[This document was sent to the U.S. Special Presidential Envoy for Climate John Kerry on February 25, 2021, accompanied with this cover letter]
By Mark Pash.
The biggest crisis in American history was in 1861. President Lincoln had to fund the Civil War. He went to Treasury Secretary Chase and his banker friends and they said that he would loan the government as much money as it wanted at a significant interest rate. The President asked why, and responded that he could print up as much as he wanted at no interest under the Constitution Article I, Section 8, and Clause 5. This right was held up later by the Courts in 1871. This was the birth of the “Greenbacks”. This money was a direct issue of the U.S. Treasury as it was stated on the currency.
This is not what we use today! We use private bank’s debt money under the operation and regulation of the Federal Reserve. Printed on the currency is not the U.S. Treasury but the Federal Reserve, a mostly private banking agency, not a Federal agency. The commercial banking system does not loan out your deposits! It creates new money and loans it out. This is how we infuse most of our money into the economy.
Now we have the biggest global crisis in World history that of Climate Change and Environmental degradation. And the current money-banking system in 2020 lent over a trillion dollars to fossil fuel companies. This is going in the opposite direction for adequate climate control. We have most of the technical solutions. Then, what is missing? It is mainly money! Therefore, we have to “Go Back to the Greenbacks” and eliminate the unsustainable, extremely skewered, private money system. Our government should not have to borrow from private bankers to infuse its own money into the economy. Today, there is no cost to create new money. Just a push of a computer key and the cost of distribution is low. The only concern we have is excess inflation, which is addressed here. Of course, the current Central Banking systems created inflation and deflation around the world causing massive human hardships. In the U.S. alone they have overseen 19 recessions and the Great Depression and Great Recession in the last 100 years.
Aim of this Paper
This paper is not a scientific one nor does it have the engineering details for accomplishing such a large task. It offers economic solutions and the reasoning and evidence for a change in our money system. These economic solutions can be adapted around the world so every country can afford to participate. It is also a job creator not destroyer. But the United States will need to be the leader!
Moving to asset-based U.S. Treasury money created without debt can result in more money supply in circulation. If the government properly creates and distributes newly created money, we can have a lot more funds to save our environment. Eliminating the interest cost of the National Debt will also make more money available for other programs. This interest will cease to be siphoned off into the private banking system for creating our money!
One of the keys of providing more money is distributing these new funds by a more diversified operation with more recipients using three more financial vehicles, not just debt. The major vehicle will be government spending or grants, the secondary vehicle is very low fixed interest, long term loans and the third would include direct investment by the government. The current banking system favors distribution to the already wealthy bank trading divisions, stock market margin accounts, loans to larger corporations, hedge funds, real estate firms and commercial mortgages. Newly created funds will be reduced in these areas but they will still have significant access to already created money. This also reduces the chances of an asset bubble collapse in these sectors.
The following is a list of specific operations solving climate change that we can implement to save our planet and how they can be funded from the new money system of “Back to the Greenbacks”. Seperately we will give you all the reasoning and evidence for monetary reform. See the enclosed paper “Reasons for Monetary Reform”.
Next time you fly into Los Angeles start looking out the window starting in Palm Springs about 100 miles out. You will see tens of thousands of large, flat roofed industrial buildings all the way to landing. Almost none of them will have solar installations on their roofs, including the government owned buildings, in the sunniest place in the country! Why? The reason is that the private owners and/or operators of these industrial buildings do not want to tie up capital in low returns when they can make their capital earn double digit returns in their own operations. Instead of the government providing tax credits and other tax incentives (affecting fiscal budgets), to stimulate solar installation, the new monetary system can provide no down, long term, tax deductible low interest loans (1%-3%). These loans do not start repayment until 30 days after the solar installation is operational. This provides a much greater incentive for owners/operators to purchase solar as there is no out of pocket costs and more importantly the payment would be substantially less than the savings on their power bills! For example: a 1%, 30-year length of the equipment loan for $100,000 would only be $377 per month. This would be substantially lower than their current power bill leaving substantial room for maintenance-upkeep. Then any extra generated power can be sold back to the power company. These loans can even be collateralized by first, second and third trust deeds on the property and/or equipment. All of these monetary operations are still approved by Congress and the President. The underwriting and loan servicing can be implemented by the current loan industry of banks, credit unions mortgage and loan brokers and loan servicing companies. After Congressional approval, some of actual oversight and implementation can be done by the States and/or their State public banks. The Federal government will have enough to do! There will be a line around the block to get these long term, low-cost loans. Congress, government agencies and these private firms, must ensure gradual implementation by limiting the total quantity of loans over time in a geographical area. This will not over-stretch the number of installers and the supply of equipment resulting in sector excess inflation or gouging. This inexpensive long term debt financing applies to wind, geothermal and other alternatives that require a payment from the end users.
Electric Automobiles & Trucks
The auto industry is still promoting and selling cars and trucks running on gas as fast as they can. This promotion can be substantially reduced by over-promoting electric vehicles. First, by having the monetary system providing 10 year 0-1% loans for individuals and businesses who trade-in their gas vehicles, starting with the oldest models, for electric ones. The loans will be underwritten, processed and serviced as they are now by dealers and loan service companies. Other banks and credit unions can also process these loans, these trade-ins will act as a down payment and will be not resold. They must be placed in salvage-recycling yards for their destruction and reuse of parts and raw materials. (Of course, this excludes classic and race cars) Low cost, long term loans will be provided to these salvage and recycling companies to expand their facilities to handle the increased demand. Second, low cost, long term loans are provided to owners to build new solar charging stations. The income from the charging process will pay back these inexpensive loans. Third, Low cost, long term loans should be provided to convert or build new domestic manufacturing facilities for electric vehicles. Fourth, a tax credit for purchasing an electric vehicle would be another incentive.
Land usage is an important environmental factor and land is generally a non-wasting asset. The Federal government can create money to purchase land to expand our coastal wetlands, National Parks, Forests and grasslands. The Federal government can also provide State and Local governments funds to purchase lands. This land purchase system can be used to sell non-protected lands which would channel money back to the Treasury assisting the control of inflation. This would be a solely government operation using private real estate brokers. Some of the newly created money can be provided to the States for the same land purchase function.
In this country much of our refrigeration units are leaking and are in need of repair or replacement. They leak polluting gas (HFC). Again, no money down, long term, low-cost loans can be provided for replacement units that are more environmentally friendly. Also, small grants can be made to equipment owners for repairs. These grants can be distributed through certified maintenance companies that repair them. Again, the distribution of these loans and grants should be spread out over time and geographic area to keep sector inflation and gauging under control.
The Airline industry has implemented many fuel-saving devices and programs over the decades. This industry can be aided by the addition of no money down, low-cost, long-term loans for funding new equipment or even plane replacements.
Water & Agriculture
There are many areas in this country and around the globe with severe water shortages that are still using regular irrigation and not micro-drip irrigation. This computerized, low-tech conservation system can be acquired using the same no money down, low-cost, long term loans. The savings on their water bills will cover the loan payment and maintenance with a profit left over. Therefore, every farmer, large and small, will be in line for this loan. New upgraded computer systems that provide environmental farming input can also be funded by these loans. Grants can used to replace all the lead water piping that is still used in our country.
Research & Development
Research and Development has mainly been funded out of straight grants or by private capital. The increase in monies available can provide more grants especially in the area of carbon storage. The development of an efficient system can aid in reducing effects of climate change.
No money down, low-cost, long term loans can provide the incentives for many companies, mainly manufacturing, to convert or replace their old, polluting facilities to cleaner ones. These loans will be environmentally underwritten with close oversight by the underwriters and government. They can be implemented by brokers and banks using environmental engineers.
Environmental Firms & Trees
In addition to loans, the government can create new money for direct investment into environmental companies through the monetary system. The reason we use equity (stock) investment rather than loans is that projects do not have enough initial cash flow to support the debt service (payments). They have longer term potential to return profits upon sale. Those sale proceeds are sent back to the Treasury to keep inflation in check rather than some nebulous tax return on profits. A perfect environmental example is tree farming. There is no cash flow until the trees are harvested usually after 7 years. Most of these investments would be in partnership with private capital and management to expand the environmental projects such as trees. The government would be treated the same as any other non-managerial investor. Another example would be fish farming to help replenish our oceans. Ocean clean ups would be a spending-grant process of funding. This is not a totally new concept. It is similar to the Small Business Innovation Research Program (SBIR) and Israel’s sovereign investment fund.
You want to use inexpensive, longer term loans and investing besides government spending-grants, because these financial vehicles have a monthly pay back of principle to the Treasury. This takes money automatically out of circulation controlling inflation. Thus, it allows more new money to be used to solve our environmental problems. Environmental scientists and engineers have and will come up with more ideas but it will be up to Congress and the President to decide what to implement. The only consideration is the amount of newly created funds per year to keep overall and sector inflation in check!
People are very reluctant to change. Money is an excellent motivator to overcome this emotion. Even non-believers of climate change will implement important changes if they have access to grants or low-cost money. We are not moving fast enough to overcome the destruction of the environment. Therefore, true monetary reform is a key motivator. It is also a solution for funding additional income to reduce inequality, fund more health coverage for the uninsured and under-insured, fund pre-school and college for many and provide nutrition (food stamps) for all who need them. Thereby creating a vibrant economy by having enough quality customers, clients and consumers. It is by far the key economic issue of our time!
Money is so opaque and macro-economically important that we have listed books and website addresses to provide overwhelming evidence that we have to end debt-created money.
Together we can change our money system, and thereby change the world. We can forge a practical path toward what the framers of the U.S. constitution expressed in the preamble: “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”
The American Monetary Institute (AMI) is a publicly supported charity, founded in 1996 to present the results of our research in a manner understandable by the average citizen; leading to monetary reforms which bring forth a greater level of economic justice and a more equitable and efficient functioning of government.
We can have a money system in which our government uses the democratic process established by our Constitution to create our money supply as an asset to the economy and society, rather than as debt to the private bankers. Then we will have the money and the power to achieve the goals set forth in our Constitution.
Greider, William. 1987. The Secrets of the Temple: How the Federal Reserve Runs the Country. New York: Simon & Schuster (Amazon)
This book is the best and easiest to read when it comes to providing a description of the U.S. monetary history up to 1983. He teaches you how the current system works within the description of our history. It provides no solutions.
Zarlenga, Stephen. 2002. The Lost Science of Money. The Mythology of Money – the Story of Power. Valatie, NY: American Monetary Institute (Order at AMI)
This book is the ultimate in the global history and definition of money. It has the solution of true monetary reform. He was co-founder of the educational nonprofit – American Monetary Institute (AMI). You can also attend the educational conference for extensive input.
Hudson, Michael. 2014. The Bubble and Beyond: Fictitious Capital, Debt Deflation and Global Crisis. Dresden, Germany: ISLET Press (Amazon)
This book and his more recent book, Killing the Host (Amazon), present the best description both mathematically and economically why are current debt money system is unsustainable and biased.
Huber, Joseph. 2017. Sovereign Money. Beyond Reserve Banking. London: Palgrave Macmillan (Amazon)
This is the book for academics and economists who are interested in researching monetary reform. His website is www.sovereignmoney.eu.
Hammon, Virginia. 2018. US Money: What is it? Why We Must Change. How We Can. Portland: Great Democracy Media (Shop at HWP)
This book is a great description of money systems and contains the negative social effects of our current money system. Her website is: HowWePay.us
Brown, Ellen Hodgson. 2007. The Web of Debt: The Shocking Truth about Our Money System and How We Can Break Free. Baton Rouge: Third Millennium Press (Amazon)
This is an excellent and easy read to help readers understand our current monetary system. But it provides an incomplete solution to help our environment through joining the current debt money system of public banking.
Jackson, Andrew & Dyson, Ben. 2012. Modernising Money: Why Our Monetary System Is Broken And How It Can Be Fixed. London: Positive Money (Amazon)
This is a wonderful descriptive book on the UK money system, with many creative ideas for monetary reform. Their nonprofit: Positive Money’s website is: www.positivemoney.uk
Kumhof, Michael & Benes, Jaromir. 2012. “The Chicago Plan Revisited.” IMF Working Papers 12/202. Washington: International Monetary Fund (Paper here)
Depicts a model of monetary reform that can be successfully implemented without excess inflation.