Monetary Policy Implementation

If money is to serve the Nation, it must be seen to be in balance with the legitimate economic activity or work generated by the people.

But the Money supply cannot be after the fact, for hindsight is always 20/20.  It needs to be available before the economic activity is to occur or it simply won’t occur. In one sense, money is the proverbial chicken, in the “what comes first…” question and… in another sense, it is the “egg” or the financial result .

This paper is based on the principle that the government’s major role following moral leadership, is to generate a climate of fiscal responsibility and trust, by enlisting the people to create statistics which the government then uses to issue and control sufficient public currency to permit the nation to live.   This successful partnership between people and government, permits the exchange of goods and services, the harvesting of natural resources including farming, the construction of needed infrastructure as well as the supply of all public services that cannot reasonably be generated by private enterprise. The result is mutual respect between government and people and also among all Second Republic nations that use the same Statistical Projection Method of issuance and control of their Public Money supply.

To accomplish this, the government must first encourage the development of the art of Business Projection in all areas of the economy, as well as foster the Statistics Discipline required to collect the data necessary to justify the volume of money needed in the economy for the next fiscal period. Without cooperation from all sectors of the economy, the money supply may be guesswork – insufficient for the work of the nation or too much to justify. The former curbs and inhibits the legitimate financial ambitions of the people, and the latter fosters instability and skepticism from trading nations with whom we do business. This is quickly evidenced in the currency markets where too much money in circulation causes other nations to devalue our currency relative to theirs, while within the nation, it brings about higher prices or inflation.

The issue here is Trust, because the lifeblood of a nation is the money it uses to earn a living. It cannot function financially or socially unless it can trust its money and those in government who are responsible for its creation or disappearance at precise times and for well defined reasons.

Prior to the founding of the United States, the colonies had tried to issue paper scrip with disastrous results. With no computer technology at hand, the governments of the colonies had no means to determine how much money was enough and so they just created more and more. That blind guesswork of course resulted in run-a-way inflation and great harm. So, when the founding fathers thought on the solution, they resolved to use gold and silver coins as a physically acquired measure of value. Under the circumstances they could choose no better method.

But before long, the bankers began to agitate for a central bank that they argued would properly manage a private money supply creating more liquidity, stability and confidence. Their argument was true in one sense because a central bank could be a long term institution which would be in existence through successive administrations.

However the bankers were not volunteering their services for free. Their control of currency would grant them creative opportunities to expand and contract a fiat money system, to their private advantage.  We have come to know this expansion and contraction process erroneously as the “business cycle”.  When they finally achieved their goal in 1913 with the founding of the Federal Reserve, they also threw a cloak of secrecy and complexity over their dealings so that they could work behind the scenes and above each succeeding administration.  These private bankers have misused their monopoly over the creation of money as a means to buy and control the democratically elected leaders as well as everything else they need including the press and the educational system. The fractional reserve banking system is their silver bullet. The use of it has legitimized the creation of private money on terms that exponentially expand the money supply causing inflation, and the excuse for the graduated income tax system as an attempt to control it.

We accept inflation, defined as the unavoidable rise in prices, as a fact of life, but it need not exist at all.  In this Monetary Model which eliminates privately created money, there is no allowance for inflation caused by the fractional reserve system. Fractional reserve banking has made inflation an unnecessary institution which should be eradicated. Gain through usury and inflation obscures the real work economy creating a whole class of persons whose sole vocation is plunder and parasitical financial activity, the cost of which is ultimately borne by those who work.

Finally the decision to pursue a system of  sovereign money creation revolves around the subject of trust. Since 1694, with the founding of the Bank of England , we have had bankers telling us that they could be trusted and  the mess we have now is the result : immoral concentrations of wealth and power in the  first world with  the remainder of the globe suffering exploitation and lost hope because of them. This is the stark reality of trusting your friendly banker and this is what has to change if mankind is to aspire to equality of opportunity among nations.

We have to learn to trust what we can control. Tomorrow, sovereign nations with a whole new generation of bold leaders, will have the computing tools and the knowledge to transparently and responsibly create and control their nations money supply under the watchful eye of the people who have elected them.

To accomplish this very essential task, statistics must be continually updated in the following categories:

1. Population: Every man woman and child within a nation by virtue of life requires food clothing and housing to live. These items require expenditures, the money for which must be in the money supply. Therefore month by month estimates that are derived from a census and projected forward from sources that recalculate on the basis of births and deaths and net immigration must find their way mathematically to the programming that determines a dollar number required for the population to exist within the nations borders.
2. Maintenance of Public Infrastructure: Bridges, tunnels, highways, publicly owned transportation equipment, government buildings, equipment for public utilities everything you can think of that exists and must continue to function in order to maintain and existing service must be maintained month after month. In order to contribute to the statistics that determine the volume of money in existence, persons in charge of this infrastructure must generate a reasonable $ figure that would suffice to maintain its use. This is not a budget, so this figure is not to be construed as money forthcoming. The budget to run the infrastructure is the result, but the figures produced for this purpose are the raw data to ensure that sufficient money is in existence to meet the budget needs. The raw material for the projections therefore is never static. Continual reevaluation with the goal in mind, will produce better and better estimates which produce more transparent totals justifying trust and respect for the Public Money supply.
3. New Public Infrastructure creation: Any major project that comes into existence requires money – lots of it. This requirement can be foreseen and can be included in the projections. Because physical work is changing the landscape or creating something new and useful, the value of the national assets are increased. Public money sovereignly created, is called into existence expressly for the purpose. There is no inflation. Every dollar is paying for labor or materials of one kind or another. When the project is completed (in this example a highway), new businesses spring up from private savings along the route; Tolls claw back some of the cost; taxes from new businesses and also taxes on the incomes that were earned to build the road return some of the money to public coffers to be recycled in new projects or to pass out of existence. In the end the value of the nation is considerably higher because of the new infrastructure, and this in itself justifies more money in the economy. And…… assuming for the moment a fixed population, more money in circulation per capita. This is not inflationary. The nation is worth more as a result of the creativity of the people.
4. New Private Industrial Infrastructure: E.g., a new factory to produce cars. If a foreign company brings the money in, it is added to the money supply as investment in the nation. Wages are paid and materials are purchased until all is in readiness for production. Tax breaks for a period of time may be offered in view of the fact that no money creation was necessary.
5. Private Savings and Investment: If the project is to be undertaken by a national person, savings may be used and public money creation may take place to fund the balance of the project.  This would be brought about by some sort of banking service, but this time, because the ownership and profits are in private hands, capital repayment will be a factor. The net result is the same. The factory becomes a national asset because it exists and functions profitably inside the nation producing incomes, profits, taxes and hopefully an inflow of foreign exchange from the sale of the product. The capital loaned  and repaid may then be recycled or retired depending on the requirements calculated in the current projection.
6. Food Production: A nation needs to feed itself. Farms require capital each year to plant fertilize and harvest. The sale of food nationally or to foreign markets provides a business equation which either makes a profit or loss. The seasonal capital requirements to enable the farming industry must be considered in the money supply calculations.
7. Private Initiative: Consideration does not mean the money is borrowed from government. Government will not interfere or contribute to free enterprise when there is sufficient capital and a profit motivation for farmers to use their own money.  Government must just be certain that sufficient money exists in the economy to undertake the nation’s food production.
8. Mining, Forestry, Fishing and other industries: There will be the similar consideration toward the Mining, Forestry and Fishing industries. Of course government must be sensitive to the long term issues which are concerned with sustainable harvesting of any natural resource. Royalties may also be appropriate when and industry is licensed by government to harvest a public resource thereby benefitting all of the nation.
9. Public Service Agents and Industries: We need to consider all of the services and institutions that contribute to the fabric of a nation but cannot reasonably be expected to make a profit. What funds do they need to either maintain or further develop their service? What responsibilities should the government shoulder on behalf of the people and what can the nation afford in public services?  Reasonable projections must be advanced for Defense, Health Care, Public Housing, Education and Culture.

10.  Supplementary Resources: Finally, consideration must be given to all the resources that would offset the need to create new money: e.g., Private Savings, Taxes, Royalties, Insurance Indemnities, Trade Surpluses all have a bearing on the calculations necessary to determine a Money Supply Figure that meets all of the requirements for the nation to thrive and meet its goals while earning the trust  and respect of its neighbors for its record of fiscal responsibility.

For the first time in history and thanks to modern computerized record-keeping technologies, it is physically possible to ask for and compile statistics in order to produce these projections.  Modern businesses and even the family unit must engage in careful forecasting under the present inflationary money system, so making this request should be nothing new. It should even be easier to accomplish as the irresponsible financial instruments and the predators that bring them into the present equation are removed from a new Monetary Model. Banks will not practice fractional lending. The Economy will be based on meaningful work that contributes to the fiscal health of  the nation.

Why hasn’t this been tried? About all I can find for an answer is that banks and their fractional reserve privileges have become so entrenched and so powerful that they have been able to buy off or destroy any educated opposition to the monopoly they enjoy. The majority do not raise the awkward questions because they have never known anything different. But what I am suggesting is not rocket science. It is possible to present a new model to millions of people with present technology Careful record keeping, producing  increasingly accurate projections, resulting in  predictable profits, and  an efficient money supply is conceivable while exposing  the banking predators who have “weaseled” their way into a place of greedy privilege to cause incalculable harm to many generations.

As elections follow the calendar in nation after nation, we have to recognize that the present half-breed Private and Public Money System that we live with is a powerful and demonic menace who has discovered that nothing in this world need be feared. Absolutely no one can exist independent of the banking cartel’s present influence. From the plush neighborhoods and business districts of the western world  to the squalor of the third world, most everyone can be bought,  and those that will not be bought will meet with circumstances  that  remove them from the scene.

This paper has been written to assure you that The Second Republic Movement can advocate a thinking alternative to the world, which may in time succeed if enough individuals grasp the reason for change and then carefully consider how simply and effectively every arm of a society can function outside the present system of plunder.

Philip Jarman
Costa Rica
27 March 2011