Karl Denninger Endorses the National Employment Emergency Defense Act

  By Zarathustra | December 29, 2010 - 17:00 |

Twelve days ago, left-wing, liberal, progressive, Representative Dennis Kucinich (D-OH10), proposed the most sweeping changes in monetary policy in over seventy years by introducing H.R. 6550, the National Employment Emergency Defense (NEED) Act of 2010. Four days later, right-wing, Tea Party, conservative stock trader, Karl Denninger, posted a forceful endorsement of the bill.

Denninger wrote, “[this] bill would end the process of money issuance … as a debt instrument” and “would thus restore actual ‘lawful money’.”

The bill calls upon the Treasury to issue and spend United States Money into circulation with “a requirement that their operation be neither inflationary nor deflationary.”

Writes Denninger, “the precise mandate that is required – that United States Money maintain its purchasing power.”

Denninger calls upon Representative Ron Paul (R-TX14), Senator elect Rand Paul (R-KY) and other Tea Party members in Congress to join Mr. Kucinich in making sure that the bill is immediately reintroduced in the new Congress suggesting that their failure to do so would expose them as “frauds” who only claim to demand sound and lawful money.

“Dennis Kucinich: Delete the Fed” by Karl Denninger.

H.R. 6550: National Emergency Employment Defense Act of 2010

Written by: Zarathustra on December 29, 2010.

About Zarathustra

BS Business Management (magna cum laude), Park University, Parkville, MO (1992) AS Medical Laboratory Technology, Community College of the Air Force (1987)
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  • http://overthepeak.com/wordpress/ Mystic

    This is one of those subjects that I just don’t seem to get my mind round.

    This `issuing of money thing`.
    Do we not have two main points of interest here~?
    The Government, and the Non-Government money issuing types (banks etc.).

    There must be a rule change put in place for Fed/Government.
    And, a separate rule change for the Non Gov Money Issuers.
    ~?~

    • Wvolson

      It is Amazing that the Discussion is getting louder!!!Tough to put this Cat back in the Bag!

    • Anonymous

      I think you have hit upon something that I really struggle to communicate. There seem to be these two schools of thought. One side, usually identified as liberal, progressive and/or socialist, suggests that the government should have a monopoly on the issue of money (credit) and the other, usually described as neo-liberal, conservative and/or capitalist, that government should not be involved in the issue of money (credit).

      Not only do I believe that both government and the private sector can and should be involved in the issue of money (credit), but I believe they both MUST if we are to have a healthy medium of exchange in the marketplace.

      This is very much like the silver and gold argument. I have no objection to trading coins made out of soft, shiny corrosion-resistant metal for goods and services; my objection is to the notion that this metal MUST be the basis for ALL medium of exchange. Not only because it is mathematically impossible to do so, but because it does exactly what most silver and gold enthusiasts object to most, it compels others to accept silver and gold as money by fiat when others may wish to do something else.

      So the NEED Act would abolish the monopoly granted to a private, fractional reserve banking system to issue money (credit) and set the We the People through our government up with our own monopoly on the issue of money (credit) effectively prohibiting the private sector from issuing money (credit).

      This is kind of like the public school model, I don’t want to abolish public schools in favor of private schools, but I don’t want to do anything to discourage private education. Just as I think there will always be a great demand for public education and a small demand for private education, I think money (credit) could be the same way. Just like I think innovation in private education could keep the quality of public education higher, I think competition with private sector money (credit) could keep government issued money (credit) stronger.

      Yes, I think the bill should make provision for private sector issues of money and explain how the government money (credit) and private money (credit) would work together. That’s what it means to be social and liberal, to see how working together can benefit us all collectively without robbing dissenting individuals and groups of their liberty.

      Also, enshrining private money (credit) in law would reduce the risk of consumer fraud by private issuers.

      PS. Please forgive the repeated “money (credit)” thing; I am trying to make a point with it. If readers got the point, great; if not, try harder.

      • http://steshaw.org/ Steven Shaw

        Zarathustra, nice to see you balanced views there. Seems you would be in favour of competitive currencies.

        I do think that everyone can currently issue their own credit. For instance, a shopkeeper or barkeeper can keep tabs for people that will pay off their tab later (usually without any interest I note). Also, if I baby sit your kids, perhaps you could pay me back later by polishing my car or mowing my lawn. I guess this is a kind of barter. However, it’s not an instant exchange and so amounts to credit. This kind of credit will appear on any of the official government statistics. I don’t know if that good or bad it’s just food for thought. Businesses too use this kind of credit all time. It’s generally called having an “account”. Often these accounts are to be paid at the end of the month. This kind of credit though, isn’t money AFAICT, as it isn’t a general medium of exchange. I.e. I don’t think you’d agree that I can sell your IOU-1-car-polish to my neighbour – unless perhaps I ask you or we agree on it beforehand.

        Banks don’t create this same kind of credit. Banks would not be able to operate the way that they do without it being enshrined in law. Also, their credit becomes money (by law) once it is lent into existence. The receiver can trade the IOU generally and it is legal tender (or can become legal tender by a quick visit to the cash machine). This kind if bank credit probably wouldn’t be so bad if it wasn’t money/legal-tender and was instead, it’s own special IOU in the name of the issuing bank.

        I disagree with Stephen Zarlenga at the Monetary Institute. He believes that money is brought into existence through law and that this is the only “real” money. It seems clear (from an interview I heard on YouTube) that Stephen Zarlenga believes there is some kind of spiritual crisis in relation to money. He says that the Catholics are “good” on money and the Protestants too (as well as others that he doesn’t mention – Islam?). This is merely his subjective view of things and hardly any kind of deep truth. It’s an affront to “democracy” that this institute -if it had it’s way – would force everyone to use it’s idea of “real government issued debt-free money” to e detriment of other monies/ideas.

  • bugs

    This seems to bring the control of the currency back to Congress, and from there, run a fiat currency in an honest manner. Hmmm. What’s the chances? Still, what other choice is there, for all those decent people who want nothing more than for the economy to recover, and resume growing?

    Mystic seems to be raving, trying to avoid all the obvious MMT questions that this Act sparks. More and more, economics becomes about moral issues — about the right of one generation to sell the next into a kind of bondage … just as an example. No doubt, not something that would register as ‘important’ to those who take pride in their moral insensitivity.

    We differ about money — do we forget that there are moral requirements of money? These are jettisoned when money becomes abstract, only a blip on a digital recording device, created without anyone labouring, and spent without Congressional approval. This endless printing of money only puts off the day of reckoning, and probably makes the price of atonement higher in the end.

    This particular bit of political theatre looks to me like a knowledgeable Washington pro trying to get ahead of the curve. This Act will take control of the currency away from Bernanke and the Fed and prepares the way for spending to be controlled by Congress — always dangerous. They mean to restore the faith in the dollar — that’s implicit in the promise to neither inflate or deflate. The legislation would commit the USA to a stable dollar.

    Think pragmatism. This is probably a good first step, even if it is radical, and transitional. ANY step off the treadmill, at this point, will result in a depression in the USA, which will likely spread. The only gain — better sooner than later.

    • Anonymous

      I don’t see why enacting this bill would cause a depression. The principle cause of recessions and depressions is contraction of credit in an economy that wants or needs to grow. In our case, the math associated with repaying money (credit) burdened by interest for the last 70 years has finally created more demand for money to repay debt that economic growth can support.

      The fear must therefore be that business will seek money for productive use and fail to find it? But if the wealthiest few are no longer able to put their money into government debt instruments, where will they put it? The answer is that they will have to lend it or invest it in productive activies.

      The alleged benefit of fractional reserve lending is its scalability. This bill makes a provision for commercial banks to borrow from the monetary authority at a low interest rate and relend at a higher interest rate. The banks will always do better when they lend form savings and bank assets, but they will do ok borrowing from the monetary authority. The difference is that We the People will get a dividend from the expanding of the money supply for this purpose instead of just handing it all over to the bankers.

      I don’t see any reason why this bill would lead to contraction of the money supply, deflation and recession or depression.

    • http://steshaw.org/ Steven Shaw

      Economics becomes more about moral issues? That is an interesting statement. I tend to agree but am would like you and other readers to wonder what economics _used_ to be about and what, if anything, has changed.

      My take is that economics has never been a science. The practioners are ideologues – whether they chose their particular ideology or were taught it. Since many economists inform govt policy, it seems that they are mostly a political class – social reformers (or conservatives). That’s ok, it’s not evil in and of itself. The trouble comes because regular folks think these guys are independent thinkers and scientsists. Economics if often taught alongside law, political theory and philosophy. All these areas of thought are subjective and debatable.

      Also something to consider, is that when things become mostly about ethics and morality then they are more and more about _law_. The eternal question of what is right and what is wrong. Big problem – we (all humans) cannot decide what’s right. Rather, perhaps we can decide individually (though even then we change our minds frequently enough). However, we cannot reach a consensus. We cannot even hope to reach a consensus.

      This problem of lack of consensus on law is why it seems to me that it cannot work (that is be fair and ethical) for a few to make decisions for the many. Governments are the law makers. Even without outright corruption this cannot work. It is hopeless. Most folks have accepted representative democracy. This is hopeless too if there must be _one_ law. Even with exemplary representation (where all have a representative who shares their views), one still cannot hope to reach a consensus because the views differ! Our democracies are much worst. Who has a representative that shares their views? Who has spoken to their representative recently? More to the point, which representatives have contacted you recently to see what you think?

  • http://steshaw.org/ Steven Shaw

    Surely Denninger understands that the Pauls could not stand behind this Act. They believe that gold and silver should be money. What’s Karl trying to accomplish here? This is completely disingenuous. Seems that he is trying to discredit the Pauls in the eyes of those who are ignorant of the position?