The Daily Republic’s front page article last Wednesday, “GOP moves to delay debt showdown,” said, “. . . Republicans controlling the House are moving quickly to try to defuse a potential debt crisis with legislation to prevent a first-ever U.S. default for at least three months.”
Gosh GOP, thanks for delaying your annual debt crisis for another three months. It sure seems like congressional Republicans waste a lot of time every year trying to decide whether or not to pay the bills Congress has already racked-up, instead of doing something constructive with their time. Maybe that’s the point.
There is a far simpler way for America to pay her bills, cut down meaningless congressional brinksmanship, and to reduce our national debt, all at the same time: It’s the trillion-dollar coin.
Economists have proposed that the U.S. Treasury mint several platinum coins, each with a face value of $1 trillion. These coins would then be exchanged, as needed, with the Federal Reserve Banks for $1 trillion worth of their bank notes or bank credits, which the government then spends.
The history of our money is a twisted tale and so vital to the understanding of our nation’s economy that every single American should be required to learn it in school. Were you?
I grew-up in Fairfield and had all the required American history, civics and government classes at Fairview and Armijo, but even in college, nobody told me how money was created.
Fairfield Kiwanis Club members may remember my little speech, last fall, “Banking in 1860s America,” and Daily Republic readers can refer to my July 2011 column, “The Civil War and our national debt.”
Both times, I gave a very short history on the ridiculous way we create money in America. As you probably guessed, the problem began during the Civil War. In those days, America had no national currency, only locally traded notes issued by private banks. After initially authorizing $450 million in U.S. government “greenback” dollars, Congress passed the 1862 National Banking Act, which ensured that only private bankers would issue our nation’s money.
Bankers would take a U.S. Treasury Bond guaranteeing them $10,000 plus interest, to be paid in gold, and give Congress $10,000 in pretty paper bank notes in return. In the midst of battle, President Lincoln had no choice but to sign the absurd law.
Today, the privately owned Federal Reserve Bank still trades pretty colored bits of paper for United States Treasury Bonds. Whenever Congress needs money, the Treasury gives the Federal Reserve bankers a $10,000 U.S. Treasury Bond and the Federal Reserve gives Congress $10,000 worth of pretty paper Federal Reserve Notes. The $10,000 bond becomes part of our national debt and we taxpayers get to pay interest on that every year, forever.
To calculate the total number of dollars taxpayers have wasted on this bankers’ scheme, simply multiply our national debt times the prevailing interest rate for the past 150 years. Let me help get you started: In 2012, we paid $360 billion. In 2011, we paid $454 billion. In 2010, $414 billion. In 2009, $383 billion. In 2008, $451 billion. Etcetera, etcetera, etcetera.
Fairfield readers know I have long advocated for the U.S. Treasury to purchase the Federal Reserve and eliminate this horrendous waste, but minting these legal-tender coins, using power granted by our Constitution, would be a great first step.
For each coin we hand the bankers, we taxpayers eliminate interest payments on $1 trillion, forever.
Whose face on the coin? The obvious choice is Ronald Reagan, who nearly tripled our national debt and taught Republicans that “deficits don’t matter,” unless a Democrat is president.
Mike Kirchubel grew up in Fairfield and is the author of “Vile Acts of Evil – Banking in America.” He can be reached at [email protected]