The National Emergency Employment Defense Act, aka the NEED Act, is a monetary reform proposal submitted by Congressman Dennis Kucinich in 2011, in the United States. The bill has failed to gain any co-supporters and was not introduced to the floor of the house.
Dennis Kucinich (D), representative for Ohio's 10th congressional district , introduced H.R. 2990 to the 112th Congress, on 21 September 2011. Kucinich claimed that "H.R. 2990 enables money to be issued by spending it into circulation on programs approved by Congress — without taxing or borrowing." [1] The bill was co-sponsored by John Conyers (D), representative for Michigan's 13th congressional district .
The legislation's aim, according to its sponsor, [2] was
To create a full employment economy as a matter of national economic defense; to provide for public investment in capital infrastructure; to provide for reducing the cost of public investment; to retire public debt; to stabilize the Social Security retirement system; to restore the authority of Congress to create and regulate money, modernize and provide stability for the monetary system of the United States; and for other public purposes.
According to the Congressional Research Service, a nonpartisan division of the Library of Congress, the NEED Act, in brief, would [2] replace "Federal Reserve notes" with "United States Money" and dismantle the Fed. In this, the Act
Additionally, the Act would earmark funds for federal outlays in order to "create 50 million jobs" nationwide, in projects such as "federal & state infrastructure investment, education, health care," etc. [3]
The bill's introduction was "enthusiastically" supported by the American Monetary Institute, [4] whose director, Stephen Zarlenga, helped draft early versions of the bill. [5] and other opponents of fractional reserve banking, as well as by opponents of the Federal System, in general, such as the Positive Money organisation. [1]
Kucinich stated that the bill would remove the power of creating money from the "privately owned and controlled" Federal Reserve System and would restore the authority of the U.S. Congress to "create money interest-free." He added that the bill would "address" America's "structural economic problems directly by creating over 7 million jobs" at a time when "the nation struggles with long-term unemployment at rates not seen in generations, and as infrastructure crumbles across the nation." [6]
According to supporters and people who endorsed Kucinich's candidacy for Congress, the bill "would create millions of private sector jobs and rebuild America's infrastructure while paying off the national debt, all without raising taxes," [7] while many supporters of the Occupy movement voiced similar sentiments. [8] The Green Party in New York, in its official platform, has endorsed the NEED Act, [9] while other Green Party organizations have endorsed the notions advocated in the bill, in a platform called "Greening the Dollar." [10]
The argument for "United States Money," as opposed to Fed-issued money, is not new. As far back as 1943, Abba Lerner had dismissed such arguments, pointing out that the central bank can, at any time, start "printing money" to match government deficit-spending "sufficient to achieve and sustain full employment." [lower-alpha 1]
Post Keynesian economists, such as L. Randall Wray, have argued repeatedly on the "foolishness" of notions such as promoted by the NEED Act, [12] [13] pointing out that if money does not represent debt, in the form of a tax credit, then it is useless. [lower-alpha 2] [lower-alpha 3]
Economist and investor Warren Mosler has pointed out that the NEED Act is an "innocent fraud," because it undertakes to end a system that has ceased to exist a long time ago. [lower-alpha 4]
The bill has not yet been introduced to the floor. There were no other co-sponsors and there was no companion legislation in the Senate. [16]
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.
The Federal Reserve Act was passed by the 63rd United States Congress and signed into law by President Woodrow Wilson on December 23, 1913. The law created the Federal Reserve System, the central banking system of the United States.
The monetary policy of The United States is the set of policies which the Federal Reserve follows to achieve its twin objectives of high employment and stable inflation.
Monetary reform is any movement or theory that proposes a system of supplying money and financing the economy that is different from the current system.
The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that is charged under United States law with overseeing the nation's open market operations. This Federal Reserve committee makes key decisions about interest rates and the growth of the United States money supply. Under the terms of the original Federal Reserve Act, each of the Federal Reserve banks was authorized to buy and sell in the open market bonds and short term obligations of the United States Government, bank acceptances, cable transfers, and bills of exchange. Hence, the reserve banks were at times bidding against each other in the open market. In 1922, an informal committee was established to execute purchases and sales. The Banking Act of 1933 formed an official FOMC.
This history of central banking in the United States encompasses various bank regulations, from early wildcat banking practices through the present Federal Reserve System.
The Federal Reserve System has faced various criticisms since it was authorized in 1913. Nobel laureate economist Milton Friedman and his fellow monetarist Anna Schwartz criticized the Fed's response to the Wall Street Crash of 1929 arguing that it greatly exacerbated the Great Depression. More recent prominent critics include former Congressman Ron Paul.
Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region, is increased. In most modern economies, money creation is controlled by the central banks. Money issued by central banks is termed base money. Central banks can increase the quantity of base money directly, by engaging in open market operations. However, the majority of the money supply is created by the commercial banking system in the form of bank deposits. Bank loans issued by commercial banks that practice fractional reserve banking expands the quantity of broad money to more than the original amount of base money issued by the central bank.
Debt monetization or monetary financing is the practice of a government borrowing money from the central bank to finance public spending instead of selling bonds to private investors or raising taxes. The central banks who buy government debt, are essentially creating new money in the process to do so.
Modern monetary theory or modern money theory (MMT) is a heterodox macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires. According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy in order to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector.
The United States Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913.
Stephen A. Zarlenga was a researcher and author in the field of monetary theory, trader in stock and financial markets, and advocate of monetary reform.
The Emergency Economic Stabilization Act of 2008, often called the "bank bailout of 2008" or the "Wall Street bailout", was proposed by Treasury Secretary Henry Paulson, passed by the 110th United States Congress, and signed into law by President George W. Bush. It became law as part of Public Law 110-343 on October 3, 2008, in the midst of the financial crisis of 2007–2008. It created the $700 billion Troubled Asset Relief Program (TARP) to purchase toxic assets from banks. The funds were mostly redirected to inject capital into banks and other financial institutions while the Treasury continued to examine the usefulness of targeted asset purchases.
The Federal Reserve Transparency Act of 2015 was a bill introduced in the U.S. House of Representatives of the 114th United States Congress by Congressman Thomas Massie (KY-4). It included proposals for a reformed audit of the Federal Reserve System. The Senate version was introduced by Senator Rand Paul (R-KY)..
Monetary policy in the United States is associated with interest rates and availability of credit.
Monetary reform, the reform of monetary creation and thus of the banking system, is a topical political issue in the United States, especially in light of the public debt, household debt, Social Security and other public sector undertakings and state debts. The financial crisis that began in U.S. in the fall of 2007 and subsequently affected large parts of the world, and was followed by massive bank rescues, also plays a major role in this context as well as criticism of Federal Reserve.
The trillion-dollar coin is a concept that emerged during the United States debt-ceiling crisis of 2011 as a proposed way to bypass any necessity for the United States Congress to raise the country's borrowing limit, through the minting of very high-value platinum coins. The concept gained more mainstream attention by late 2012 during the debates over the United States fiscal cliff negotiations and renewed debt-ceiling discussions. After reaching the headlines during the week of January 7, 2013, use of the trillion-dollar coin concept was ultimately rejected by the Federal Reserve and the Treasury.
In macroeconomics, chartalism is a heterodox theory of money that argues that money originated historically with states' attempts to direct economic activity rather than as a spontaneous solution to the problems with barter or as a means with which to tokenize debt, and that fiat currency has value in exchange because of sovereign power to levy taxes on economic activity payable in the currency they issue.
The Swiss sovereign money initiative of June 2018, also known as Vollgeld, was a citizens' (popular) initiative in Switzerland intended to give the Swiss National Bank the sole authority to create money.