PRINCIPAL and NEVER THE INTEREST, THE DEBT IS ALWAYS GREATER THAN THE MONEY SUPPLY. This fraudulently created and unpayable debt forces Americans to borrow constantly so the system can function. Eventually, the process becomes unworkable as society, mortgaged to the hilt can no longer afford to borrow. This debt creates extreme stress for us as we struggle to meet impossible money obligations. The RESULTS are a constant rise in the cost-of-living, downsizing, mergers, layoffs, consolidation, family breakdown, increased drug and alcohol use, an increase in crime and a general moral breakdown.

‘Confidence’ is not the basis of the problem nor is it the solution. The growing unpayable debt is the problem. Americans are in extreme indebtedness. Most can no longer afford to borrow. The ‘sub prime’ problem was actually the result of the banking industry trying to find more borrowers in an effort to keep the system going.

The solution to the sub prime crisis and our overall ‘borrowing problem’ was decided to be ‘more borrowing’ from the banking industry, the very same banking industry that caused the problem and that seemed to be having difficulty making loans. However, that same industry found it easy to create $700 Billion in new money as a loan to our government. Then, our government ‘gifted’ the money to the banks on behalf of the public. Now, we, the taxpayers and good, efficient workers, must see increased taxes to repay the ‘gift’ to the banks.

Government has only two sources of income, borrowing or taxing. If government borrows, it borrows money that was already created as a loan to someone or it borrows newly created money directly from banks. When government taxes it is really just taxing money the people have gotten through the lending process. In any case, the debt must constantly grow.

About October 11-12, 2008 the British government decided to back all European bank loans—even questionable or bad loans. It instructed the banks to make loans; make loans to anyone; even those who may not be able to pay them back. The ‘Government’ would back those loans. If the Government has to make good on bad loans, it must do so with money.

Where will the money come from to repay those bad loans? It must borrow money that was already created as a loan to someone or it borrows newly created money directly from banks.

This recent example of more debt upon debt is no true and lasting solution. The banking industry simply gains more and more control and ownership of everything while the overall indebtedness, hardship and destruction keeps growing. Some temporary relief may result. But, without a totally new direction, the frequency and severity of money problems will increase.

The Solution is to create and spend new money into circulation as a debt-free payment for building and maintaining roads and bridges, production that unquestionably benefits all of society mutually.

Federal and State legislation has been written to guide the process. Contact your Senator and Representative today! Debt money is dead.

Gordo,
We do not print money. Federal Reserve Notes are not available for direct delivery to the public. They are only available from your local lending institution by writing a check for cash and paying for them with check book money (book keeping entries created on the ledger of a bank as a loan).
Why do you seem to take the position that 'money' created as a loan against a promise to do future production is ok but creating it as a payment for current production is not?
My phone number is 507-440-1015.

Greg,
I take no position on the desirability of any one money printing and distribution scheme over any other. And neither does Paddy Hirsch in this excellent whiteboard presentation.

Byron, if you have the time I highly recommend the series of articles entitled "Mises on Money" by Gary North. The link is: lewrockwell.com/north/north83.html

I have no reason to think that he doesn't, but if you are interested in an more in-depth answer to your questions than can be provided by one of these whiteboard videos you will enjoy the Gary North articles referred to above.

OK, here are my thoughts:

1. What do we use for money?

Money is the most marketable commodity. Mises defined money as "the most marketable good which people accept because they want to offer it in later acts of impersonal exchange" (Human Action).

What falls within this definition is open to debate. I consider the following to be money:
Cash
Demand deposits with commercial banks and thrift institutions
Government deposits with banks and the central bank.

2. How is that money created?

Money is created when the Federal Reserve purchases assets (generally treasury bills) from the banks using newly created money.

3. How is the new money put into circulation?

When the banks receive the money described above it *is* in circulation. The banks will invest, loan or spend that newly created money as they see fit.

Ultimately the Fed manufactures the commodity it uses to buy treasury bills. That commodity is paper currency (or its electronic equivalent, which the Fed can replace with currency at nominal cost). There is no requirement for debt in order to create money; the Fed generally buys t-bills with newly created money but it could purchase any asset if there were no government debt available for purchase.

The banks don't get something for nothing. They merely sell treasury bills that they own for cash.

I don't maintain that this is an optimal situation; in fact, I would prefer that there were no central banks. Central banks are threats to economic liberty. Unfortunately, however, the current system of central banking is not going away. The best that we, as individuals, can do is to understand the threats to our well-being that central banking and fiat currencies represent and to act accordingly to mitigate these risks to the extent possible.