The American History You WEREN'T Taught in School

If you only watch only one documentary this year, this is the one I recommend.  It answers so many questions as to how and why America is in the mess it's in today.  Although the film was made in 1996, the future it describes is happening right now.  Running time is 3 1/2 hours, but it get's right to the meat within the first few minutes. 

I thought I knew a lot about the history of banking and money before I watched this.  I've listened to the advice of experts who warn of fiat currencies (like the US dollar) as compared to 'true' money that is backed by gold. One thing I learned from this film is that the American colonists had a fiat money system that actually worked very well, because the supply was consistent with the amount of goods and services traded and it was created without interest.  Then the banksters came in with a monetary system back by gold and the country went into a depression.  Why?  Because the currency was based on fractional-reserve banking.  (Like the Federal Reserve System does today.)  The narrator warns us to beware of embracing a gold-backed money system at a time when the vast majority of gold is owned by the Money Masters.


Or watch in 22 parts


At the 3 hour mark, William T. Still offers these solutions to our financial crisis:


  1. Pay off the debt with debt-free U.S. Notes.  [The national debt was trillions less in 1996].

  2. Abolish Fractional Reserve Banking.

  3. Repeal the Federal Reserve Act.

  4. Withdraw the U.S. From the IMF, the BIS, and the World Bank.


These are things that the Occupy Wall Street folks should be including in their demands.  Left the way things are now, we're headed towards one world government.


Wendy's picture

Yes, I saw it quite a while ago - a very good film.

I finally got the search bar to work, I always try to take a peak, especially with older material. It has been posted here before:

Also see his latest, The Secret of Oz:

Noa's picture

Wow!  Thanks, Wendy.  A lot of good links and information on that post, especially the email that Chris Bowers posted from the Money Masters producer, Patrick S.J. Carmack.  He calls for people to ask their congressman to sign the Monetary Reform Act.  There would be little reason for people to march and camp out in the cold on Wall Street (at least not for economic reasons), if they instead told Congress to approve the Monetary Reform Act.  Please spread the word.

This is the updated link:


The Two Step Plan to

 National Economic

Reform and Recovery

    Step 1: Directs the Treasury Department to issue U.S. Notes (like Lincoln’s Greenbacks; can also be in electronic deposit format) to pay off the National debt.
    Step 2: Increases the reserve ratio private banks are required to maintain from 10% to 100%, thereby terminating their ability to create money, while simultaneously absorbing the funds created to retire the national debt.

These two relatively simple steps, which Congress has the power to enact, would extinguish the national debt, without inflation or deflation, and end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking). Paying off the national debt would wipe out the $400+ billion annual interest payments and thereby balance the budget. This Act would stabilize the economy and end the boom-bust economic cycles caused by fractional reserve banking.    

Support the Monetary Reform Act – write your Congressman today!

Monetary Reform Act – A Summary
(in four paragraphs)

This proposed law would require banks to increase their reserves on deposits from the current 10%, to 100%, over a one-year period. This would abolish fractional reserve banking (i.e., money creation by private banks) which depends upon fractional (i.e., partial) reserve lending. To provide the funds for this reserve increase, the US Treasury Department would be authorized to issue new United States Notes (and/or US Note accounts) sufficient in quantity to pay off the entire national debt (and replace all Federal Reserve Notes).

The funds required to pay off the national debt are always closely equivalent to the amount of money the banks have created by engaging in fractional lending because the Fed creates 10% of the money the government needs to finance deficit spending (and uses that newly created money to buy US bonds on the open market), then the banks create the other 90% as loans (as is explained on our FAQ page). Thus the national debt closely tracks the combined total of US Treasury debt held by the Fed (10%) and the amount of money created by private banks (90%).

Because this two-part action (increasing bank reserves to 100% and paying off the entire national debt) adds no net increase to the money supply (the two actions cancel each other in net effect on the money supply), it would cause neither inflation nor deflation, but would result in monetary stability and the end of the boom-bust pattern of US economic activity caused by our current, inherently unstable system.

Thus our entire national debt would be extinguished – thereby dramatically reducing or entirely eliminating the US budget deficit and the need for taxes to pay the $400+ billion interest per year on the national debt – and our economic system would be stabilized, while ending the terrible injustice of private banks being allowed to create over 90% of our money as loans on which they charge us interest. Wealth would cease to be concentrated in fewer and fewer hands as a result of private bank money creation. Thereafter, apart from a regular 3% annual increase (roughly matching population growth), only Congress would have the power to authorize changes in the US money supply – for public use -not private banks increasing only private bankers’ wealth.


Monetary Reform Act in Printable Version

An Act

Note: Portions in blue are the most important.

To restore confidence in and governmental control over money and credit, to stabilize the money supply and price level, to establish full reserve banking, to prohibit  fractional reserve banking, to retire the national debt, to repeal conflicting Acts, to withdraw from international banks, to restore political accountability for monetary  policy, and to remove the causes of economic depressions, without additional taxation, inflation or deflation, and for other purposes. 1

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that:

Section 1. SHORT TITLE. This Act may be cited as the Monetary Reform Act.

Sec. 2. IMPLEMENTATION. This Act shall be implemented over a one-year transition period, beginning thirty days after the date of the enactment of this Act.

Sec. 3. DEFINITIONS. The definitions of terms shall be those set forth in the Federal  Reserve Act of December 23, 1913, as amended. United States Notes as used herein shall mean Treasury issue United Stated currency notes (as defined in 31 U.S.C. Sec. 5115) not bearing any interest, being lawful money and legal tender for all debts, public and private, and which term as used herein shall include Treasury Department  Deposits (a.k.a. Treasury Deposits or Treasury book entries) convertible to United States  Notes, which may be substituted therefor at the discretion of the Secretary of the Treasury. During the transition period, Treasury Deposits as used herein shall  include Federal Reserve Deposits.

Sec. 4. ONE HUNDRED PERCENT (100%) RESERVE REQUIREMENT. Section 19(b)(2)(A-D) of the Federal Reserve Act is hereby amended to raise the Reserve Requirement ratio  for financial institutions, in equal monthly increments of eight and one-half percent  (8.5%), to one hundred percent (100%), during the said transition period. No existing reserve requirements shall be reduced, but shall be increased as the overall Reserve Requirement ratio incremental increase surpasses them. The initial minimum overall Reserve Requirement ratio shall be fixed at eight and one-half percent (8.5%) for all accounts,  effective in one month. United States Notes, Federal Reserve Notes, Treasury Deposits and  Federal Reserve Deposits shall be included in Reserve calculations in the transition period. No waivers or exemptions to this section may be granted, and any in existence are hereby repealed.2

Sec. 5. RETIRING THE NATIONAL DEBT. The Secretary of the Treasury is hereby authorized and directed to purchase, in open market operations or otherwise, all outstanding Federal Debt held by the public, with United States Notes; thereby the net (public) National Debt is to be completely retired and replaced with United States Notes.3 Treasury Deposits are to be created for intra-U.S. government debt in quantity sufficient to extinguish the remaining gross National Debt.

Sec. 6. STABLE MONEY SUPPLY. The Secretary of the Treasury is hereby authorized and directed to time and apportion the purchase of United States Bonds and other federal debt securities held by the public, and the issuance of United States Notes and the creation of Treasury Deposits to the rate of the Reserve Requirement Ratio increases made pursuant to this Act, in order to keep the money supply (calculated including the monetary substitutions provided for herein) constantly stable, except as is provided in section 7, infra. Should the Secretary of the Treasury determine that additional bank deposits be needed to provide funds for the bank reserve ratio to be increased to 100% without inflation or deflation, the Treasury Secretary is authorized to retire other U.S. government agency securities with U.S. Notes issued in sufficient amount to provide the needed funds, or such amounts shall be transferred from aforesaid (see Section 5., supra.) Treasury Deposits to commercial bank accounts. 4

Sec. 7. FUTURE MONETARY GROWTH. Beginning with the transition year period, and thereafter on an annual basis, the total dollar amount of United States Notes (as defined supra: i.e., the sum of outstanding currency plus Treasury Deposits) outstanding (calculated to include the total amount of outstanding Federal Reserve Notes, i.e., not yet replaced with U.S. Notes) shall be increased by the Treasury Department, steadily, by three per cent (3%) per annum5, which amount shall be paid into the economy by the Treasury Department, first to retire (or purchase) any future war bonds (issued pursuant to section 8. hereof), then any remaining marketable and non-marketable federal debt (e.g., Federal government agency securities, intra-governmental debt, and fully guaranteed obligations of the government), then, pursuant to appropriation by Congress, to pay for goods, services, or interest. Any such new money not appropriated (i.e. allocated for expenditure) by Congress during any such year, shall be rebated by the Secretary of the Treasury to individual, personal income taxpayers on a fixed percentage basis within thirty (30)days of the close of such year. Except in time of war, no United States government bonds, bills, savings bonds or other debt obligations may be sold by the government, except as is provided for in this Act. No federal agency or federally-chartered bureau, board or instrumentality may engage in any further lending or borrowing, nor guarantee same, after the date this Act becomes law.

Sec. 8. WAR EXCEPTION. In the case of a formal Congressional declaration of war with a foreign nation, the three percent (3%) monetary growth provided for in section 7., supra,  may be exceeded and United States government bonds may be sold or purchased in open market operations by the Treasury Department, pursuant to Congressional authorization. The  suspension of the fixed three per cent (3%) monetary growth, and United States government  bond sales, shall terminate annually unless renewed by Congress, or upon the cessation of hostilities, or by formal  proclamation of the President declaring the war ended, or upon the exchange of  ratifications of the treaty of peace. The provisions of this Act shall supersede the  provisions of the National Emergencies Act (50 U.S.C. 1601, et seq., Titles I-V, as amended), and any declaration of emergency by any member of the Executive  Branch.

Sec. 9. FULL RESERVE BANKS. After the transition period, institutions using the word bank in their name or title, may not engage in lending, except that the  capital of the owners may be invested or loaned on the open market, but may charge fees  for their services and may invest deposits in Treasury Department Deposit accounts. These: full reserve; one hundred percent (100%) reserve; deposit; check or narrow;  banks, as they, exclusively, may also be titled, must treat deposits received as trust-funds of money held for depositors. By the end of the transition period, for every  dollar deposited, banks must have a dollar of United States Notes on hand or invested in a Treasury Department Deposit account. All bank deposits shall be in demand accounts. Banks shall be free to pay any rate of interest on accounts. Only bank deposits may be  transferable by check, credit card, electronic transfer or any substitute therefor. At the beginning of the transition period, entry into such one hundred percent (100%) reserve  banking shall be open to all persons having no criminal record, subject to minimal bonding  requirements to be established by the Secretary of the Treasury.6

Sec. 10. TREASURY DEPOSITS. Funds placed in Treasury Department Deposits shall  be utilized by the Secretary of the Treasury pursuant to appropriation by Congress, to pay  for goods, services, or interest needed by the federal government. Any such funds received by the government in excess of federal expenditures not funded by tax revenues shall be rebated to individual, personal income taxpayers on a fixed percentage basis within thirty  (30) days of the close of that year. Withdrawals of Treasury Deposits in excess of  receipts in any given year shall be funded by future monetary growth as provided in section 7., supra, or should the withdrawals ever exceed monetary growth, by tax  increases; in this latter, unlikely event, the Secretary of the Treasury is hereby  authorized, in the absence of any other, specific authority, to add a fixed percentage  surcharge to income taxes for that period, equal to the sum of excess withdrawals.

Sec. 11. INTEREST. The initial rate of interest payable on Treasury Department Deposits shall be equal to the average yield on three-month Treasury bills during the preceding quarter. Thereafter, it shall be adjusted quarterly in accordance with changes  in the average yield of ninety-day commercial paper over the preceding quarter.7

Sec. 12. LENDING INSTITUTIONS. Banks or any other persons may establish separate associations, with or without joint ownership or management, not to be titled banks,  such as investment trusts, mutual funds, brokerage or lending houses, to sell stock, to  receive, borrow, lend or invest money at interest, but by the end of the transition period  only from existing funds (i.e. United States Notes and Treasury Deposits). Contractual provisions must be made by such institutions upon the receipt of any funds  with their owners, investors or depositors, that at no time may more funds be subject to  demand than are presently idle and one hundred per cent (100%) available on demand. For any funds deposited with such associations payable on demand there must be a dollar of United States Notes on hand or deposited in a Treasury Deposit. No such association may denominate any account a demand account, nor promise immediate availability of any funds which may be invested, deposited or otherwise placed by such association without notice in any instrument or account other than Treasury Deposits. No funds  deposited or invested with such associations may be transferred by check, credit card,  electronic transfer or any substitute therefor. Owners, investors, lenders and depositors  must be advised of the use of their funds, fairly appraised of the risks including the  risk of total loss, of the maximum term of the use and of the potential and actual lack of availability of their funds, and the agreed or expected interest rate or the rate of return.

Sec. 13. REPEAL OF CONFLICTING ACTS. The National Banking Act of 1864 and  amendments, and the Federal Reserve Act of 1913 and amendments, are hereby  repealed,8effective at the end of the  transition period. All Federal Reserve System monetary authority and Federal Reserve Deposits shall be transferred to the Treasury Department at the end of the transition  period. From the effective date of this Act, and during the transition period, the Federal  Reserve System and its District Banks shall not engage in open market transactions, nor  change the Federal Funds Discount Rate, nor alter any Reserve Requirements, nor otherwise  alter any money aggregate, nor transfer, dispose of, nor move any gold or silver in either  their physical or legal possession, except as provided for in this Act, contrary  provisions of the Federal Reserve Act or other statutes notwithstanding. The  paid-in capital of Federal Reserve System member banks shall be credited to their Federal Reserve Deposit accounts at the beginning of the transition period, and the Federal Reserve Banks, employees, assets and liabilities transferred to the jurisdiction  and control of the Treasury Department and employed for the purposes of this Act,  including continuation of check-clearing and other services not prohibited by this Act. The Secretary of the Treasury is directed to replace gradually all outstanding Federal  Reserve Notes with United States Notes, as soon as is practicable. Outstanding Federal  Reserve Notes shall remain legal tender for all debts, public and private. Section  602(g)(14) of the Riegle Act of 1994 amending U.S.C. Title 32, insofar as it removed the requirement of reissuing United States currency notes upon redemption, is  hereby repealed. Title 31 U.S.C. Section (a)2(b) limiting United States Notes to a total of $300 million and prohibiting their use as reserves, is hereby repealed. Existing  legislation in conflict with this Act, whether in whole or in part, is hereby repealed in whole or in part as may be necessary to resolve any conflict with this Act.9

Sec. 14. PENALTIES. After the transition period, no person may loan, create credit or liabilities payable on demand or transferable by check, credit card or electronic transfer, without having one hundred percent (100%) reserves of United States  Notes, dollar for dollar, for any such amounts. Violation of this provision will subject the violator to civil penalties for fraud, and to criminal penalties. 18 U.S.C. Crimes  and Criminal Procedure �1344. Bank fraud: is hereby amended to include a new subsection (3) as follows: Whoever knowingly executes, or attempts to execute, a scheme or  artifice � (3) to engage in fractional reserve banking practices as described and prohibited by the Monetary Reform Act, Section 14, shall be fined not more than three times the total dollar amount of the violation(s), or imprisoned not more than 20  years, or both; but if the amount of the violation does not exceed $1,000, the violator(s)  shall be fined treble damages or imprisoned not more than one year, or both.

Sec. 15. WITHDRAWAL FROM INTERNATIONAL BANKS. It is hereby declared as a matter of federal statutory law that membership and/or participation of the United States government, or its agencies, or of the Federal Reserve Board or Reserve Banks or any officer or employee thereof, with the Bank for International Settlements, the International  Monetary Fund, the World Bank, and all other international banks, is  inconsistent with and in direct conflict with the purposes of this Act of Congress. The President is hereby authorized and directed to take such steps as may be necessary to withdraw the United States from all participation, and membership, in the Bank for  International Settlements, the International Monetary Fund, the World Bank,  and all other international banks, in any orderly manner, but in a period not to exceed  one year from the effective date of this Act, and to recover the original and any subsequent United States subscriptions, contributions and quotas to such organizations, not already fully and lawfully expended, whether in the form of gold, deposits, currency or otherwise; and to enter into negotiations to establish new exchange facilities  consistent with the purposes of this Act having no authority to create money or credit in  any form, and having no independent authority to establish laws or regulations binding upon the United States or its banks, financial institutions or citizens, and subject to the ongoing, annual budgetary authority and approval of Congress.10

Sec. 16. FOREIGN EXCHANGE. The Secretary of the Treasury is hereby authorized and directed to enact regulations allowing the external rate of exchange freely to fluctuate, as foreign price levels fluctuate (i.e. in accordance with their respective purchasing power), while utilizing the exchange stabilization fund and foreign currency reserves to counterbalance  fluctuations in the exchange rate. The Secretary of the Treasury shall enact such  regulations in order to: 1. keep the stable, internal domestic price level established by this Act unaffected by foreign exchange rate fluctuations; 2. maintain imports and exports of capital, in equilibrium. In no event shall foreign exchange rates be allowed to alter the fixed rate of monetary growth set forth in section 7., above.11

In any period in which the exchange stabilization fund and foreign currency reserves are inadequate to maintain equilibrium in capital flow, the Secretary of the Treasury is hereby authorized and directed: to restrict any imbalanced inflow of  dollars to an amount equal to the monetary growth rate for such period (as set forth in  Section 7.,supra), which monetary growth shall be thus funded; and, to prohibit any  imbalanced outflow of dollars. Imbalances in excess of such amounts must first be chronologically booked for subsequent exchange as soon as the free markets restore the  equilibrium necessary for the exchange(s) to occur.

The Secretary shall issue regulations to establish an advance foreign exchange book, open for public inspection, of all contracted, future foreign exchange  transactions and obligations, in order to facilitate such exchanges. Such exchanges must  be assigned by the Secretary on a first-come, first-served basis, in order to guarantee  foreign exchange availability, for a one quarter per cent (0.25%) fee. 12

Sec. 17. APPROPRIATIONS. The Secretary of the Treasury is authorized and directed to establish Treasury Department Deposits, convertible to United  States Notes on demand, sufficient to accomplish the provisions of this Act. The Federal  Reserve Act is hereby amended to add this section: that the Governors of the Federal Reserve System are authorized and directed to establish Federal Reserve Deposits sufficient to accomplish the purposes of this Act, in amounts to be determined by the Secretary of the Treasury. The Director of the Bureau of Engraving is hereby authorized and directed to print a sufficient quantity of United States Notes to accomplish the provisions of this Act. There is hereby authorized to be appropriated, out of any funds not otherwise appropriated, such sums as may be necessary to carry out the purposes of  this Act.13

Sec. 18. SEVERABILITY. If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance shall be held to be unconstitutional, the remainder of this Act, the amendments made by this  Act, and the application of the provisions of such to any person or circumstance shall not  be affected thereby.

* * *


1. A draft in 17 sections by Patrick Carmack, J.D.; Copyright 1996. All rights reserved. For a free copy of the Act, send a SASE to: Monetary Reform Act, P.O. Box 67, Manitou Springs, CO 80829-0067, or call 1-888-THE PLOT to order the video The Money Masters which has the Act as an insert, or visit Minor revision is an ongoing process in response to suggestions received.

2. The principal point of this section and of the  entire Act is to replace private creation of money by debt-based, bank-book-entry creation  (i.e. by bank loans), based on fractional reserves (i.e. high-powered money) which is inherently unstable and unjust, with government creation of money by credit-based Treasury deposits and U.S. Notes (i.e. for government payments or  purchases) which are based on full reserves (i.e. not high-powered money), by definition for the benefit of all the people, not just for bankers.

3. The gross National debt is presently c. $9.9 trillion [Sept. 2008]. The net or Public National Debt portion of that (i.e. net of what the government owes itself) is c. $5.4 trillion, of which the Federal Reserve holds c. $480 billion in the System Open Market Account managed by the NY Fed. There is obviously less urgency in paying off what the government owes itself (i.e., the difference between the gross and the public national debt, owed to different government departments and funds), presently c. $4.5 trillion. The Act provides that the remaining c. $5.4 trillion public debt should be paid off with U.S. Notes issued by the Treasury Department. The only real objection to this is that, under the present law, such action would be hyperinflationary, which is true. This is why the proposed Act requires the simultaneous increase in the required reserve ratios of banks from 10% to 100%, which both fully solves the inflationary issue and ends private bank creation of money. Commercial bank loans in the US total c. $7 trillion. This represents money created by the banks as loans. Increasing the reserve ratio to 100% would require banks to have a source of deposits equal to the needed increase in reserves which would be c. $7 trillion, in order to avoid calling in loans Paying off the public national debt would provide c. $5.4 trillion of the needed capital. Commercial banks hold another c. $1 trillion in other US government agency securities, which the Act provides would also be paid with U.S. Notes, thus providing a total of $6.4 trillion and extinguishing national debt to the same amount. The Act provides for the gradual payment of the c. $4.5 trillion intra-governmental debt, which shall be timed to provide the balance of the needed reserves (c. $600 billion), and thereafter to provide the 3% growth of the money supply, until fully retired. The intra-governmental debt thus provides a ready and flexible avenue for the Treasury to manage the amount of U.S. Notes created to retire the National debt to match capital needed for the reserve ratio increase. Hence there is no technical obstacle to implementation of this section.

Alternatively, in a less comprehensive but arguably easier reform, full-reserve banks could be required to keep their reserves in either the form of cash or federal debt securities. This would be equivalent to keeping their reserves in interest-bearing Treasury Deposits. Both methods would effectively require banks to substitute existing bank liabilities for the entire marketable government debt in one form or another. Free markets to facilitate this substitution would very rapidly arise and should be allowed to so function. Similarly, Federal Reserve Notes and/or Deposits could be used instead of U.S. Notes and Treasury Deposits, PROVIDED one hundred percent (100%) reserve banking (Act section 4.) is enacted. The form of the new reserves required for the transition to full-reserve banking is immaterial provided they result in the substitution of government securities for existing bank liabilities, and provided fractional reserve banking is terminated as the reserve requirement is increased to one hundred percent (100%), scheduled concurrently to avoid any inflationary/deflationary effect.

4. In another example and approach, the “monetary base” created by the Fed is presently about $911 billion. This is multiplied by the commercial banks between 9 and 10 times (due to exceptions in the required reserve ratio of 10%) resulting in banks “assets” of roughly $9.9 trillion (after deducting required reserves). The gross national debt is presently c. $9.9 trillion. Paying off the gross national debt would provide $9.9 trillion in new reserves to fund the banks’ assets (predominantly loans) on a 100% basis, without the banks creating any money. The US Treasury would have created the $9.9 trillion and used it to pay off the gross national debt.

5. The three percent (3%) figure represents the low end of the three-to-five percent (3-5%) range proposed by Prof. Friedman and Mrs. Friedman, for a  Constitutional Amendment limiting monetary growth, which we completely support (see endnote 14. for text). However, this draft Act takes the practically-easier legislative  approach and adds the critical prohibition of fractional reserve banking as well as other related issues. With population growth and productivity increases averaging approximately one percent (1%) each per year for the last thirty years, a three percent (3%) growth  figure will insure stable prices within a vary narrow range and would allow for  price-level or cost-of-living adjustments (COLAs) in contracts with a predictable effect to address any slight variation in economic activity from the three percent (3%) monetary  growth rate. Further, as perfect fine-turning of monetary growth in a complex economy is not possible, to err on the side of a very slight inflation would at least  relieve those burdened by debt of some of the effects of the prior inequity caused by  private money creation, whereas to err on the side of deflation would exacerbate such  inequity. A fixed rate of growth will provide the needed stability so long lacking m  monetary policy, which instability has caused every economic depression in United States  history. In 1931, Sweden established a mixed commodity krona by setting up  an oflicial C.P.I., and succeeded in keeping it stable (within 1.75%) for several  years, until she had to give up the system under pressure from international bankers to stabilize foreign exchange rates. This example demonstrates both empirical proof of the validity of this ideal approach, and of its susceptibility to failure by political  manipulation

Periodic, non-discretionary, fine-tuned adjustments based on widespread  indexation of prices, by a Monetary Commission of some sort would be the ideal, but lack the stability and predictability of a fixed growth rate and are subject to corruption and  to manipulation indirectly (e.g. such as by alteration of index definitions, components or base years as has repeatedly occurred with the Department of Labor’s Consumer Price Index [CPI]).

The zero (0%) monetary growth proposal, particularly if tied to freezing high-powered money, lacks the essential feature of abolishing fractional reserve banking.  This is particularly important in light of all the exceptions to maintaining any reserve ratio. However, if combined with such an abolition (and allowing for COLAs to  address the inevitable deflationary effects), would be acceptable and arguably easier to  advance politically due to the Schelling point effect of a figure such as zero, as  Prof. Friedman has pointed out. But, as Paul A. Samuelson noted, the gyrations in the futures markets tend to belie the notion that monetary stability can be found in that direction

6. Absent massive fraud or theft, full reserve banks cannot fail,  rendering insurance such as F.D.I.C. and F.S.L.I.C. unnecessary. Only a minimal cost to  insure against fraud or theft would be necessary. Had full reserve banking been in place before the S & L collapse, this one reform would have saved the U.S. taxpayers over  $600 billion.

7. As now, no interest would be paid on currency in circulation – the  government benefitting from the seigniorage. However, as Prof. Friedman and George Tolley warn, if the government pays no (0%) interest on reserves, which is the theoretical ideal (or charges banks interest on Treasury-assumed bank liabilities [e.g. on  so-called Commercial Bank Conversion Bonds] – a variation of a one-time government take-over of existing reserveless [i.e. factional-reserve-based loans] bank liabilities), this would create a high incentive for private near-monies of various kinds (e.g. new forms of negotiable debt, equity or derivative instruments) to  proliferate, particularly in advanced economies such as the U.S.

This would threaten many of the benefits of monetary reform including  the stability of the money supply and the prohibition of private fractional reserve money creation. The interest may be viewed as a social cost for the benefits of a stable  national money. The private trading (circulation) of futures based on widespread price indices as money offers only speculative, though intriguing, reform possibilities at this  time.

8. While it would theoretically be easier simply to reform the Federal Reserve System than to abolish it, the experience of the last 300 years in Europe and the last 200 in the U.S. has proven time and again that private banking interests invariably  utilize any independence afforded a central bank from government control as an opportunity  to exert undue influence over it, often by acquiring outright ownership interests in it,  and/or to gain control of it through placement of their employees and experts (schooled in  protecting and promoting their private interests who often “retire” to very well-paid positions in private banking) in its key positions at the expense of the public  good. This is one reason for the seeming anomaly that private banking interests champion the “independence” of central banks from any effective oversight by politicians generally controlled by them. It simply exposes central banks to even greater private  manipulation with less interference from and explaining to have to do to  “unreliable” politicians. Independent central banks concentrate national  economic control in a body too removed from accountability and therefor from  responsibility to the body politic, at least in the often critical short-term.

The so-called independence or autonomy of central banks  from governmental control, such as the Federal Reserve System has in the United States, to whatever degree granted, has in practice meant increased private influence and control to  that same degree.

The avowed purpose of central bank independence or autonomy – to reduce  political (i.e. private special interest) influence over its functions – something the present independent central banking system utterly fails to achieve but rather enhances, can be accomplished without this danger, by establishing a fixed rate of  monetary growth not subject to any discretionary authority or manipulation, as is set forth in section 7. Of course, this too could be a reform within the present Federal Reserve System, but absent direct accountability to Congress (including for annual budget appropriations – a power now uniquely delegated to the Fed which funds its operations without Congressional budget authorization or audit, from interest it receives on the U.S. bonds it purchases for the cost of the paper) the Fed would remain the powerful,  effectively independent and dangerous, entrenched banking lobby with virtually unlimited  and unaudited funds, constantly working to resist, obstruct and repeal reforms, just as it  did during the Great Contraction (i.e. Depression) which it caused. Further, the current division of responsibility for monetary policy between the Fed and the Treasury  has allowed both bodies to shift responsibility to the other for harmful actions. This can only be solved by ending this division.

9. Other conflicting, or partially conflicting Acts, such as the Banking Acts of 1933 and 1935; Federal Securities Act of 1933; Securities Exchange Act of 1934; Margin Requirements Act of 1934; Public Utility Holding Company Act of 1935; Bretton Woods Agreements Act of 1944; Federal Deposit Insurance Act of 1950; Bank Holding Company Act of 1956; Bank Merger Acts of 1960 and 1966; Emergency Loan Guarantee Act of 1971; Electronic Funds Transfer Act of 1978; International Banking Act of 1978; Financial Institutions  Regulatory and Interest Rate Control Act of 1978; Depository Institutions Deregulation and  Monetary Control Act of 1980; Bank Export Services Act of 1982; Garn-St. Germain Act of 1982; Financial Institutions Reform Recovery and Enforcement Act of 1989, and subsequent amendments, would be repealed in whole or in part where in conflict with this Act.

10. The U.S. Supreme Court, in an increasingly important decision, held that an Act of Congress is on full parity with a treaty (or any lesser  agreement), and that when a federal statute which is subsequent in time is inconsistent  with a treaty, the statute, to the extent of the conflict, renders the treaty null. Whitney  v. Robertson, 124 U.S. 190 (1888); et aliacf. Reid v. convert, 354  U.S. 1 (1957)      

11. It is estimated that c. $350 billion in U.S. currency is held outside the U.S. This is high-powered money that would cause hyperinflation if repatriated in large amounts in a short period of time. Additionally, the U.S. presently has a high trade deficit, which has been roughly balanced by U.S. bond sales to foreigners, which total approximately $2.5 trillion at present. Further, currency speculators manipulate and exacerbate temporary exchange fluctuations, which can radically affect internal price stability, as was demonstrated in several of the Southeast Asian nations a few years ago.

Whoever originates and controls the volume of money, controls every  single economic operation. Therefore, it is essential to monetary stability, and so to reform, as well as to maintaining national sovereignty, that the import and export of  capital be kept in balance, so that the domestic money supply be not subject to manipulation nor to fluctuation in quantity, beyond the rule fixed in section 7., above.

Stability of the internal quantity of money is the only basis on which to obtain a stable price level, and foreign exchange rates must not be allowed to disrupt internal price stability. This can be accomplished, there being no theoretical difficulty.  For example, the government of China simply forbids banks from handling large foreign transactions other than those for the purchase of Chinese goods, and also maintains a  large exchange stabilization fund to defend the yuan. Chile requires that 30% of capital inflows stay in the country a minimum of one year.

12. i. e. the so-called Tobin tax, designed to discourage speculative trading in small differentials in interest on exchange rates.

13. Prior inequitable and usurious profits accumulated by banks from fractional reserve banking practices are not addressed in this draft Act, which therefor leaves the banks in possession of prior profits of some $1.2 trillion (2008 commercial bank net worth), most of it from such unjust practices. Likewise, prior distribution of profits to bank owners is not addressed. This vast wealth and the economic and political influence it represents, particularly through the control of the media it has purchased, constitutes a standing danger to the Republic and should be addressed, perhaps by some effective form of anti-trust legislation and/or Court action breaking-up the giant banks (and media) into small localized units with separate ownership, or more aggressively by a bank nationalization, break-up into smaller units, and immediate reprivatization by public stock sale pursuant to rules insuring widespread ownership.

But any nationalization Act without an immediate reprivatization clause  would create a new and unnecessary danger, as the power to loan does not properly rest  with the government, is most effectively handled at the local free market level, and is  easily abused for political purposes as was the case with pre-war Germany’s Reichbank which granted loans to whomever the government chose for political reasons, as do government banks in communist command economies.

The goal is not nationalization of banks, but of money. By contrast, and by definition, creation of a national currency/money supply can only be effectively and  properly handled by a national government, not by local governments or private persons, as  reason and experience abundantly prove.

It is primarily for these reasons that we disagree with that portion of  the monetary reforms advanced by Messrs. Peter Cook, Theodore R. Thoren and Richard F.  Warner, insofar as they advance the notion that the Treasury ought to become a lender to  banks and local governments, while we are in general agreement with their reform proposals otherwise (including their rejection of a return to a gold standard). Rather, consistent with the sound reform principle of subsidiarity, the private sector alone ought to engage in the various legitimate forms of lending, as set forth in section 12. herein, with free market supply and demand setting the interest rates.

Government selection of lending proposals for  “creditworthiness” or “profound societal impact” etc., or any  criteria imaginable, and their evaluation, is inevitably subjective and therefor open to grave abuse by a monolithic lender. As Ms. G. M. Coogan wrote in Money Creators (p. 333-334), for the government to create money as loans is even more vicious than for private banks to create money as loans, carrying with it the power to aid (by granting loans) or destroy (by denying loans) whomever it chooses.

Decentralized, private lending agencies generally tend to loan to any creditworthy applicant, their primary motive being profit (or profit-derived power) which is maximized by making more loans; whereas governments replace this profit priority with political ends such as rewarding their supporters, the political value of which is maximized by restricting loans. So government lending tends to arbitrary discrimination for political motives, an abuse generally avoided in a truly free market lending situation.

Thus, perhaps the most dangerous error of any monetary reform proposal would be to place the lending of money in the hands of the government, which is the  essence of communist economics, carrying with it the power to destroy. Indeed, Lenin  recommended government origination and control of lending for the political control it  affords. That money-lending ought to be carried out by private legal persons rather than the government is a major principle of sound monetary policy. The lending of money ought  to be completely divorced from its origination, for as Ms. Coogan pointed out, it is  fundamental that money ought not to come into existence as loans or in response to loan applications, but only as the total stock of available goods increases (or a reasonable approximation thereof, such as three percent [3%] in the U.S.). Further, there is simply no need for the government to get involved in lending, and risk the dangers mentioned, in order to reform the present system and achieve all of the ends set forth in the preamble  hereof.

14.Prof. Milton Friedman on his proposed  Constitutional Amendment

“When the Constitution was enacted, the power given to Congress ‘to coin money,  regulate the value thereof, and of foreign coin’ referred to a commodity money: specifying  that the dollar shall mean a definite weight in grams of silver or gold. The paper money  inflation during the Revolution, as well as earlier in various colonies, led the framers  to deny states the power to ‘coin money; emit bills of credit [i.e., paper money]; make anything but gold and silver coin a tender in payment of debts.’ The Constitution is silent on Congress’s power to authorize the government to issue paper money. It was  widely believed that the Tenth Amendment, providing that the ‘powers not delegated to the  United States by the Constitution . . . are reserved to the States respectively, or to the people,’ made the issuance of paper money unconstitutional.

During the Civil War, Congress authorized greenbacks and made them a legal tender for  all debts public and private. After the Civil War, in the first of the famous greenback  cases, the Supreme Court declared the issuance of greenbacks unconstitutional. One  ‘fascinating aspect of this decision is that it was delivered by Chief Justice Salmon P. Chase, who had been Secretary of the Treasury when the first greenbacks were issued. Not only did he not disqualify himself, but in his capacity as Chief Justice convicted himself of having been responsible for an unconstitutional action in his capacity as Secretary of the Treasury.’

Subsequently an enlarged and reconstituted Court reversed the first decision by a  majority of five to four, affirming that making greenbacks a legal tender was  constitutional, with Chief Justice Chase as one of the dissenting justices.

It is neither feasible nor desirable to restore a gold-or-silver coin standard, but we do need a commitment to sound money. The best arrangement currently would be to require  the monetary authorities to keep the percentage rate of growth of the monetary base within a fixed range. This is a particularly difficult amendment to draft because it is so  closely linked to the particular institutional structure. One version would be:

Congress shall have the power to authorize non-interest-bearing  obligations of the government in the form of currency or book entries, provided that the  total dollar amount outstanding increases by no more than 5 percent per year and no less  than 3 percent.

It might be desirable to include a provision that two-thirds of each House of Congress,  or some similar qualified majority, can waive the requirement in case of a declaration of war, the suspension to terminate annually unless renewed.

A Constitutional Amendment would be the most effective way to establish confidence in  the stability of the rule. However, it is clearly not the only way to impose the rule. Congress could equally well legislate it.”

Quoted from: A Program for Monetary Stability, by. Dr. Milton Friedman, Fordham University Press (N.Y. 1960, 1992), pgs. X, 66-76, 100-101; and, Free to Choose by  Dr. Milton & Rose Friedman, Harcourt Brace & Co. (San Diego 1980, 1990), pgs.  307-308.


Noa's picture


Few people know who represents them in the House these days.  Here's an easy way to find out:   A snail mail  letter is probably more effective than an email.  You can find the last 4 digits of your zip code here:!input.action  Now it's up to you.


"In the long history of the world, only a few generations have been granted the role of defending freedom in its hour of maximum danger. I do not shank from this responsibility - I welcome it. I do not believe that any of us would exchange places with any other people or any other generation. The energy, the faith, the devotion which we bring to this endeavour will light our country and all who serve it -- and the glow from that fire can truly light the world. 

And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country. 

My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man." ~ John F. Kennedy

Wendy's picture

Noa's picture

Pretty good summary for a 9 minute video.  They forgot to mention the biggest offender, though... Fractional Reserve Banking.  This allows bankers to create money from nothing 9 more times.  So when you borrow $1000, the bank is only required to keep $100 of the money created (from nothing) as a reserve.  Then they loan out the other $900 the same way, only keeping 10% of each new loan in reserve each time,

and so on...

and so on...

and so on...

and so on...

Wendy's picture

Right, and the Money Masters also makes a good point about how the current system creates war to increase profits.

Knightspirit's picture

That's not exactly right, Noa. It's actually even worse than that! In reality - the bank has to have something in reserve to start with. Let's say it's $100. So with that in "reserve" they can now loan 9 times that amount, or $900. Here's the kicker though. If I were to take that $900 and deposit that into the bank next door - now THEY can loan 9 times THAT amount! So there is more going on than just the initial inflation of the reserve amount by 9 times. It has the potential to get ridiculous real quick. If we just follow that first $900 to the second bank - it turns to $8100 - and if that amount went to a third - $72,900! And that's from $100 in "reserve"...

Understand that this is where debt comes into play. As the fractional reserve system creates more and more money - there has to be some way of getting that money back OUT of the system - otherewise there is instant inflation. So while money is being "loaned" out and put into the system - there needs to be payments coming back in to counter what went out. This is why we have taxes - not to fund anything - but to regulate the money supply. But as you can see - we would always be behind on this system - as there would always have to be more debt being created just to keep up with what has already been put into circulation. Never mind the idea that the interest for the loan isn't created as part of the loan - and thus must come from a future loan to someone else. It's an ever expanding circle that eventually has to be collapsed so they can start the whole cycle over again.

They collapse it using things like housing bubbles, stock market crashes etc etc. 

Noa's picture

Bill Still's Speech at Bromsgrove 2010


SR 21 Debt Limit Debate 3 - July 29, 2011


Guest Bill Still talks about the crooked Federal Reserve, the lack of auditing of the US gold reserves (most likely because the US has no gold left), and the collapsing Fiat currencies, and governments manipulating the markets with their banker friends to defraud savers and pension funds.

Bill Still is the filmmaker of the award winning Secret of Oz and The Money Masters, the 15th most viewed video on the net, EVER. 

Recorded from Russia Today, Keiser Report, 20 September 2011.


Wendy's picture

Thanks Noa for the execellent Bill Still interviews. I checked him on what he said about Ron Paul about only gold and silver can be money.

Here's exactly what the constitution says:

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;


I think this is a debatable point since the constitution does not say that Congress has the power to print money but to coin money.

Noa's picture


“We can’t solve problems by using the same kind of thinking we used when we created them.”
               – Albert Einstein

Forty-six of fifty states are now reported to be so insolvent that they could be filing Chapter 9 bankruptcy proceedings within the next two years.1 Of the four that are not in that category, one is the isolated farming state of North Dakota. What does it have that other states don’t? The answer seems to be: its own bank. In fact, North Dakota has the only state-owned bank in the nation. It has avoided the credit freeze caused by the derivative schemes of the Wall Street bankers by creating its own credit, leading the nation in establishing state economic sovereignty.

North Dakota is an unlikely candidate for the distinction. As Michigan management consultant Charles Fleetham observed last month in an article distributed to his local media:

“North Dakota is a sparsely populated state of less than 700,000, known for cold weather, isolated farmers and a hit movie – Fargo. Yet, for some reason it defies the real estate cliché of location, location, location. Since 2000, the state’s GNP has grown 56%, personal income has grown 43%, and wages have grown 34%. This year the state has a budget surplus of $1.2 billion!” 

The secret of its success seems to be the state-owned Bank of North Dakota, which was established by the state legislature in 1919 specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It loans money to students (over 184,000 outstanding loans), and it purchases municipal bonds from public institutions.

A License to Create Money

Still, you may ask, how does that solve the solvency problem? Isn’t the state limited to spending only the money it has? The answer is no. Certified, card-carrying bankers are allowed to do something nobody else can do: they can create “credit” with accounting entries on their books.

Under the “fractional reserve” lending system, banks are allowed to extend credit (create money as loans) in a sum equal to many times their deposit base. Congressman Jerry Voorhis, writing in 1973, explained it like this:

“[F]or every $1 or $1.50 which people – or the government – deposit in a bank, the banking system can create out of thin air and by the stroke of a pen some $10 of checkbook money or demand deposits. It can lend all that $10 into circulation at interest just so long as it has the $1 or a little more in reserve to back it up.”2

The Federal Reserve’s 10 percent reserve requirement is now largely obsolete, in part because banks have figured out how to get around it with such games as “overnight sweeps”. What chiefly limits bank lending today is the 8 percent capital requirement imposed by the Bank for International Settlements, the head of the private global central banking system in Basel, Switzerland. With an 8 percent capital requirement, a state with its own bank could fan its revenues into 12.5 times their face value in loans (100 ÷ 8 = 12.5). And since the state would actually own the bank, it would not have to worry about shareholders or profits. It could lend to creditworthy borrowers at very low interest, perhaps limited only to a service charge covering its costs; and it could lend to itself or to its municipal governments at as low as zero percent interest. If these loans were rolled over indefinitely, the effect would be the same as creating new, debt-free money.

But, you ask, wouldn’t that be dangerously inflationary? Not if the money were used to create new goods and services. Price inflation results only when “demand” (money) exceeds “supply” (goods and services). When they increase together, prices remain stable.

“Nationalization” Should Cover Bank Profits as Well as Losses

Today we are in a dangerous deflationary spiral, caused by sharply contracting credit and plummeting asset values. The monopoly on the creation of money and credit by a private banking fraternity has resulted in a malfunctioning credit system and monetary collapse. Credit markets have been frozen by the wildly speculative derivatives gambles of a few big Wall Street banks, bets that not only destroyed those banks’ balance sheets but are infecting the whole private banking system with toxic debris. As economist Paul Krugman recently wrote in The New York Times:

“Arguably, the only reason they haven’t failed already is that the government is acting as a backstop, implicitly guaranteeing their obligations. But they’re zombie banks, unable to supply the credit the economy needs.”3

Krugman went on to speculate that nationalization and reorganization for the failed Wall Street mega-banks could be the only viable course. But the form of “nationalization” now being discussed involves propping up these profligate zombies with billions in taxpayer dollars, only to return them to their gambling-addicted private owners (or others like them) once the banks have been restored to viability. As economist Michael Hudson observes, this is a perversion of language. True nationalization would involve keeping the entities as public resources, returning the profits to the taxpayers who bore their costs.4

Our workers and our factories are sitting idle because the private credit system has failed. An injection of new money from a system of public banks could thaw the credit freeze and bring spring to the markets again. The mathematical flaw in the private credit system is the enormous tribute siphoned off to private coffers in the form of interest. A public banking system could overcome that flaw by returning the interest to the public purse. This is the sort of banking that was pioneered in Benjamin Franklin’s colony of Pennsylvania, where it worked brilliantly well. We need to return to our historical roots and implement that system again.

  1. John Mitchell, “46 of 50 States Could File Bankruptcy in 2009-2010,” Freedom Arizona (January 30, 2009).  
  2. Jerry Voorhis, The Strange Case of Richard Milhous Nixon (1973), excerpted at  
  3. Paul Krugman, “Banking on the Brink,” New York Times (February 22, 2009).  
  4. Michael Hudson, “Orwellian Doublethink: ‘Nationalize the Banks.’ . . . The Language of Deception”, Global Research (February 23, 2009).
Noa's picture


I see your point about the language being debatable, however, the United States government has printed its own currency several times before with great results.  North Dakota is doing it successfully now!  What is preventing the government from printing money again?  Only the Federal Reserve banksters.  Since they were legitimized by Congress, Congress has the authority to remove their power. 


“If our nation can issue a dollar bond, it can issue a dollar bill. Both are promises to pay, but one promise fattens the usuers and the other helps the people... gold and money are separate things... gold is the trick mechanism by which you can control money... that is the root of all evil.” ~ Thomas Edison, The New York Times, Dec. 6, 1921

Only when a critical mass of people demand that our government take back the power to print our currency will it be done.  Absent such action, the Federal Reserve will continue unimpeded to steal the world's wealth and move us towards a one world currency and one world government.

Only we the people can stop them.  The Monetary Reform Act is potentially our most powerful tool to do just that.

Wendy's picture

Yes, I agree, the state bank is a great idea - It decentralizes the power a bit better, keeping the people in better control.

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