Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.
— Canadian Prime Minister William Lyon Mackenzie King, 1935
On November 3rd, the US government will again run out of money due to a debt ceiling artificially imposed by Congress. This is the third time in four years that a radical faction has taken the country to the brink of default to extort concessions that are at best only marginally related to the budget.
The debt ceiling is an unconstitutional gimmick that violates the 14th amendment, which says the validity of the government’s debt shall not be questioned. The debt was incurred by Congress when it passed the budget, and the money has been borrowed and spent. Congress cannot now refuse to pay.
One good gimmick deserves another. The debt ceiling could be eliminated for good, by restoring to the government its constitutional authority to create money. Article 1, Section 8, provides: “The Congress shall have the power to coin money [and] regulate the value thereof . . . .” The president could pay the government’s bills by issuing some large denomination coins by executive order.
When the Constitution was ratified, coins were the only officially recognized legal tender. By 1850, coins made up only about half the currency. Today, they make up less than one-half of one percent of the money supply – about 50 billion out of a $12 trillion circulating money supply (M2). These coins, along with about $25 million in US Notes or Greenbacks originally issued during the Civil War, are all that is left of the Treasury’s money-creating power.
As the Bank of England recently acknowledged, the vast majority of the money supply is now created privately by banks as deposits when they make loans. The power to issue the national money supply needs to be returned to the people from whom it has been deceptively usurped. As Thomas Edison observed in the 1920s:
It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People.
In Lincoln’s Footsteps
In the early days of his presidency, Barack Obama claimed Abraham Lincoln as his role model. One of Lincoln’s less well known achievements was to avoid a massive debt to private banks at usurious interest rates by restoring an earlier form of government-issued money, the paper scrip of the American colonists. In the 1860s, these US Notes or Greenbacks constituted 40% of the national currency. Today, 40% of the circulating money supply would be $5 trillion.
This massive money-printing during the Civil War did not lead to hyperinflation. US Notes suffered a drop in value as against gold, but according to Milton Friedman and Anna Schwarz in A Monetary History of the United States, 1867-1960, this was not due to “just printing money” but was caused by trade imbalances with foreign trading partners on the gold standard.
The Greenbacks aided the Union not only in winning the war but in funding a period of unprecedented economic expansion. Lincoln’s government created the greatest industrial giant the world had yet seen. The steel industry was launched, a continental railroad system was created, a new era of farm machinery and cheap tools was promoted, free higher education was established, government support was provided to all branches of science, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent.
President Obama could follow the lead of his mentor and beat the debt ceiling by calling for a new issue of debt-free US Notes. The problem with that alternative is that it would require legislation, an impossibility before the looming November 3rd debt ceiling deadline.
Another way to solve the crisis with government-issued money was proposed by Republican presidential candidate Ron Paul and endorsed by Democratic Representative Alan Grayson during the last debt ceiling crisis: the Federal Reserve could be ordered to transfer to the Treasury the federal securities it has purchased with accounting entries through “quantitative easing.” The Treasury could then just void out this part of the debt, which currently tallies in at $2.7 trillion. That alternative too would be legal, but it would require persuading the Federal Reserve to act.
A third alternative, which could be done very quickly by executive order, would be for the federal government to exercise its constitutional power to “coin money and regulate the value thereof” by minting one or more trillion dollar platinum coins.
A Treasury Issue of Special Coins
The idea of minting large denomination coins to solve economic problems was first suggested in the early 1980s by a chairman of the Coinage Subcommittee of the House of Representatives. He observed that the Constitution gives Congress the power to coin money and regulate its value, and that no limit is put on the value of the coins it creates. He said the government could pay off its entire debt with some billion dollar coins. I wrote about this in Web of Debt in 2007 and said it would have to be a trillion dollar coin today.
In 1982, however, Congress chose to choke off this remaining vestige of its money-creating power by imposing limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allows to be minted in any amount for commemorative purposes. (31 U.S. Code § 5112.)
In 2013, Carlos Mucha, an attorney blogging under the pseudonym Beowulf, proposed issuing a platinum coin to capitalize on this loophole. With the endless gridlock in Congress over the debt ceiling, the proposal got picked up by Paul Krugman and some other economists as a way to move forward.
Philip Diehl, former head of the US Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender. He said:
In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years . . . under power expressly granted to Congress in the Constitution (Article 1, Section 8).
Prof. Randall Wray explained that the coin would not circulate but would be deposited in the government’s account at the Fed, so it would not inflate the circulating money supply. The budget would still need Congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full employment without creating price inflation (since supply and demand would rise together). After that, it would need to tax — not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.
Why Not Pay Off the Whole Federal Debt?
As the chairman of the Coinage Subcommittee observed in the 1980s, the entire federal debt could actually be paid in this way. The Federal Reserve has already established that it can issue $4.5 trillion in accounting-entry QE without triggering hyperinflation. In fact, it has not succeeded in triggering the modest inflation the exercise was designed for. As with QE, paying the federal debt in this way would just be an asset swap, replacing an interest-bearing obligation with a non-interest-bearing one. The market for goods and services would not be flooded with “new” money that would inflate the prices of consumer goods, because the bond holders would not consider themselves any richer than before. They presumably had their money in bonds in the first place because they wanted to save it rather than spend it. They would no doubt continue to save it, either as cash or by investing it in some other interest-generating securities.
The ease with which the government’s debt could be paid in this way was demonstrated in January 2004, when the US Treasury called a 30-year bond issue before its due date. The bonds were redeemed “at par” to avoid a 9-1/8% interest rate, which was then well above market rates. The Treasury’s January 15, 2004 announcement said that payment would be made “in book entry form,” meaning numbers were simply entered into the Treasury’s online money market fund (Treasury Direct). In effect, the money just moved from an online savings account to an online depository account, converting interest-bearing bonds into non-interest-bearing cash.
Where did the Treasury get the money to refinance this $3 billion bond issue at a lower interest rate? Whether it came from the private banking system or from the Federal Reserve, it was no doubt created out of thin air. As Federal Reserve Board Chairman Marriner Eccles testified before the House Banking and Currency Committee in 1935:
When the banks buy a billion dollars of Government bonds as they are offered . . . they actually create, by a bookkeeping entry, a billion dollars.
The US government can just as easily create this money by a bookkeeping entry itself. It can and it should, to avoid the interest charges that compound the national debt and make it unrepayable. Quoting Thomas Edison again:
If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way.
_____________
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com. Listen to “It’s Our Money with Ellen Brown” on PRN.FM.
Filed under: Ellen Brown Articles/Commentary | Tagged: debt ceiling, Greenbacks, Trillion dollar coin |
WEB OF DEBT BLOG 
Close, but no cigar. There is no national debt because there was no contract to incur debt, e.g., there is no lawful subject matter (defrauding the public), and no consideration (providing worthless thin-air cyber currency is no detriment to the Federal Reserve’s made men). Any national debt transactions between between the Federal Reserve’s made men and their accomplices in Treasury and the House Ways and Means Committee, are consequently illegal, void ab initio, and unenforceable. So any attempts to “raise the debt ceiling” are acts in the furtherance of criminal racketeering, and violative of RICO laws, and probably the law of war since the resulting bogus debt damage is destroying our national security.
Federal Reserve Act made it legal for the government to go into debt to private usurious banks. If you don’t like this, change this law or opt out of this system via public banking.
The Government does have the right to issue credit/currency and not borrow from private banks per the Constitution, as Ellen has pointed out. Hence, they also have the right to create needed credit beyond the debt ceiling when necessary for the economic good of the nation. What authority beyond the constitution are you appealing when you state the Government does not have this right?
Here, here!
Both Lincoln buffs and public money advocates should be interested to know that, even during the civil war, it took a full veto by Lincoln to force the issuance of real US notes of, for, and by the people, in lieu of borrowing bank notes. See Lincoln’s Buried Bank Note Veto Applies Today at http://www.opednews.com/articles/Lincoln-s-buried-bank-note-by-Clifford-Johnson-130520-898.html.
Today’s invidious and pervasive resistance to Treasury-issued currency is manifest even re the seemingly insignificant proposal to replace $1 Federal Reserve notes with $1 coins. A 25-year series of GAO reports on the benefits of such a change to the government always failed to include the $1 face-value gain that the government realizes when a new $1 coin is issued. See How The One Dollar Coin Can Cure The Economy at http://www.opednews.com/articles/How-The-One-Dollar-Coin-Ca-by-Clifford-Johnson-130515-443.html.
There is no national debt because there was no contract to incur debt, e.g., there is no lawful subject matter (defrauding the public), and no consideration (providing worthless thin-air cyber currency is no detriment to the Federal Reserve’s made men). Any national debt transactions between the Federal Reserve’s made men and their accomplices in Treasury and the House Ways and Means Committee, are consequently illegal, void ab initio, and unenforceable. So any attempts to “raise the debt ceiling” are acts in the furtherance of criminal racketeering, and violative of RICO laws, and probably the law of war since the resulting bogus debt damage is destroying our national security.
Contracts are indeed only possible between corporations. The United States of American became incorporated in 1871 via the District of Columbia Organic Act of 1871 http://www.teamlaw.org/DCOA-1871.pdf So since then the government has been able to legally contract with the Fed.
If you have been registered as collateral for the national debt, more commonly known as having a birth Certificate, then you too have been issued a corporation. ERNEST HUBER is a corporation. Ernest Huber is a man. We have been born into a slavery only because we haven’t been told the rules of the game regarding civil (admiralty) and common law.
I hope the author’s consideration that globalist, bankocrat, neo-Marxist saboteur, Barack Hussein Obama would make moves in the direction of restoring sovereignty to America’s monetary system is purely academic and not suffering gullibility.
Further, while Congress and America’s federal government overall, must regain control of our monetary system, it also must gain self-control over it’s perverse, Keynesian-Galbraithian, indentured collectivism, or it will continue to abuse our People and defy our foundational, natural rights.
Ellen,
The debt is not the peoples’ debt…
They don’t follow the constitution because the US gooberment was incorporated back in 1871. Surprise~ it’s a corporation running on fiat (fake money) debt based upon our birth certificates. Each people is titled (in legal terms not common law) a “person”. A person is a corporation. No wonder people are confused about the fake debt. The whole system is a fraud upon we the people. They make it up as they go along.
Anita Whitney can help you out with any confusion. She’ll set you straight about those BAR cards too. Cities, schools, counties and states are corporations too.
http://anticorruptionsociety.com/
Here is her latest interview. 10.22.2015
“YOU Are A Share Of Stock In The Corporation”
Sending the very best,
Joanie
I’ve heard “government is a corporation” stuff for a long time, over and over again. Yet, I don’t recall seeing any clear and convincing proof, nor any necessity of impact by such obviously unconstitutional actions/decisions.
District of Columbia Organic Act of 1871 http://www.teamlaw.org/DCOA-1871.pdf
If this isn’t proof, then nothing is.
How do you go into a commercial court and argue that you are not a chattel (person) of the state when you used exactly what identifies you as a chattel to get there ?
Your justice as a sovereign human being is completely divorced from the state. You cannot involve the state. Your freedom has to be self evident. If it is not, then it’s faith that has to be enhanced or worked on. This is where your faith really gets tested.
The consciousness of secular reality and spiritual reality has a place here. They know the difference and that’s what we’re learning. There are necessary evils written into the script. They’re there for a reason.
It depends on what you mean by “sovereign” and “freedom.” The USA never recognized freedom from government, nor sovereignty except that it is under God and the constraints of a just social contract.
If you recall, once the Mint the Coin movement reached mainstream media, there was a budget deal within like 2 days!!!!!!!!!!! That’s why they have settle the budget nonsense easily since then too. The banker crowd must have freaked out and pulled all their strings to put congress back in line. Since then, “mint the coin” has disappeared from MSM.
I’ve held to my opinion that minting the coin was always meant to be the doomsday revival mechanism to restart the economy after a disaster, cyber attack, or something. Once the msm caught on, it had to be squashed asap…..that’s why the budget deal came within 2 days of it reaching a critical mass. Although on another blog, Phil assured me he wasn’t that calculated when he authored the language while at u.s. mint……I still don’t believe him….lol!
[…] Source: WEB OF DEBT BLOG Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile. — Canadian Prime MinisterRead more… […]
Kudos again, great article that needs sharing.
Most interesting is the way to handle “the single highest cost entitlement”, one that has in fact increased at an unsustainable rate; “debt service” (they whisper when they say it).
Yes, Ellen shout it from the rooftops,
” Why Not Pay Off the Whole Federal Debt? ”
As the chairman of the Coinage Subcommittee observed in the 1980s, the entire federal debt could actually be paid in this way. The Federal Reserve has already established that it can issue $4.5 trillion in accounting-entry QE without triggering hyperinflation. In fact, it has not succeeded in triggering the modest inflation the exercise was designed for. As with QE, paying the federal debt in this way would just be an asset swap, replacing an interest-bearing obligation with a non-interest-bearing one. The market for goods and services would not be flooded with “new” money that would inflate the prices of consumer goods, because the bond holders would not consider themselves any richer than before. They presumably had their money in bonds in the first place because they wanted to save it rather than spend it. They would no doubt continue to save it, either as cash or by investing it in some other interest-generating securities.
The ease with which the government’s debt could be paid in this way was demonstrated in January 2004, when the US Treasury called a 30-year bond issue before its due date. The bonds were redeemed “at par” to avoid a 9-1/8% interest rate, which was then well above market rates. The Treasury’s January 15, 2004 announcement said that payment would be made “in book entry form,” meaning numbers were simply entered into the Treasury’s online money market fund (Treasury Direct). In effect, the money just moved from an online savings account to an online depository account, converting interest-bearing bonds into non-interest-bearing cash.
But Frederick Soddy (The Role Of Money, 1932) says it will not happen
because we have defaulted our right to govern – “It was recognized in Athens and Sparta ten centuries before the birth of Christ that one
of the most vital prerogatives of the State was the sole right to issue money. How curious that
the unique quality of this prerogative is only now being re-discovered. The” money-power ” which
has been able to overshadow ostensibly responsible government, is not the power of the merely ultrarich, but is nothing more nor less than a new technique designed to create and destroy money
by adding and withdrawing figures in bank ledgers, without the slightest concern for the interests of
the community or the real role that money ought to perform therein.
It is concerned less with the details of particular schemes
of monetary reform that have been advocated than with the general principles to which, in the
author’s opinion, every monetary system must at long last conform, if it is to fulfil its proper role
as the distributive mechanism of society. To allow it to become a source of revenue to private issuers is to create, first, a secret and illicit arm of the government and, last, a rival power strong enough ultimately to overthrow all other forms of government.”
WHY WOULD YOU NOT WANT PROSPERITY FOR YOURSELF AND YOUR CHILDREN ?
Nice article. And for all the commenters who believe their fiat money is worthless, please send me all of yours. I’ll relieve you of the burden.
“Paying off the debt” is a canard since government “debt” is not like household debt. Besides, threaten–as the Aussies did–to zero out the T-bonds and T-bills, and Wall St. would have a hissie fit. Where would they park the hot money between speculative deals.
The last time we did that was the Clinton surplus, which led Wall St. to invent derivatives.
Better would be to deposit $100 trillion in coins in the Fed, and publish the net asset/liability balance, keeping the “debt.”
Please note how quickly they agreed to “raise the limit” this time.
They do not want it to be a campaign issue.
“And for all the commenters who believe their fiat money is worthless, please send me all of yours. I’ll relieve you of the burden.” Excellent comment!
Awesome, Ellen; thank you 🙂
[…] Ellen Brown Web of Debt […]
[…] ⇧ How Obama Could Beat the Debt Ceiling and Go Out a Hero | WEB OF DEBT BLOG […]
I’ve heard as high as a quadrillion dollars given for the actual US debt. That’s why the ~ $18T debt listed at the fed can’t be paid off. What would be done with the other $200T in outstanding federal obligation?
The feds are unable and unwilling to balance the budget, and have become fascists. They will resist any attempt to reign them in. Carter was the last POTUS to even attempt it. The 4th and 5th generations of federal bureaucrats will fight to preserve their way of life at any cost. Fascism is the path of least resistance for them. They are the shadow government of lore.
I’m a fan of Ellen’s ever since I read the article on helicopter money. Those in control will refuse to relinquish control, and I for one, will refuse to acquiesce as long as there is strength in my body to draw breath.
There is a day of reckoning on the horizon, this super cycle of human events, and it can’t come soon enough.
“What would be done with the other $200T in outstanding federal obligation?”
Easy. Mint more $Trillion coins.
Whee!!
There is internet meme afoot that the Federal Raeserve internet domain was changed from .org to .gov, and this demonstrates a change in control of the Federal Reserve. Would you comment. I reposted your excellent article to a Facebook Group themed, real money and world affairs.
It’s federalreserve.gov because the Federal Reserve BOARD is a government agency, at law.
However, all the Fed BANKS (which actually issue bank notes) are private organizations, e.g. newyorkfed.org
On the Internet, getting the difference right (or wrong) can be damaging .
When, on the Naked Capitalism blog, I pointed out that the Fed banks, as opposed to the Board, were privately owned, and gave a legal citation for the difference, the blog owner Yves Smith responded that my posting was “batshit talk,” and henceforth blocked me from participating. See Naked Naked Capitalism at http://tompainetoo.com/docs/Naked%20Naked%20Capitalism.pdf
When I tried to visit federalreserve.org (as opposed to .gov), I got the message:
“Your attempt to authenticate failed. A valid Federal Reserve credential is required.
WARNING! If you are not authorized to use this private network, please disconnect immediately…”
The only reason the US issues debt is to drain reserves from the banking system. This debt is not needed to fund government spending. Why drain reserves? Because there is a limited thing banks can do with excess reserves but one of the things is to loan them to other banks that may need reserves. But the competition to loan the reserves drives the overnight interest rate to near zero, which destroys the ability of the Fed to maintain a positive interest rate target. However, in October 2008, Treasury started paying interest on excess reserves, which eliminated the need of banks to loan reserves. Therefore, there is no further operational need to issue debt, although it is still the law. The bonds issues as debt are an asset to the private sector. Foreign countries with a trade surplus with the US deposit all of the dollars in their savings account at the fed in the form of bonds. The US government then redistributes this money (in the form of more reserves0 back into the economy. If we did no issue US denominated debt, foreign central banks would have no place to out the dollars from trade to get a return. You say the “spend them.” that is true, but in the end someone ends up with the dollars and needs a place to put them earning some positive return. There is absolutely no reason to pay off the debt. there was never any intention to pay off the debt. The bonds will simply be rolled over for ever when they mature. The debt necessarily must continue to grow forever and the economy expands.
he won’t do this in a million years…he’s too much of an asshole
________________________________
Kennedy was the last guy to try to take on the FED, and look what it got him.
[…] If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way.https://ellenbrown.com/2015/10/27/how-obama-could-beat-the-debt-ceiling-and-go-out-a-hero/ […]
[…] https://ellenbrown.com/2015/10/27/how-obama-could-beat-the-debt-ceiling-and-go-out-a-hero/ […]
Obama is under orders from Rome to imbalance the books, and to cook them. He works with evil. America will die, and decrease, as Russia will increase, depending if she can dig out the mountain of gold she currently has. Scenarios are linked to the good book, not a cooked, crooked book Obama operates. So, when America flips over, so will the World. And then the third woe. America has become Fascist in principle with American correctness. Under the guise of freedom.
Reblogged this on Dreams of Liberty and commented:
Listening to her in the radio was just refreshing. Discussing why government can’t print the money without paying interest instead of borrowing from the FED and paying interest and using it to build infrastructure. Getting the money injected into economy from the bottom up not only to the top.
A bank by the people for the people, what a concept!
[…] How Obama Could Beat the Debt Ceiling and Go Out a Hero | WEB OF DEBT BLOG Another way the government serves the financial sector over people. The only sector with "growth". Reply With Quote […]
The sad part here is that, in my estimation, about 50% of the national debt, (50%= to ~$9Trillion) was issued just to pay the interest to the rentiers. Now, just imagine if that $9T was issued into circulation to build things, provide better service, support healthcare, and improve the American way of life. How much better off would we all be?
But instead, it was issued to super rich people who just sit on it and look to accumulate more to sit on and more of it.
[…] This piece first appeared at Web of Debt. […]
[…] Source Web Of Debt Oct […]
[…] Originally posted on October 27, 2015 at ellenbrown.com. […]