Karl Deninger thinks Dennis Kucinich's NEED Act is the greatest thing since sliced bread..

[girl gone mad]

and now it's time for Ron and Rand Paul to put up or shut up.

From http://market-ticker.org">Market Ticker:

Dennis Kucinich, which many people have (properly) labeled as one step removed from a communist in the past, and who has a reputation as having a hard-core left slant in his politics, has just written up and introduced a bill that will fundamentally restore the free market - for real - to banking and credit.

It will also **** a lot of people off.

His bill would end the process of money issuance by The US Federal Government as a debt instrument. It would thus restore actual "lawful money" as Ron Paul claims to want, but in a form he has never, ever elucidated. It does, however, exactly match up with the base position I have propounded upon, along with Bill Still and a few others.

Instead, Treasury would issue and spend into circulation United States Notes. The existing "FOMC" would be replicated in Treasury with a mandate identical to The Fed's, with one important addition - a requirement that their operations be neither inflationary or deflationary.

That is, the precise mandate that is required - that United States Money maintain its purchasing power.

It would bring into effective existence my One Dollar of Capital standard for bank lending, by requiring that all lending be funded by either a loan granted by Treasury (where interest would inure to the Government, not a private bank) or be funded by the issuance of private debt with no government backstop.

It would absolutely bar the use of depositor reserves for any lending purpose whatsoever - that is, if you deposited funds into a transaction account (any sort of "demand" account) the bank would have to hold the funds as an actual custodian with fiduciary requirements for performance. Other than by direct and punishable fraud, depositor losses would instantly become impossible.

http://market-ticker.org/">more...

[JDPriestly]

1. K&R. End the fraud.

Reward the wise use of resources.

[dixiegrrrrl]

2. YES!!!!

God bless Dennis.

Maybe this time there are a sufficient numbers of people who are FED. up, and this bill can get some
publicity.

[dkf]

3. How do you lend money then?

And why would a bank want to hold your deposit or pay you interest?

[girl gone mad]

4. Sometimes it helps to read the article.

A scribd file of the bill is embedded.

The bill does not ban lending or charging interest on loans.

[dkf]

5. But you need money to loan. That used to be deposits.

It seems to cut traditional banks out of the equation and go straight to investment banking. Also, straight to the MBS market. And why would a bank want to hold your assets and execute your transactions? It sounds like they are all being turned into visa where they have to charge by transaction.

[girl gone mad]

6. Banks can still loan out deposits..

it just ends lending and levering up transactional accounts. They could charge fees for these types of accounts, like they did in the 80s. Not the end of the banking system, by any means.

[dkf]

8. No they can't loan out deposits...

"It would absolutely bar the use of depositor reserves for any lending purpose whatsoever - that is, if you deposited funds into a transaction account (any sort of "demand" account) the bank would have to hold the funds as an actual custodian with fiduciary requirements for performance.  Other than by direct and punishable fraud, depositor losses would instantly become impossible."

Funds would have to be borrowed from the Treasury, based on what I have no idea.

[girl gone mad]

9. Maybe look up the definition of depositor's "reserves"..

and study up on the fundamentals of modern banking and fractional reserve lending.

Modern banks create money out of thin air. This bill primarily seeks to give the power of money creation back to the government, where it belongs.

[dkf]

10. Yes yes, the money multiplier effect...

I'm just saying that it has implications on access to funding and free checking.

[demandTheGoodLife.co]

7. current banking is an archaic system that must go

This plan would go a long way to improving banking. But it should go further. It should eliminate interest because interest is the NUMBER ONE expense in your life.

Instead of having government create new money and spend it into circulation, they should use the central bank to give citizens interest free loans.

Computers have made banks obsolete. Since money is digital, digital credit should be as cheap as digital mail: free.

Since money is digital, and no longer physical like gold or silver, it means it requires no labor, no energy and no materials to produce. You can produce an unlimited amount of digital money for free.

And since we can produce an unlimited amount of money for free, it is completely unnecessary for anyone to have to borrow someone else's digital money and pay that person an interest fee.

When someone wants to access a line of credit, their account balance is just increased; there is nothing you need to borrow so there is no interest or fees to be paid.

Under this new system, the central bank will no longer be able to manage the rate of inflation using interest rates since nobody pays interest; instead, the loan term will be the tool the central bank uses to manage inflation. If inflation rises, instead of raising the interest rate, you just decrease the term of the loan (the amount of months new loans need to be paid back is shortened).

You will most likely spend more money on interest in your life than on any other thing you buy - you will spend more on interest than on your house, your car, your education, your healthcare, your electronics, your vacations, everything.

And what you get in return for buying the most expensive item of your life is absolutely nothing - it can all be done digitally, for free. IT IS THE BIGGEST RIP-OFF IN THE HISTORY OF COMMERCE.

Eliminating interest will eliminate hundreds of thousands of dollars that you currently waste on interest expenses. It will significantly reduce your cost of living and cut your monthly payment for housing in half.

[Statistical]

12. "You can produce an unlimited amount of digital money for free."

Sure with an infinite amount of inflation.

You are now a millionaire except bread cost $182,000 per loaf.

[westerebus]

11. Tell Dennis to stay off planes.

The proposal fits in with Monetary Sovereignty whose language should be appended to the Bill so people understand the Congress controls the indebtedness of the Nation. I'd add ending issuance of T-bills as there is no reason to increase debt should Dennis' Bill come to fruition.

The Government would pay down the National Debt with the interest earned on the loans it made. Then directly defeating the current debt owed and not adding to the debt by issuing new Treasuries. That in effect would make current Treasuries more valuable to their current holders. It would be premium paper as the dollar's value would rise.

Will it end speculation? No. Will commodities lower? Not as long as there is demand and shortages.

Will it secure SS? Yes. The Congress would directly fund SS and end the idea there is no mechanism to fund SS other than raising FICA or extending age limits or reducing benefits. The stability clause would allow such a mechanism.

It could provide consolidation of revenue funding to provide Universal Medicare for every American. FICA would be the national health care payment plan. Revenue neutral and not a new tax.

Stabilizes the economy. Check

Eliminates national debt. Check

Puts real controls on banks. Check

Makes SS funding secure. Check

Puts Universal Medicare on the table. Check

Excuse me, Mr President, could I have a word with you?

[upi402]

13. Kucinich is a real Democrat

I hope he is allowed to play in the Reindeer games next time.

[howaboutme]

14. Didn't JFK consider something like that? - NT