Why We Need the NEED Act

A very important piece of legislation was recently introduced by Rep. Dennis Kucinich (D-OH). The NEED Act ("National Emergency Employment Defense") would restore the Treasury Department's power to issue debt-free money. This power was delegated in 1913 to the Federal Reserve, a semi-private organization, lamentably turning the dollar into a privatized debt-based currency.



Money issued by the Federal Reserve, because it is privatized, goes into circulation through lending (which includes purchase of government bonds). This results in ever-increasing levels of debt and eventual economic chaos. The US "debt ceiling crisis" and Europe's "sovereign debt crisis" are both attributable to debt-based currencies.

Under the NEED Act, a fully public central bank would be created within the Treasury Department. This means that the dollar, no longer privatized, would go into circulation through direct government spending. The government could then create wealth, investing in major infrastructure projects without borrowing. Thus the term debt-free currency. This could also clear the way for single payer health care, a much-needed reform that would boost the economy and create many good jobs.

The US already has a long and positive history with debt-free currency. US Treasury notes ("greenbacks") allowed Lincoln to win the Civil War. Treasury notes were issued from 1862 through 1971, alongside Federal Reserve notes. If you have ever seen a dollar bill with a red Treasury seal instead of green, you were looking at a Treasury note. The NEED Act will resurrect debt-free Treasury notes and stamp out the debt-based Federal Reserve notes.

The most common objection to debt-free currency is that it poses a risk of inflation.  Kucinich correctly says that when new money is legitimately invested and not simply given away, there is an increase in wealth but not inflation.  In any case, the correct way to control inflation under this system is through tax policy. When inflation starts to rise tax rates would need to increase, soaking up excess currency. Conversely, during times of low inflation or deflation taxes could be reduced or suspended -- with additional currency spent into circulation by the Treasury. Ideally these tax rate adjustments should be automatic and not politicized, based on a set formula. This puts taxation in its proper role: as a control on inflation and not for revenue per se.

Now, there are those who speak of "ending the Fed" but replacing it with commodity currency (gold). This is an elitist scheme which would be far worse than what we have now -- unless you are a gold baron or bankster monopolist. So don't be taken in by goldbugs. Let them fill their vaults with glittery metal but never let them turn it into legal tender. The NEED Act is what we need to break free from the "web of debt."