November 1, 2020
Representative Rashida Tlaib
1628 Longworth House Office Building
Washington, DC 20515
Dear Representative Tlaib,
The Alliance For Just Money thanks you for sponsoring the very creative HR 6553, the Automatic BOOST to Communities Act. It seems clear that an intention of the bill is to help real people survive the serious economic effects of the pandemic, a much-needed step at this time. We are eager to discuss the bill’s potential and its problems with you, especially the important Constitutional principle it contains, that government can and should create money in significant amounts without incurring debt.
Because the proposed coins cannot be used in commerce, but will only be deposited at the Fed, some reject the proposal as a gimmick. Ultimately what is needed is for the government to create money in the forms used in commerce, namely coins, bills, and account money. Currently about 95% of our money is account money created by banks as they make loans. This gives private banks first use of new money and all its seigniorage. According to the St. Louis Fed, $3.7 trillion of new money was created over the past year, an extraordinary amount. The first use of all new money—whether coin, bill, or money on account—should go to meeting public needs and then filter into general circulation.
One way to do that would be to reintroduce a bill, or the essential elements of a bill, that was introduced in 2011, during the last economic downturn, called at that time the National Emergency Employment Defense Act (HR 2990). It would have transferred all national money creation from the private banks to the government.
Short of or before that, Congress could establish a National Commission of Inquiry into the monetary system, to look into the way our existing system of money creation contributes to the inability of government to respond adequately to the acute needs we face. The Commission could explore alternatives and make recommendations to Congress. Such a Commission has been proposed by the Alliance For Just Money in a Resolution enclosed with this letter.
HR6553 is a bold step to meet the country’s immediate financing needs. We urge you to continue this effort by considering a broader approach to money creation – through support of a Monetary Commission and the kind of change embodied in HR2990 of 2011. We would welcome the opportunity to talk with you, or your senior staff who will usher the bill through the Ways and Means and Finance Services committees, about these matters. In the meantime, we request your response to these questions:
1. What exactly is the legal basis under section 5112(k) of title 31 of United States Code that allows the Treasury, under authority of Congress, the ‘discretion’ to mint coins worth more than $50?
2. What is the meaning of the section of HR 6553 entitled “Supplemental Financing Securities?” Does it mean that instead of the government borrowing, the Fed will be borrowing – by issuing securities up to the amount of the coins deposited with the Fed? Is there a precedent for this?
On behalf of the Alliance For Just Money, and with hope for a future that can fulfill the aspirations of the nation’s young people for a just, sustainable, and democratic society,
John N. Howell, Secretary
Alliance For Just Money, Inc.
Alliance For Just Money Board of Directors: Lucille Eckrich, president, Bloomington, IL; John Glazer, Athens, OH; Virginia Hammon, Portland, OR; John Howell, secretary, Athens, OH; Paul Lebow, vice president, Annapolis, MD; Sue Peters, New York, NY; Mary Sanderson, De Forest, WI; Howard Switzer, Linden, TN; Steven Walsh, treasurer, Evanston, IL.
The Alliance Board sent a similar letter to each of the 11 co-sponsors of the Boost Act:
Jayapal, Pramila (WA-7)
Hastings, Alcee L. (FL-20)
Norton, Eleanor Holmes (DC-At Large)
Ocasio-Cortez, Alexandria (NY-14)
Omar, Ilhan (MN-5)
Pressley, Ayanna (MA-7)
Rush, Bobby L. (IL-1)
Schakowsky, Janice D. (IL-9)
Velazquez, Nydia M. (NY-7)
Castor, Kathy (FL-14)
Garcia, Jesus G. “Chuy” (IL-4).
We encourage Alliance members to contact them and your own Representative about Just Money Reform as the best way not only to meet our economic needs under the pandemic but also to create a just and sustainable economy and a democratic society moving forward.