In a battle of knowledge between the lawyer-politicians and the public, the people fight unarmed. An elite group dominates through legal finesse. It holds the high ground, establishing rule with nothing more than technical words written on paper and a few simple principles adopted from Lex Mercatoria, nowhere officially recorded. Its real power emanates from control of America's institutions, primarily those dealing directly with monetary and fiscal policy. Misuse of this power for its own purposes, with considerable encouragement from voters expecting to get something for nothing, led to the nation's current economic predicament. The easiest way out of this mess requires new monetary and fiscal policies. Both systems desperately need renovation.
Monetary policy controls money creation. Most of these rules have changed little since 1913 when they were first implemented. Despite the modern appearance of the buildings and shiny new computers of the nation's financial institutions, our monetary system is antiquated. Modern computers process numbers faster but do not improve the system's outdated fundamental operations.
The proposed bill, the National Economic Stabilization and Recovery Act, increases the efficiency of the monetary system and immediately eliminates part of the national debt. One way or another, that $20 trillion debt, impossible to pay, must soon be discounted. Under current economic conditions and systems' rules, this requires either general depression or hyperinflation. Both methods wipe debt off the books; both are painful processes. NESARA proposes a third method. By changing the rules it offers an engineered solution to the problem rather than insisting on additional sacrifice from those who have little more to contribute.
Modification of the nation's monetary system starts with the definitions in Section 1 of Part I, Banking and Monetary Reform. Words often have legal definitions that differ from popular or colloquial usage. "Dollar" is a unit of measurement, specifically, a unit of weight equal to 371 and 1/4 grains. A price of ten dollars is semantically equivalent to a price of ten gallons. Gallons? Gallons of what? Practical applications demand an additional clarification. Individuals usually supply the answer through ignorance in the form of assumed knowledge. Their stock seems unlimited.
Words build sentences. Sentences frame ideas. Ideas lawfully expressed in statutes become law. Changing definitions of words after the fact corrupts the law. The lawyer-politicians make effective use of this tactic with one exception—their attacks on the U.S. Constitution. In order for it to have reasonable construction the words in the Constitution must be taken at their obvious historical meaning. In 1824 Chief Justice Marshall wrote, "As men, whose intentions require no concealment, generally employ the words which most directly and aptly express the ideas they intend to convey, the enlightened patriots who framed our constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said.
On occasion, the lawyer-politicians, attempting to evade clear constitutional intent by changing the meaning of a word, encounter someone like Justice Mahlon Pitney of the 1920 Supreme Court. He declared that "Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised."2 Definitions are important.
Misunderstanding the meaning of words used in the proposed bill might result in an incorrect interpretation of the statute's intent when it becomes law. Furthermore, all definitions must conform to those used in the Constitution. Pay close attention to the specific definitions given for "bills of credit," "eagle," "interest," "lawful," "legal," "legal-tender," "money," "payment," "seigniorage," "specie" and "tender." All of the ideas found in NESARA are based on the simple legal definitions of a few dozen words.
Section 2 of Part I lists some obvious items as likely findings of Congress. The purpose of this section is to state the relevant facts about the issue addressed and explain why a new law is needed. New laws should not be passed without serious justification because their current total volume exceeds the ability of any human to know, let alone comply with all of them.
Section 3 of Part I acknowledges congressional control of the United States monetary system. This authority originates with the Constitution, contained in its monetary powers and disabilities:
Article I, § 8, cl. 2 —The Congress shall have the Power …To borrow Money on the credit of the United States[.]
Article I, § 8, cl. 5 —The Congress shall have the Power …To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures[.]
Article I, § 8, cl. 6 —The Congress shall have the Power …To provide for the Punishment of counterfeiting the Securities and current Coin of the United States[.]
Article I, § 10, cl. 1 —No State shall …coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts…
Clearly the nation's monetary system is under the control of Congress.
In Section 4 of Part I Congress exercises its monetary power, directing the United States Treasury to produce three new kinds of currency: treasury credit-notes, standard silver coin, and standard gold coin. Treasury credit-notes "in sufficient quantity to replace all outstanding United States legal tender paper currency of every type" will become the bulk of the nation's currency. All printing of previously authorized paper currency is now prohibited. Natural circulation and the resultant wear and tear will eventually eliminate the old paper currency, predominantly Federal Reserve Notes, except those items held as collectibles. Existing gold and silver certificates will not be redeemed in specie but are still usable under their current legal tender status. The bill authorizes but does not mandate production of new silver certificates and new gold certificates that are redeemable. It also provides general specifications and limitations for their production along with remedies for failure to meet those limitations. Congress further directs the Secretary of the Treasury to begin maximum production of standard United States gold and silver coin according to the general instructions provided. A standard design unchanged for thirty years and the marking of all coins produced within a decade with the same date works to limit an excessive exchange value for the coins as collectibles and to promote their circulation.
NESARA opens the public mints to unlimited coinage. Anyone may bring gold or silver bullion to these mints to be coined. A charge, called seigniorage, keeps them self-supporting. It raises the exchange value of the standard coin to a point above the exchange value of its bullion content, another way of protecting its circulation. In addition, seigniorage makes feasible the operation of private mints in competition with government mints, assuring the efficiency of both. The Secretary of the Treasury is directed to promote and regulate such operations.
Notice that unlimited coinage at the national mints of privately owned bullion has the effect of monetizing not just U.S. owned precious metal, but the entire world supply. By honestly following this simple plan the United States will become the monetary capital of the world, its currency immediately acceptable at the published exchange-ratios anywhere on the planet. And this is accomplished at no cost to the government.
The benefits of a moral monetary system extend beyond the borders of any nation. Imagine what would have happened if the United Nations had adopted this plan and obtained its financial support from a small tax on the international trade of its members. Undoubtedly, the world today would be a far different place.
Maintaining three types of currency in simultaneous circulation requires practical solutions to two problems: One is nomenclature; the other is regulation of their exchange-ratios. The term "dollar" has been corrupted by popular use so far beyond its original constitutional meaning that its recovery seems improbable. Under these circumstances the most appropriate solution is to assign the term "dollar" or the symbol "$" without other qualifiers to designate United States Treasury credit-notes or its subdivisions such as clad token coins and subsidiary token coins of base alloys. In contrast, terminology designating standard silver coin must contain the word "silver" as a qualifier. The term "eagle" seems adequate to identify the new standard gold coin. Specific historical coins can be identified by date and description.
To avoid the problems often encountered with fixed exchange-ratios, Congress directs the Secretary of the Treasury to determine and publish the exchange-ratios between the various currencies. This method, established as a matter of law, discharges Congress's constitutional obligation to "regulate the Value thereof."
Treasury credit-notes enjoy a limited legal-tender status as a default medium of exchange. If parties to a mercantile transaction fail to specify a specific medium of exchange, such as standard silver dollars or eagles, the courts must assume they intended to use treasury credit-notes. Of course, as the issuing agent, the government must accept them in payment of all taxes and fees.
Other provisions of this section give the new coinage a distinctive shape, useful for the visually impaired, and specify the method to compensate for abrasion. NESARA also repeals all existing laws authorizing government seizure of precious metals for monetary policy purposes or prohibiting the recovery and use of the bullion content of lawful coin. This enables artists to use either the coin itself or its metal content in their works. It also encourages public enforcement of the regulation of their exchange-ratio because the coins may be melted to recover the intrinsically valuable bullion without penalty.
Section 5 of Part I identifies the Federal Reserve Act of 1913 as the Act amended by this bill, using its original provisions for the dissolution and recovery of assets of the Federal Reserve System. In effect, this section transfers all rights and ownership of whatever kind that anyone may have in the Fed, everything from the dust on its chandeliers to the spiders under its foundations, to the United States Government. It assimilates the existing Federal Reserve System into the United States Treasury as the United States Treasury Reserve System and creates a new Board of Governors. The character of this new Board is established by specifying that twelve of its thirteen officers are ordinary citizens representing their districts, a design patterned after the jury system. To encourage only conservative actions, NESARA reduces the current wide range of sometimes confusing and often conflicting objectives imposed on the existing Federal Reserve System to the single objective of maintaining a long-term, stable exchange value for the new treasury credit-notes. Every action by the new Board of Governors requires an affirmative vote by nine of its thirteen officers.
Some of the Board's prerogatives are expanded. The existing Federal Open Market Committee of the Federal Reserve System is abolished, its powers and responsibilities transferred to the new Board of Governors. Also, a special account within the United States Treasury Reserve System called the Treasury Reserve Account is established, to be administered at its sole discretion.
Section 6 of Part I renames the twelve existing private Federal Reserve Banks as Treasury Reserve Banks, now public entities. It establishes a requisition and accounting method for the Treasury to track the production and distribution of treasury credit-notes. Denominations larger than $100 are allowed, provided their circulation is not public.
All financial instruments held by the twelve United States Treasury Reserve Banks shall be delivered to the Office of the Director of the Board of Governors of the Treasury Reserve System and exchanged for treasury credit-notes from the Treasury Reserve Account at an equivalent face value of one for one. These treasury credit-notes may then be used for the ordinary operating expenses of the Treasury Reserve Banks. This will effectively eliminate or keep the necessary charges for their services very low for an extended period. It also provides one method of slowly releasing them into general circulation, preventing economic shock.
Once these funds have been expended, the Treasury Reserve Banks must charge a sufficient amount for their services to remain self-supporting. As the obligations of the United States are received in the Office of the Director of the Treasury Reserve System, they will be delivered to the Secretary of the Treasury. Appropriate action by the Secretary cancels them out of existence. Notice that all commercial instruments other than those of the United States, such as private commercial paper and the financial instruments of other nations, remain under the control of the Board of Governors of the Treasury Reserve System.
The Office of Comptroller of the Currency becomes responsible for regulation of the United States Treasury Reserve Banks. Except for an absolute prohibition against making dispersals from accounts that contain no funds, they continue normal operations. Their exact status is deliberately left as an open question.
The Comptroller of the Currency may operate them under commercial contracts or the current staff might become government employees. It is contemplated that, at some future time, their physical assets and ordinary banking functions might be sold back into the private sector. This option should be kept open.
United States Treasury Reserve Banks now operate as direct agents of the Treasury. They obtain the standard gold and silver coin from the Treasury as it becomes available. Individuals may exchange their paper currency for coin at the published ratios.
Section 7 of Part I compensates the former owners of the private Federal Reserve Banks for cancellation of their outstanding capital stock. They are paid in newly printed treasury credit-notes at the price previously fixed by law. Stock not redeemed in 90 days becomes worthless.
All government obligations, both foreign and domestic, held by the nation's commercial banks are exchanged for treasury credit-notes, on a dollar for dollar basis, with their district Treasury Reserve Banks. Ultimately, the Secretary of the Treasury cancels the U.S. obligations. The new law prohibits commercial banks from purchasing or holding the income-producing instruments of the United States, or those of other nations, effectively eliminating much of their influence on monetary policy.
These actions amount to a direct reduction of the public debt, and at virtually no cost. To see how this is accomplished, follow the money's path. The Treasury prints new money, swapping it for the government's income-producing obligations held by the old Federal Reserve System. When this system is absorbed into the Treasury, it gets that money back, essentially paying itself for its own obligations with a small printing cost.
Using this money again, the Treasury buys its income-producing obligations currently held by more than ten thousand of the nation's banks, either as fractional reserves or for their own investment accounts. The Secretary of the Treasury then cancels these government obligations, eliminating billions of dollars of public debt. By limiting commercial bank reserves to treasury credit-notes, which produce no direct income, the national economy remains largely unaffected. Most of the exchanged treasury credit-notes rest quietly in bank vaults as reserves, out of the stream of commerce. Because they are not in public circulation, they do not bid the price of consumer goods higher.
Swapping treasury credit-notes for the government's income-producing obligations is remarkably fair. It prevents taxpayer support of the banks through double use of the same funds, first as income producers for the banks and then as an expansion base for the banks' monetization of the public's debt. From now on, commercial banks must earn their living through direct service to the community, not at taxpayers' expense.
Similarly, the private debt of the American people can be reduced by astronomical amounts simply by requiring repayment of principal on secured loans before a bank begins to earn the monetization-fee and by prohibiting compounded monetization-fees. These rules would only apply to financial institutions that make secured loans on a fractional reserve basis. Such loans are nothing more than monetization of the borrower's own debt, an extension, not of bank credit, but of the national credit through the bank's license to create money.