The GREENBACK RENEWAL ACT of 2012
Whereas, the US national debt has been growing exponentially at about 3% per year to an alarming $16
trillion with no end in sight;
Whereas, the interest payments on the national debt have been growing at the same rate to
approximately $0.5 trillion per year;
Whereas, the unemployment rate has remained above 8% for the last four years since the 2008 crash;
Whereas, the budget deficits have remained high for the last decade, and above $1 trillion for the last
Whereas, Abraham Lincoln’s greenback money issues were declared constitutional by the Supreme Court
and circulated successfully for over 100 years;
Whereas, the Central Bank of Canada successfully issued government money debt-free from its opening in
March 1935 until it mistakenly switched to government funding from private banks in 1975;
Whereas, the Island of Guernsey has issued debt-free money for its economy successfully for almost 200
years, which circulates in parallel with British pounds;
Whereas, $3 billion in US Notes were authorized by the Thomas Amendment to the Agricultural
Adjustment Act of 1933, but were never issued;
Therefore, in order to prevent sequestration budget cuts, avoid a national debt default, to bring
unemployment down rapidly, and to put the American economy on a stable path to debt free status with
full employment and stable prices, it is resolved as follows:
Title I: Government Money Creation
Section (a) The US government shall resume the practice of issuing its own money, debt and interest free,
as President Abraham Lincoln did to win the Civil War with paper money called “greenback” notes. The
term US Money shall be used to refer to government issued paper money, called US Notes, and their
electronic equivalents, called US Bank Deposits.
Section (b) Government issued money will circulate through the economy alongside of bank issued money
(Federal Reserve Notes and Federal Reserve Bank Credit) and shall be legal tender for all debts, public and
private. In all matters of payment, the value of a US Note shall be equal to the value of Federal Reserve
Note of the same denomination, and a dollar of US Bank Deposit money (electronic) shall be the same
value as a dollar of Federal Reserve Bank Credit money. Whether in paper or electronic form, a dollar of
one shall be equivalent to a dollar of the other.
Section (c) The backing for this money shall be the real output of the economy, and hence as a general
rule, the money supply shall increase at a rate that parallels the growth in the real output of the economy,
with exceptions to be determined by variations in money velocity and other relevant macroeconomic
Title II: Deficit Reduction and cancellation of sequestration budget cuts
Section (a): Starting on the first day of the quarter beginning after passage of this act, (i.e. either Jan 1,
Apr 1, July 1, or Oct 1), and continuing for a period of 10 years, the quarterly budget deficits will be
partially financed by US Money, to be issued INSTEAD OF US Treasury Bonds, at the rate of $100 billion
per quarter (roughly $1.54 billion per workday). Hence annual deficits will be reduced by $400 billion per
year or $4 trillion in ten years’ time.
Section (b): New US Money issues (backed by past or future economic output) will be itemized in the
federal budget as income to be totaled with tax receipts, and included in budget legislation to be
submitted and approved by Congress.
Section (c): Estimated deficit (i.e. borrowing) reduction during the ten years will be $400 billion per year.
Hence the deficit reduction requirements of the Budget Control Act of 2011 will be met in about four
years instead of ten years. Hence the sequestration budget cuts scheduled to begin on Jan 1, 2013 are
Title III: Debt Reduction Plan for a debt-free nation
Section (a) All US Bonds in possession for the Federal Reserve Banks (approximately $1.6 trillion) shall be
replaced with US Money through the purchase of US Bonds held in the portfolios of the various Federal
Section (b) One fourth of the US bonds owned by the Fed (approximately $0.4 Billion) shall be replaced
with US Money during each quarter of the first year following passage of this act. Hence, all US Treasury
bonds will be replaced with US Money at the end of the year following passage of this act, thus reducing
the National Debt by approximately $1.6 trillion in the first year.
Section (c) Federal Reserve Notes shall be retired gradually as US Notes are issued into circulation in such
a way that total currency held by the non-bank public will grow at a rate appropriate for the needs of
commerce. Federal Reserve Notes held by banks as vault cash will be replaced with US Notes during the
first year following passage of this act.
Section (d) Upon passage of this act, the Federal Reserve Banks will cease and desist from further
purchases of US Bonds. Hence after the first year following the commencement of this act is completed,
Federal Reserve Bank share of the national debt shall be, and shall remain, 0%.
Section (e) Non-Federal Reserve debt and interest on the debt shall be paid off with existing or new US
Money as provided for in the annual budget.
Section (f) Loan repayments from foreign entities to the Federal Reserve, including those reported in
Table 8 on page 131 of GAO-11-696 and those based on subsequent loans to foreign entities, being
outside the purview of the mandates for the Federal Reserve System, including both principal and
interest, shall be transferred to the US Treasury account on a daily basis as received from the foreign
debtors. The Federal Reserve shall cease and desist from future loans to foreign entities, except as
approved by Congress.
Title IV: Federal Reserve Audits
Section (a) The General Accounting Office shall conduct annual audits of the Federal Reserve System,
excluding the Federal Open Market Committee and the Federal Advisory Board;
Section (b) GAO audit reports shall be submitted to Congress once a year;
Section (c) The first audit report submitted based on this legislation shall include
i. a complete accounting of the stock holders of the Federal Reserve Banks, including names and
contact information for each together with their shareholdings;
ii. a complete accounting of the origin and disposition of funds mentioned in GAO-11-696 on
page 131 in Table 8 (Institutions with Largest Total Transaction Amounts [not Term-Adjusted] across
Broad-Based Emergency Programs, December 1, 2007 through July 21, 2010);
iii. a complete accounting of Federal Reserve Surplus accounts held domestically and
internationally. This legislation to provides for return to the Treasury Department of Surplus balances
held in foreign accounts or balances in excess of levels deemed prudent for the Fed;
iv. a complete description of all macroeconomic models used by the Fed to perform policy
analyses; copies of software and documentation shall be made available to the Monetary Authority
provided for in Title V of this act.
Title V: Monetary Authority
Section (a) In order to coordinate government issued money with bank created money to achieve
monetary growth rates consistent with the triple mandate (full employment with stable prices and low
interest rates), a new Monetary Authority will be created, to include:
a. Chair, House Budget Committee
b. Chair, House Financial Services Committee
c. Chair and Ranking Member, Senate Finance Committee
d. Chair and Ranking Member, Senate Budget, Housing and Urban Affairs
e. Chair and Vice Chair, Joint Economic Committee
f. Director, Congressional Budget Committee
ii. COUNCIL OF ECONOMIC ADVISORS
a. Chair, Chief Economist, and Director of Macroeconomic Forecasting
iii. OFFICE OF MANAGEMENT AND BUDGET
a. Deputy Director for Management
iv. TREASURY DEPARTMENT
a. Secretary and Comptroller of Currency
v. FEDERAL RESERVE SYSTEM
a. Chair, Federal Reserve Board
b. President, Federal Reserve Bank of New York
c. Director, Division of Research and Statistics
Section (b) The committee members listed above shall, within 90 days of the enactment of this legislation,
choose an independent chairperson who will be independent of government and banking industry
involvements, both prior to and during his/her term of office, which shall be for six (6) years. Selected
chairperson shall be subject to review and approval by the Senate.
Section (c) Staff and consultants may be hired as needed to carry out administrative functions and policy
analyses related to monetary policy decisions.
Title VI: Quarterly target updates
The Monetary Authority shall prepare quarterly schedules of monetary aggregate targets, US Money
issues, and high powered money reserve requirements (separately for checking and savings accounts) for
each fiscal year, subject to approval of Congress. These shall be developed using the best macroeconomic
computer models available at the time. Interest rate policy shall remain in the hands of the Federal
Reserve Board to be implemented through the Federal Reserve System.
Title VII: Special Inspector General
Due to the recent law suit by Spire Law Group pertaining to “Major Banks, Governmental Officials and
Their Comrade Capitalists Targets of Spire Law Group, LLP's Racketeering and Money Laundering Lawsuit
Seeking Return of $43 Trillion to the United States Treasury,” and in light of Phil Schneider’s videotaped
reports to the effect that Black Budget Ops used in part for underground military bases are in excess of $1
trillion every two years, a SIG shall be appointed (having appropriate clearances) to delve into the matters
of black budgets, money laundering, and the possibility of “excess” surplus accounts maintained by the
Federal Reserve System. Money’s improperly expropriated or misallocated shall be returned to the US
Title II example.
Supposing the projected annual budget deficit is $1.2 Trillion; then the deficit to be financed in each
quarter would be about $300 Billion. If $100 billion of this is created as new green money, then the
amount borrowed will be decreased to only $200 billion, a reduction of 33.33%. US Money will be printed
in the form of US Notes or credited to the US Treasury Department account as US Bank Deposits and
spent into circulation on items provided for in the Federal Budget. Any excess in money supply growth
due to the new money created by government (that might cause inflation) can be compensated for by
appropriate open market operations and/or increases in the reserve ratio requirements imposed by the
Federal Reserve System on member banks, as determined by the Monetary Authority.
Title III example.
Purchase of about $400 billion in each quarter of the first year will eliminate government debt to the
Federal Reserve System. This will decrease the national debt by $1,600 billion, roughly 10% of the $16
trillion debt total in September 2012. The government borrowing (US Bond sales to non-Federal Reserve
Banks and the public) during the first year being $800 billion, the net reduction in the national debt during
the first year will thus be about $800 billion. Continuation of debt reduction at this rate for an additional
20 years (March, 2033) will completely eliminate the national debt and put the USA into the desirable
debt free status intended by this act. This transformation of the high powered money in the Federal
Reserve Banks will have no effect on the money supply, since the substitution of US Money for Federal
Reserve Bank Credit will be on a dollar for dollar basis.