NESARA An Age Old Idea


NESARA
The National Economic Stabilization and Recovery Act
http://www.nesara.org
__________ CONGRESS
1st Session
H. R. ________________
To amend the Federal Reserve Act of 1913, as amended; and the Internal Revenue Code of 1939, as
amended; in order to secure for the American people their unalienable right to Life, Liberty, and Property.
IN THE HOUSE OF REPRESENTATIVES
_____________________ for himself, _____________________,
_________________, _________________, _________________,
introduced the following bill; which was referred to the committee on
____________________
A BILL
To amend the Federal Reserve Act to provide for the American people a constitutionally accurate, sound,
safe, and honest medium of exchange; and,
To amend the Internal Revenue Code enacted on February 10, 1939, as amended, to abolish the collection
of revenue based on income and to establish a constitutional tax system within the classes of imposts,
excises and duties;
So that the endeavors of the American people in agriculture, industry and commerce may prosper.
TITLE: NATIONAL ECONOMIC STABILIZATION AND RECOVERY ACT
Be it enacted by the Senate and House of Representatives of the United States of America in Congress Assembled,
NESARA
The National Economic Stabilization and Recovery Act
http://www.nesara.org

Table of Contents
Purpose............................................................................................................................................4
What is wrong with America?........................................................................................................4
Can We Really “Fix” America? Can One Bill Repair The Damage? ..........................................4
Executive Summary .......................................................................................................................5
Monetary Policy Reform ................................................................................................................5
Fiscal Policy Reform.......................................................................................................................5
What NESARA Does Not Immediately Do ....................................................................................5
Detailed Summary–Part I Banking and Monetary Reform ..........................................................6
Immediate Relief and Results ........................................................................................................6
The Federal Reserve System .........................................................................................................6
Monetary Policy ..............................................................................................................................6
Banking ............................................................................................................................................7
Detailed Summary–Part II National Sales and Use Tax................................................................8
Immediate Relief and Results ........................................................................................................8
The Income Tax ...............................................................................................................................8
Sales and Use Tax ...........................................................................................................................8

Part I. Banking and Monetary Reform ...........................................................................................10
Section 1. Definitions ......................................................................................................................10
Section 2. Findings .........................................................................................................................13
Section 3. Congressional Control Of The United States Monetary System...............................14
Section 4. Provisions For United States Currency ......................................................................14
Section 5. Reformation Of The Federal Reserve System.............................................................18
Section 6. Reformation Of The Federal Reserve Banks...............................................................21
Section 7. Regulation Of Commercial Banks And Other Financial Institutions.........................22
Section 8. Excise Tax Imposed On Monetization-Fee Or Interest Income .................................24
Section 9. Regulation Of The Exchange Value Of Treasury Credit-Notes..................................25
Section 10. Authorization For Limited Bank Charters..................................................................26
Section 11. Regulation Of Postal Money Orders ..........................................................................26
Section 12. Crime Defined And Punishment Established ...........................................................27
Section 13. All Inconsistent Acts Repealed ..................................................................................27

Part II. National Sales and Use Tax.................................................................................................28
Section 1. Definitions ......................................................................................................................28
Section 2. Findings ..........................................................................................................................30
Section 3. Federal Income Tax Abolished .....................................................................................31
Section 4. Revision Of The Internal Revenue Service ..................................................................32
Section 5. National Sales And Use Tax Imposed...........................................................................32
Section 6. Liability For And Disposition Of The National Sales And Use Tax.............................34
Section 7. Compensation For Tax Policy Changes .......................................................................37
Section 8. Recovery Of Taxes, Penalty, And Interest ....................................................................37
Section 9. Crime Defined And Punishment Established ..............................................................40
Section 10. All Inconsistent Acts Repealed ...................................................................................41

Appendix A ........................................................................................................................................42

Part I. Banking and Monetary Reform Explanation and Details....................................................42

Appendix B ........................................................................................................................................54

Part II. National Sales and Use Tax Explanation and Details ........................................................54

NESARA
The National Economic Stabilization and Recovery Act
http://www.nesara.org

Appendix C .........................................................................................................................................66

Fair or Equitable? ..............................................................................................................................66
Imagine Legislation That... ................................................................................................................67
Promotes Universal Home Ownership .............................................................................................67
Terminates or Drastically Reduces Existing Mortgage Debt .........................................................69
Provides New Banking Rules That Are Equitable To All.................................................................70
Eliminates Federal Income Taxes .....................................................................................................71
Enables Single Parents to Support Their Families .........................................................................72
Restores Financial Privacy ...............................................................................................................73
Restores Inner Cities as Vital Economic Areas...............................................................................74
Improves the Balance of Trade .........................................................................................................75
Restores High-Paying Productive Jobs ...........................................................................................75
Increases Benefits to Senior Citizens ..............................................................................................76
Doubles the Average Standard of Living .........................................................................................77
Eliminates Bank Failures ..................................................................................................................78
Provides 500 Billion Dollars for Infrastructure Projects .................................................................82
Makes the Public Responsible for Currency Creation ....................................................................83
Eliminates A Trillion Dollars of Public Debt......................................................................................83
Eliminates Inflation .............................................................................................................................84
Benefits Americans with an Unprecedented Economic Boom .......................................................85
Provides a More Secure Future For All..............................................................................................85

NESARA
The National Economic Stabilization and Recovery Act
http://www.nesara.org

Purpose
• To provide monetary reform by amending the Federal Reserve Act of 1913.
• To provide fiscal reform by amending the Internal Revenue Code of 1939.
• To secure for the American people their unalienable right to Life, Liberty, and Property.

What is wrong with America?

The income gap between the rich and poor continues to widen
• Earnings for the poorest fifth of American families rose less than 1% between 1988 and 1998
• Earnings for the richest fifth of American families rose more than 15% between 1988 and 1998
• Income tax preparation costs Americans more than $225 billion and more than 5 billion hours per
year in nonproductive labor
• Social woes and problems continue to escalate
• Income tax laws continue to erode privacy rights
• Asset forfeitures continue to rise due to inequitable monetary policy and tax laws
• The American Dream is quickly disappearing
• Unsound monetary and fiscal policies encourage waste and graft
• Public and private debt continue to rise
• Current banking practices and policies no longer support the people but special interests
• Current monetary and fiscal policy provides no mechanism to stop or defeat inflation

Can We Really “Fix” America?
Can One Bill Repair The Damage?

NESARA will:
• Reduce social inequalities and problems by doubling the average standard of living
• Eliminate trillions of dollars of public and private debt
• Return control of the currency to the public
• Reduces the cost of using public currency
• Provide new banking rules that are equitable and fair to all
• Provide $500 billion of new public works projects
• Replace the income tax with a fair tax
• Improve the balance of trade problems
• Rebuild American industry with high-paying, productive jobs
• Eliminate inflation
NESARA
The National Economic Stabilization and Recovery Act
http://www.nesara.org

Executive Summary Monetary Policy Reform

• Establishes three types of United States currency: standard silver coin, standard gold coin and treasury credit-notes (restores      Constitutional currency)
• The United States Treasury buys and cancels all outstanding capital stock of the former Federal Reserve Banks
• The privately owned Federal Reserve System becomes a public entity, the United States Treasury Reserve System
• A new Board of Governors of the Treasury Reserve System uses a specific law-mandated plan to maintain and stabilize the exchange value of the currency
• The new Board assumes all powers and responsibilities of the former Federal Open Market Committee
• The existing regional Federal Reserve Banks become Treasury Reserve Banks and continue clearinghouse operations and other bank service functions under the direction of the Office of the Comptroller of the Currency
• All commercial banks must exchange their income-producing government obligations for treasury credit-notes (reduces the national debt)
• Only treasury credit-notes may be held as bank reserves
• Fundamental changes are imposed on the repayment of all outstanding fractional reserve loans on secured property—principal must be repaid before the monetizing-fee is paid (applies retroactively to existing mortgages reducing private debt)
• A progressive federal excise tax is imposed on the privilege of making commercial loans of currency for profit
• Commercial financial institutions such as credit unions are provided, subject to some restriction, with opportunities to operate with fractional reserves Fiscal Policy Reform
• Amends the existing federal income tax system
• A national retail sales (excise) tax is imposed upon non-exempt retail activities of commerce (21 categories of exemptions covering most necessities of life)
• The Internal Revenue Service is reorganized as the National Tax Service to administer the collection of the new tax

What NESARA Does Not Immediately Do

• Eliminate all payroll taxes, such as Social Security and Medicare taxes
• Eliminate constitutional excise taxes on regulated activities
• Immediately eliminate the entire national debt
• Immediately halt inflation (the economy needs some response time before inflation will disappear)

________________________________________________________________________________________________________________________________________________________







__________ CONGRESS
First Session

H. R. ________________

To amend the Federal Reserve Act of 1913, as amended; and the Internal Revenue Code of 1939, as amended; in order to secure for the American people their unalienable right to Life, Liberty, and Property.

IN THE HOUSE OF REPRESENTATIVES

_____________________ for himself, _____________________,

_________________, _________________, _________________,

introduced the following bill; which was referred to the committee on ____________________.

A BILL

To amend the Federal Reserve Act to provide for the American people a constitutionally accurate, sound, safe, and honest medium of exchange; and,

To amend the Internal Revenue Code enacted on February 10, 1939, as amended, to abolish the collection of revenue based on income and to establish a constitutional tax system within the classes of imposts, excises and duties;

So that the endeavors of the American people in agriculture, industry and commerce may prosper.

TITLE: NATIONAL ECONOMIC STABILIZATION AND RECOVERY ACT

Be it enacted by the Senate and House of Representatives of the United States of America in Congress Assembled,

 

Part I. Banking and Monetary Reform

Section 1—Definitions
Section 2—Findings
Section 3—Congressional Control of the U.S. Monetary System
Section 4—Provision for United States Currency
Section 5—Reformation of the Federal Reserve System
Section 6—Reformation of the Federal Reserve Banks
Section 7—Regulation of Commercial Banks and Other Financial Institutions
Section 8—Excise Tax Imposed on Monetization-Fee Or Interest Income
Section 9—Regulation of the Exchange Value of Treasure Credit-Notes
Section 10—Authorization for Limited Bank Charters
Section 11—Regulation of Postal Money Orders
Section 12—Crime Defined and Punishment Established
Section 13—All Inconsistent Acts Repealed

All explainations and Details are at the bottom of this page!

Part I. Banking and Monetary Reform

SECTION 1. DEFINITIONS
 

Definitions for terms used in this part are equivalent to those of the United States Constitution and the Coinage Act of 1792 or are explicitly stipulated below.

Accounting unit dollar: Token dollar; imaginary accounting unit used to denominate United States currency.

Barter: Wealth traded by direct exchange.

Bill of credit: Paper document issued as legal tender by the government on its authority and credit, redeemable in specie at a future day, and designed to circulate as money.
 

Coin: A piece of metal with its commodity type, weight and fineness stated on its face; an item of intrinsic value based in the unconditional, historical domain and often used as a medium of exchange.

Credit: Imaginary demand. Reliance on the truth or reality of something; belief; faith.

Credit-note: Paper document denominated in token dollars; United States Treasury credit-note.

Currency: That which circulates as a medium of exchange; anything that is in immediate, continuous and widespread use as money.

Custody account: a fiduciary account of general warrant deposits whereby rights to deposited funds remain vested in the depositor.

Dollar: A unit of weight, as construed in the U.S. Constitution and in the Coinage Act of 1792, equal to 371 and 1/4 grains; equivalent to 24.0566 grams or 0.77344 troy ounces.

Eagle: A gold coin containing one troy ounce of gold; an easily recognizable standard United States coin which may be used as money.

Exchange value: Instantaneous parity of a thing at the time of the exchange.

Expediency: That which is apt or suitable to an end in view.
 

Federal Reserve Note: Paper document denominated in token dollars; a token note having only exchange value; a type of U.S. currency adopted by custom and through the imposition of legal tender laws; a direct obligation of the United States; fiat money; scrip. 
 
Fiat money: Paper documents or token coins, normally issued by governments and made legal tender by fiat or statutory law, not redeemable in specie; an item of exchange value based in the conditional, future domain; accepted by the issuer as compensation for taxes, fees, duties or debts; accepted by others in anticipation of future exchanges.

Fiat: A sanction; decree.

Free market: One in which any individual may exchange their products or services by competitive bidding, open to all, without constraint.

Fungible: Goods and commodities that are identical with other goods and commodities and of the same nature.

General warrant deposits: fungible deposits allowing banks to return property like-for-like.

Gold certificate: A document certifying that a like amount of its face denomination in (gold) eagles is on deposit with and held in trust for its immediate redemption at the U.S. Treasury or at a designated agent of the U.S. Treasury.

Gold eagle: Eagle.
 

Interest: Compensation paid to a creditor for loss of the use of their own currency.

Intrinsic value: Inherent value usually related to cost of production, more properly related to marginal utility.

Irredeemable: Not convertible into specie at the pleasure of the holder; inconvertible; not terminable by payment of the principal.

Lawful: Authorized; sanctioned; not contrary to nor forbidden by law; constitutional.

Lawful money: Lawful money of account; specie: silver dollars, eagles.

Legal: Done or performed in accordance with the forms and usages of law, or in a technical manner. An Act may be legal but, if not constitutional, it is not lawful.

Legal-tender: Default medium of exchange; forced use of a government specified medium of exchange when parties to a mercantile transaction fail to specify a specific medium of exchange.

Medium of exchange: Currency; an intermediate used during trade or commerce; an expediency accepted in an exchange; that which is used as money in an exchange.

Monetization fee: Payment required for the monetization of debt; pseudo interest.

Money: A psychological creation; a concept; the mental image of that which is used as a medium of exchange.
 

Note: Certified claim on wealth; a written or printed paper acknowledging a debt and promising payment.

Payment: Discharge of an obligation or debt by delivery of value, usually lawful money. The execution and delivery of negotiable papers [instruments] is not payment unless it is accepted by the parties in that sense. (UCC § 3–410)

Scrip: Provisional certificate; evidence that the holder or bearer is entitled to receive something.

Seigniorage: The difference, which may be positive or negative, between the face value of specie (coin), silver or gold certificates, or fiat money and its commodity value in a free market.

Silver dollar: A coin containing a dollar weight—371 and 1/4 grains—of silver; an easily recognizable standard United States coin which may be used as money.

Silver certificate: A document certifying that a like amount of its face denomination in dollars of coined silver is on deposit with and held in trust for its immediate redemption at the U.S. Treasury or at a designated agent of the U.S. Treasury.

Source: Point of origin or creation.

Specie: Coin, usually of silver or gold.
 

Tender: Any offer to settle a debt or obligation with any accepted medium of exchange accompanied by means for fulfillment of that offer.

Token coin: A piece of metal intended for use as currency, issued at a nominal or face value normally far in excess of its commodity value; United States clad coins and subsidiary coins of base alloys.

Token dollar: Imaginary accounting unit dollar; debt; an artificial creation, irredeemable in specie.

Token: Something that serves as what it is not.

Treasury bill: Obligation of the U.S. Treasury for a specified term of three, six or twelve months from the date of issue, bearing no interest but sold at a discount.

Treasury bond: Paper document issued by the government as evidence of long-term indebtedness.

Treasury certificate: Obligation of the U.S. Treasury generally maturing in one year on which interest is paid by coupon.

Treasury credit-note: United States currency; paper document denominated in token dollars, designed to circulate as money, having exchange value, irredeemable, with limited legal-tender character, authorized by the Congress of the United States, issued by the U.S. Treasury bearing no interest and spent into circulation through voluntary acceptance; an obligation of the United States; fiat money.

Treasury note: Obligation of the U.S. Treasury, with a maturity of one to five years and interest paid by coupon.

Unit: Any specified or determinable amount or quantity adopted as a standard of measurement. Unity; one.

Units of Measure—Common Equivalents: Accurate to one part per million or better; included for reference only;

  • 1 pound, Troy = 373.2417216 grams;
  • 1 pound, Troy = 12 ounces, Troy;
  • 1 pound, Troy = 5,760 grains;
  • 1 ounce, Troy = 480 grains;
  • 1 grain = 0.06479891 grams

Read Explanation and Details for Section 1.

Part I. Banking and Monetary Reform

SECTION 2. FINDINGS
 

The Congress finds that —

(1) an excessive debt, both public and private, is the cause of much of this nation’s economic distress.

(2) outdated banking, monetary and fiscal practices, supported by national statutes, codes and regulations, led to the creation of a large portion of this debt.

(3) the nation’s privately owned central banks of the Federal Reserve System exercise significant control over the national economy through manipulation of monetary policy.

(4) the private character of the Federal Reserve System was recognized in the Act creating the system when Congress reserved to itself “[t]he rights to amend, alter, or repeal” the authorizing legislation. (38 Stat. 251, 275)

(5) the reservation of “[t]he right to amend, alter, or repeal” the Act establishing the Federal Reserve System displays Congressional concern to obviate any possibility that the private parties comprising the Federal Reserve System might acquire, directly in or through application of the statute, any rights, powers, privileges or immunities that the courts could later hold were constitutionally immutable.

(6) the federal courts have also recognized that, although the Federal Reserve System may perform various functions purportedly on behalf of the national government, it is not an agency of the United States. Lewis v. United States, 680 F.2d 1239, 1240 (9th Cir. 1982)

(7) the Supreme Court of the United States noted in 1896 that “National banks are instrumentalities of the Federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States.” Davis v. Elmira Savings, 161 U.S. 275

(8) the Board of Governors of the Federal Reserve System and the Federal Open Market Committee were given a mandate to “maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”

(9) the performance of the Federal Reserve System, particularly in pursuit of its mandate to “promote …stable prices and moderate long-term interest rates,” has been considerably less than satisfactory. A 1950 dollar is worth only 18 cents in 1990, losing 82 percent of its value in 40 years.

(10) changes in the economic behavior of the American people, particularly since World War II, have greatly reduced the ability of the Federal Reserve System to regulate monetary policy.

(11) Federal Reserve System regulators struggle to maintain stability, hampered by conflicting goals and grossly inadequate monetary tools.

(12) the authority of Congress to issue irredeemable, legal tender paper currency, or to delegate such a power, finds no basis in Article I, § 8, cl. 5 of the United States Constitution, which grants Congress the power “To coin Money, [and] regulate the Value thereof.”

(13) the constitutional power “To borrow Money” found in Article I, § 8, cl. 2 does not authorize Congress to issue “Bills of Credit” or to delegate such a power.

(14) reconstruction of the national banking and monetary system can begin based on the unquestionably constitutional premises that:

(a) Congress has the power and duty to provide the nation with a sound monetary system; and,

(b) Congress has the power to borrow money; and,

(c) Congress has no power or privilege to emit bills of credit, nor to delegate such a power; and,

(d) Congress has the power and duty to protect commerce from irresponsible banking practices. 

(15) the reform of the current monetary system as outlined in this Act is necessary to ensure the American people of their unalienable rights to Life, Liberty, and Property, and to provide for them a constitutionally accurate, sound, safe, and honest medium of exchange.

Read Explanation and Details for Section 2.

Part I. Banking and Monetary Reform

SECTION 3. CONGRESSIONAL CONTROL OF THE UNITED STATES MONETARY SYSTEM
 

(A) The monetary system of the United States shall be under the control of Congress. 

(B) It shall be administered within the Department of the Treasury of the United States by the Secretary of the Treasury and by other government officers.

Read Explanation and Details for Section 3.

Part I. Banking and Monetary Reform

SECTION 4. PROVISIONS FOR UNITED STATES CURRENCY
 

(A) Congress hereby directs the Secretary of the Treasury to authorize the production and immediate distribution of United States Treasury credit-notes, denominated in 1, 5, 10, 20, 50, and 100-token dollar units, in sufficient quantity to replace all outstanding United States legal tender paper currency of every type.

(B) The following characteristics, among others, define the United States Treasury credit-notes:

(1) paper document denominated in token dollars

(2) an obligation of the United States

(3) created by authorization of the United States Congress

(4) issued by the United States Treasury bearing no interest

(5) placed in circulation through voluntary acceptance

(6) designed to circulate as money

(7) irredeemable in specie

(8) having exchange value

(9) having limited legal-tender character

(C) Congress hereby declares that, from the date of passage of this Act, United States Treasury credit-notes are legal-tender for all debts—public, private, and personal—where such debts are not explicitly stated and understood by the parties involved to be dischargeable in some other stipulated medium of exchange.

(D) All existing forms of United States legal tender paper currency of whatever type, denominated in dollars and produced on or before the date of passage of this Act, are exchangeable or replaceable at a face value of one for one for the new United States Treasury credit-notes. Federal Reserve Notes, National Bank Notes, and State Bank Notes will no longer be printed.

(E) Congress hereby directs the Secretary of the Treasury to authorize the production of standard silver and gold coins from the following sources:

(1) coinage at the public mints of all government-owned silver and gold bullion except for minimum amounts which may be required under the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98 et seq.); and,

(2) coinage at the public mints of silver and gold bullion acquired on the world market by the Secretary of the Treasury at not more than the then current average world price; and,

(3) unlimited coinage at the national mints of privately owned bullion; and,

(4) encouragement of private coinage.

(F) Congress hereby directs the Secretary of the Treasury, under Article I, § 8, cl. 5 of the United States Constitution, to establish and implement procedures and necessary regulations to encourage each of these sources to its maximum extent.

(G) United States Coinage

(1) The standard unit of the domestic monetary system shall be a lawful United States constitutional silver dollar coin, containing 371 and 1/4 grains of silver, as construed in the United States Constitution and the Coinage Act of 1792. The Secretary of the Treasury shall provide for the minting of 1, 1/2, 1/4, and 1/10-dollar pieces, containing weights of silver in these exact proportions to the standard silver dollar.

(2) The Secretary of the Treasury shall provide for the minting of standard gold coins. A standard gold coin, called the eagle, will contain 1 troy ounce of gold. The Secretary of the Treasury may, by discretion, provide for companion-pieces containing 1/10 troy ounce of gold, the 1/10 eagle; and 1/4 troy ounce of gold, the 1/4 eagle; and 1/2 troy ounce of gold, the 1/2 eagle.

(3) Despite any other provision of law, the Secretary of the Treasury shall provide for the minting and issuance of standard gold and standard silver coins of the following character:

(a) consist of an alloy of —

(i) the specified weight of the precious metal; plus

(ii) other metal, weighing not more than 1/10 of the total weight of the coin, included to increase the coin durability;

(b) a silver dollar will contain 371 and 1/4 grains of silver, being a minimum of 90 percent silver by weight, with the 1/2, 1/4, and 1/10-dollar pieces containing weights of silver in exact proportions to the standard dollar;

(c) an eagle will contain 1 troy ounce of gold, being a minimum of 90 percent gold by weight, with 1/2, 1/4, and 1/10eagle pieces containing weights of gold in exact proportions to the standard eagle;

(d) have a standardized design which remains unchanged for thirty years —

(i) symbolic of Liberty on the obverse side; and

(ii) of an eagle on the reverse side;

(e) have inscriptions —

(i) indicating denomination, such as “One-half Dollar” or “One Eagle”; and

(ii) actual type and weight of precious metal content, such as “371 and 1/4 Grains Silver” or “One Troy Ounce Gold”; and

(iii) “Liberty”; and

(iv) “United States of America”;

(f) are marked —

(i) to identify the mint of origin; and

(ii) with the first year of the decade of minting or issuance;

(g) all standard silver coin will have a twelve-sided polygon design with reeded edges;

(h) all standard gold coin will have a sixteen-sided polygon design with reeded edges;

(4) To compensate for abrasion of the lawful coinage, the “Value” of any particular coin is equal to its actual weight divided by its specified total weight expressed in appropriate terms of dollars or eagles.

(5) The Secretary of the Treasury shall immediately open the public mints to unlimited coinage of both metals, levying a charge, denominated in treasury credit-note dollars, for seigniorage at the minimum level necessary to fund the mints’ operations.

(6) The Secretary of the Treasury shall determine and publish at least weekly, but more often if he deems necessary, the exchange-ratios between —

(a) a treasury credit-note dollar and a United States standard silver dollar and

(b) a treasury credit-note dollar and a United States eagle,

such ratios being calculated by adding the current average world market price, denominated in treasury credit-note dollars, for the bullion equivalent weight of the standard coin to the mint seigniorage charge to produce a standard coin.

(7) All existing laws or regulations authorizing governmental seizure of precious metals for monetary policy purposes or prohibiting the recovery and use of the bullion content of lawful coins are hereby repealed.

(H) Private Coinage

(1) As part of the duty, under Article I, § 8, cl. 5 of the United States Constitution, to supply the country with an adequate coinage, Congress requires the Secretary of the Treasury to, upon request of United States wholly owned and operated private mints, have prepared and make available at cost, dies for the minting of standard silver and gold coin of the United States.

(2) The Secretary of the Treasury is hereby directed to create, subject to the approval of Congress, the necessary policies, procedures and regulations to ensure that the quality of standard silver and gold coinage produced by private parties equals or exceeds the public standard. Any penalties provided will apply equally to officers of the public mints.

(I) The Secretary of the Treasury may issue silver and gold certificates, denominated in dollars and eagles, respectively.

(1) The silver series shall include 1, 5, and 10-Dollar Silver Certificates of the following character:

(a) They are printed on a distinctive paper of silver color.

(b) They have inscriptions —

(i) “United States of America”; and

(ii) “In God We Trust”; and

(iii) indicating year of issue; and

(iv) indicating denomination, such as “Five Dollar Silver Certificate”; and

(v) indicating promise of redemption, such as “The United States Treasury will pay face value to the bearer on demand in standard silver dollar coin.”

(2) The gold series may include 1, 5, and 10-Eagle Certificates of the following character:

(a) They are printed on a distinctive paper of gold color.

(b) They have inscriptions —

(i) “United States of America”; and

(ii) “In God We Trust”; and

(iii) indicating year of issue; and

(iv) indicating denomination, such as “Ten Eagle Certificate”; and

(v) indicating promise of redemption, such as “The United States Treasury will pay face value to the bearer on demand in standard gold coin.”

(3) These certificates shall represent only standard coined silver and gold actually on deposit with the United States Treasury, or with designated Treasury agents, and must be redeemed on demand.

(4) Any failure to redeem silver certificates or gold certificates issued under the provisions of this Act upon any demand

(i) shall cause an immediate audit by two independent qualified public auditors at the expense of the Treasury and

(ii) will be prima facie cause for the removal of the Secretary of the Treasury.

(J) All accounts of record of all monetary transactions of whatever type, subject to the jurisdiction of the United States, are hereby required to show the form or forms of currency used. The use of the term “dollar” or the symbol “$” without other qualifiers will designate United States Treasury credit-notes or its subdivisions such as clad token coins and subsidiary token coins of base alloys. The terms “silver dollar,” “silver $,” “dollars silver” or “$ silver” without other qualifiers will designate standard silver dollar coin containing 371 and 1/4 grains of silver and its appropriate subdivisions. The term “eagle” without other qualifiers will designate standard gold coin containing 1 troy ounce of gold and its appropriate subdivisions.

Read Explanation and Details for Section 4.

Part I. Banking and Monetary Reform

SECTION 5. REFORMATION OF THE FEDERAL RESERVE SYSTEM
 

(A) The Federal Reserve Act of 1913, as amended, is hereby further amended, as per its provisions for the dissolution of and recovery of assets of the Federal Reserve System. 

(B) Administration of the Federal Reserve System is hereby vested in the United States Treasury in a new department of the Treasury, hereby established and called the United States Treasury Reserve System or by the short title of Treasury Reserve System. 

(C) A Board of Governors of the Treasury Reserve System is hereby established and charged with the administration of the Treasury Reserve System, to exercise all powers and duties granted within the provisions of this Act and those powers and duties, some of which are subject to modifications by this Act, previously specifically granted to the Board of Governors and to the Federal Open Market Committee of the Federal Reserve System. This Board will consist of thirteen officers including a Director of the Board plus one Governor of the Board from each of the existing twelve Federal Reserve Bank Districts, hereafter called United States Treasury Reserve Districts.

(1) All officers of the Board of Governors of the Treasury Reserve System will be appointed by the President of the United States with the advice and consent of the Senate, the initial selection of all thirteen officers commencing with the passage of this Act and following the guidelines set forth herein. Selection shall be made without discrimination because of race, creed, color, sex, or national origin. No individual who is or has been a Senator or Representative in Congress shall be an officer of the Board of Governors of the Treasury Reserve System.

(2) The officer who serves as Director of the Board of Governors of the Treasury Reserve System:

(a) shall be a United States citizen; and, 

(b) shall be selected from the nation at large; and, 

(c) shall be a person of tested banking or economic experience; and, 

(d) shall receive a salary equivalent in amount to the salary of a member of the United States Senate; and, 

(e) shall maintain an office within the District of Columbia; and, 

(f) shall have no specific term of office, being replaced at the pleasure of the President of the United States with the advice and consent of the Senate.

(3) Each officer who serves as a Governor on the Board of Governors of the Treasury Reserve System:

(a) shall be a United States citizen; and, 

(b) shall have been a resident for at least two years of the Treasury Reserve District which they represent; and, 

(c) shall be actively engaged in their Treasury Reserve District in commerce, agriculture, the medical arts, education, industry, services, or consumer or labor affairs; and, 

(d) shall not at the time of their selection, nor at any time during that period of service, be or have been an officer, director, employee, or a direct stockholder of any bank; and, 

(e) shall not have held State elected or appointed office; and, 

(f) shall not be an Officer of the Court, a Member of the American Bar Association, nor a practicing Attorney; and, 

(g) shall maintain an office within the Treasury Reserve District which they represent; and, 

(h) shall receive a salary equivalent to the salary of a member of the United States House of Representatives; and, 

(i) shall, on good behavior, serve a minimum term of four years, being replaceable at the pleasure of the President of the United States with the advice and consent of the Senate except that, after initial selection of all thirteen officers, no more than four of the twelve Governors may be replaced in any one four-year period or in any one presidential term of office.

(4) A Lieutenant Governor will be selected for each of the twelve Treasury Reserve District Offices in the same manner and under the same guidelines as are Governors except that, after the initial selection, more than four new selections for that office are permitted in any one presidential term when the purpose of each additional selection is to fill an office which becomes vacant. Each Lieutenant Governor—

(a) shall receive a salary equivalent in amount to 85 percent of the salary of a member of the United States House of Representatives; and, 

(b) shall assume the powers, responsibilities, duties and salary of the Office of the Treasury Reserve District Governor upon the resignation or during any period of incapacity of the Governor of the District or in the event that the holder of that office is convicted of a felony.

(5) All officers of the Board of Governors of the Treasury Reserve System will receive their written Delegations of Authority from and be sworn into office by the Secretary of the Treasury.

(6) All officers of the Board of Governors of the Treasury Reserve System are hereby charged to administer the affairs of the nation’s monetary system with the sole purpose of maintaining a long-term, stable exchange value for United States Treasury credit-notes.

(a) All actions undertaken by the Board will require an affirmative vote, recorded as part of the public record in the District of Columbia Office of the Director of the Board of Governors, by nine of the thirteen officers.

(b) The officers need not be physically present in order to cast their vote.

(D) A Treasury Reserve Account which will be administered at the sole discretion of the Board of Governors of the Treasury Reserve System is hereby established.

(E) The Federal Open Market Committee of the existing Federal Reserve System is hereby abolished, its powers and responsibilities being transferred to the Board of Governors of the Treasury Reserve System.

(F) All rights, titles, properties, interests, and every claim of the Board of Governors of the Federal Reserve, of all Federal Reserve Banks, of all member banks, of all Federal Reserve agents, and of all individuals, in and upon the Federal Reserve System is hereby transferred to and vested in the United States Government to be held in and administered by the United States Treasury under the Treasury Reserve System.

Read Explanation and Details for Section 5.

Part I. Banking and Monetary Reform

SECTION 6. REFORMATION OF THE FEDERAL RESERVE BANKS
 

(A) The word “Federal” within the titles of the twelve existing Federal Reserve Banks is hereby changed to “United States Treasury” as “Federal Reserve Bank of New York” becomes “United States Treasury Reserve Bank of New York.”

(B) At the written request of the Board of Governors of the Treasury Reserve System, the Secretary of the Treasury is hereby directed to authorize the production of United States Treasury credit-notes for the Treasury Reserve Account in sufficient quantity to complete the exchanges or replacements specified by this Act. On request of the Board of Governors or at the discretion of the Secretary of the Treasury, treasury credit-notes may be produced in any desired denominations larger than $100.00 provided that their use is restricted to the Treasury Reserve Banks, the Treasury Reserve Account, and the General Account of the United States Treasury.

(C) All securities, notes, bonds or other evidences of indebtedness, whatever the source, type or issue, held by the twelve United States Treasury Reserve Banks shall be delivered to the Office of the Director of the Board of Governors of the Treasury Reserve System and exchanged for United States Treasury credit-notes from the Treasury Reserve Account at an equivalent face value of one for one. These credit-notes may be used for the ordinary operating expenses of the Treasury Reserve Banks.

(D) All evidences of indebtedness and obligations of the United States other than United States Treasury credit-notes, whatever the type or issue, received in the Office of the Director of the Treasury Reserve Board of Governors will be delivered to the Secretary of the Treasury whereupon they shall be canceled out of existence.

(E) All United States Treasury Reserve Banks are hereby declared to be Treasury agents. The Secretary of the Treasury shall distribute the standard gold and silver coin of the United States among the twelve Treasury Reserve Banks as it becomes available to the Treasury. Any individual may trade treasury credit-notes for standard gold and silver coin at any Treasury Reserve Bank at the current exchange-ratio on an as available basis.

(F) United States Treasury Reserve Banks shall continue their normal operations under the Office of the Comptroller of the Currency except that they are prohibited from purchasing or holding for their own account income-producing obligations of the United States or those of other nations. This Act does not change their present clearinghouse functions.

(G) The Office of the Comptroller of the Currency is hereby directed to revise or create, subject to the provisions of this Act and the approval of Congress, the necessary policies, procedures and regulations to promote the normal operation of the United States Treasury Reserve Banks. Fees charged for clearinghouse functions and other such banking services at all Treasury Reserve Banks will be uniform and approved by the Comptroller of the Currency. Treasury Reserve Banks shall not issue checks against nor otherwise make dispersals from accounts which contain no funds.

Read Explanation and Details for Section 6.

Part I. Banking and Monetary Reform

SECTION 7. REGULATION OF COMMERCIAL BANKS AND OTHER FINANCIAL INSTITUTIONS
 

(A) All persons and every national banking association holding capital stock in former Federal Reserve Banks are hereby required to deliver that stock to the Office of the Director of the Board of Governors of the Treasury Reserve System. A compensation of one-hundred dollars ($100) plus one-half of 1 phttps://sites.google.com/a/easyenglish4u.com/www/nesara-an-age-old-idea?pli=1ercent per month from the period of last dividend, if earned, will be paid from the Treasury Reserve Account in United States Treasury credit-notes for each share. All stock in former Federal Reserve Banks is hereby canceled, declared irredeemable 90 days after this Act becomes law.

(B) All securities, notes, bonds or other evidences of indebtedness or obligations of the United States other than United States Treasury credit-notes, whatever the type or issue, held by any bank subject to the jurisdiction of the United States, whether as bank reserves or for the banks’ investment account, shall be delivered to its district’s Treasury Reserve Bank which will forward them to the Office of the Director of the Board of Governors of the Treasury Reserve System. They will be exchanged at a face value of one for one, plus earnings, if any, current to the date this Act becomes law, for United States Treasury credit-notes. The banks may receive compensation on a dollar for dollar basis from their District Treasury Reserve Bank in treasury credit-notes or as a deposit to a Treasury Reserve Bank account in their name. 

(C) Every bank subject to the jurisdiction of the United States is hereby prohibited from purchasing or holding for their own investment account income-producing obligations of the United States, such as Treasury bills, bonds, certificates, or notes, or those of other nations. Only United States Treasury credit-notes will be counted as bank reserves.

(D) No financial institution under the jurisdiction of the United States making commercial loans of currency for profit may grant a loan to any person, or to members of their immediate family, while that person is a director, officer or employee of that financial institution nor shall a financial institution grant a loan to itself.

(E) All financial institutions shall maintain separate accounts of record based on currency type. The form of currency used in any account of record will determine whether that account is an eagle (gold) account, a silver dollar account, or a credit-note dollar account. One type of account of record will not be commingled with another type of account of record. No funds of any type of account will be converted to funds of another type of account without written authorization of the owner of the funds indicating the owner’s agreement to a specific exchange-ratio.

(F) All tenders in repayment which have been previously made or which are made on any secured loans outstanding on or made after the date of passage of this Act with any financial institution making such loans on a fractional reserve basis, will be credited to repayment of the loan principal prior to any credits being applied to any monetization-fee on that loan.

(1) The repayment rate for each loan will be calculated as:

Section 7F Equations

where:

Rr = repayment rate, $ per $ per month 
n = number of equal payments, months 
fm = bank monetizing-fee per month, expressed as a decimal 
Cf = cost factor for the loan 
L = amount of the loan 
Mb = base monthly payment 
Cb = base cost for the loan

(2) The requirement for bank reserves for the conversion of loans outstanding on the date of passage of this Act is hereby eliminated.

(3) Compound monetization-fees or charges on monetization-fees earned are prohibited.

(4) A service charge may be imposed by the lender for each tender in payment recorded, retroactively and on future tenders in payment, provided it does not exceed a total or 25 dollars monthly for any one loan and the total service charges for any one converted loan do not exceed 50% of the savings to the borrower.

(5) All new secured loans made on a fractional reserve basis may—

(a) be subject to a maximum origination fee of 50 dollars or 1 percent of the principal loan amount, whichever is greater; and,

(b) be issued with a prepayment of discount points up to a maximum of 5 percent of the principal amount of the loan, the allowed maximum being proportionally decreased at the rate of 1 percent for each 1 percent increase in the loan interest rate above 7 percent.

(G) Commercial banks may open and maintain accounts for their customers in any type of currency if:

(1) the accounts are kept segregated by currency type; and,

(2) they retain as reserve 100 percent of the deposited standard gold or silver coin or its equivalent in Treasury gold or silver certificates; and,

(3) all gold and silver accounts are custody accounts only, the ownership of the funds deposited remaining vested in the depositor; and,

(4) checkable accounts or travelers checks on gold accounts or silver accounts are not allowed; however, gold or silver funds on deposit may be transferred between like accounts within a bank or between like accounts of different banks within banking systems by a Lawful Money Bank Transfer Order properly authorized by the owner of the funds; and,

(5) all credit-note dollar accounts are general warrant deposits; and,

(6) all demand credit-note dollar accounts are custody accounts only; and,

(7) any other type of credit-note dollar account, where the deposited funds are considered loans to the bank, require written agreement by each depositor acknowledging the loan.

(H) No bank may advertise itself as a “full service bank” if it fails to offer its customers choices of gold accounts, silver accounts, and treasury credit-note accounts.

(I) In case of a bank failure or closing, regardless of the reason, the holders of gold and silver accounts will have immediate preferential treatment in the return of their deposits or a settlement of equal value.

(J) The Office of the Comptroller of the Currency is hereby directed to revise or create, subject to the provisions of this Act and the approval of Congress, the necessary policies, procedures and regulations to regulate the service operations of all banks subject to the jurisdiction of the United States.

Read Explanation and Details for Section 7.

Part I. Banking and Monetary Reform

SECTION 8. EXCISE TAX IMPOSED ON MONETIZATION-FEE OR INTEREST INCOME
 

(A) An excise tax is hereby imposed on the monetization-fee or interest income of all financial institutions or persons, subject to the jurisdiction of the United States, who make commercial loans of currency for profit. The amount of the excise tax is calculated upon the annualized rate of the monetization-fee or interest:

(1) For loans secured with physical property —

(a) No excise tax imposed on income received at rates less than 5 percent; plus,

(b) An excise tax of 10 percent on the portion of income received at rates between 5 percent and 12 percent; plus,

(c) An excise tax of 20 percent on the portion of income received at rates exceeding 12 percent.

(2) For unsecured loans —

(a) No excise tax imposed on income received at rates less than 10 percent; plus,

(b) An excise tax of 20 percent on the portion of income received at rates between 10 percent and 20 percent; plus,

(c) An excise tax of 40 percent on the portion of income received at rates exceeding 20 percent.

(B) The excise taxes hereby imposed will be deposited within three working days of receipt of that income with any authorized federal depository which will transfer these funds to the Treasury Reserve Account.

Read Explanation and Details for Section 8.

Part I. Banking and Monetary Reform

SECTION 9. REGULATION OF THE EXCHANGE VALUE OF TREASURY CREDIT-NOTES
 

(A) The Office of the Comptroller of the Currency will establish a method for calculating and publish at least weekly a United States Treasury Credit-Note Exchange-Value Index which will track the exchange value of treasury credit-notes against a composite list of not less than 12 nor more than 24 commonly traded items, including labor rates, rents, cost of professional services and basic commodities, excluding gold and silver. The initial list will be prepared by the Comptroller of the Currency with the approval of Congress and, once approved, will not be changed more than once in any five-year period and then only with the consent of Congress. The exact method used for calculating the Treasury Credit-Note Exchange-Value Index will remain fixed and will be published as part of the public record. The initial value of the Treasury Credit-Note Exchange-Value Index will be set at 100.000 as of the date this Act becomes law.

(B) The Board of Governors of the Treasury Reserve System will administer the affairs of the nation’s monetary system by adjusting the aggregate amount of the nation’s currency and credit to maintain the Treasury Credit-Note Exchange-Value Index within a range of 97 percent to 103 percent of its initial value by using four primary regulation tools:

(1) By setting the percentage of reserves required of the commercial banks. Commercial banks will not be penalized should their reserves fall below the percentage required provided —

(a) the bank grants no new loans for 90 days after any day on which its reserves were below the requirement; and,

(b) the bank does not call for immediate repayment of any outstanding loans which are performing within normal limits; and,

(c) the reserves of a commercial bank do not fall below 50 percent of the reserve requirement, at which point the bank would be declared insolvent.

(2) By setting the national discount interest rate, the interest rate at which commercial banks borrow funds from Treasury Reserve Banks.

(a) Commercial banks may obtain loans from their district Treasury Reserve Bank at the national discount interest rate in exchange for their best acceptable commercial paper.

(b) District Treasury Reserve Banks may obtain funds for these loans from the Treasury Reserve Account, paying that account one-half of the interest income earned as a fee for using these funds.

(3) By purchasing income-producing United States Treasury obligations in the open market.

(4) And by impounding funds within the Treasury Reserve Account or by transferring funds from the Treasury Reserve Account to the General Account of the United States Treasury or by depositing funds with commercial banks. All funds within the Treasury Reserve Account are maintained separately from all other United States Treasury funds and may not be transferred, appropriated or expended by the United States Treasury except at the sole discretion of the Board of Governors of the Treasury Reserve System.

Read Explanation and Details for Section 9.

Part I. Banking and Monetary Reform

SECTION 10. AUTHORIZATION FOR LIMITED BANK CHARTERS
 

(A) Currently operating financial institutions such as credit unions may obtain charters as limited national banks to operate on a fractional reserve basis to grant loans within the local community if they —

(1) apply to the Office of the Comptroller of the Currency; and,

(2) meet the financial requirements imposed on commercial banks and the necessary policies, procedures and regulations imposed by the Office of the Comptroller of the Currency; and,

(3) have a paid-up capital of at least five million dollars; and,

(4) grant, under these limited operating provisions, only loans secured by physical property.

(B) To meet the provisions of this section and to increase efficiency, several financial institutions located within a Treasury Reserve District may, at their request, be combined into a single organization or they may be allowed to operate in partnership with an existing bank.

Read Explanation and Details for Section 10.

Part I. Banking and Monetary Reform

SECTION 11. REGULATION OF POSTAL MONEY ORDERS
 

(A) To meet the currency provisions of this Act, postal money orders will hereafter be issued in three types denominated in —

(1) silver dollars in the standard currency units of 1, 1/2, 1/4, and 1/10 dollar, each with an aggregate maximum limit of 1,000 silver dollars; and,

(2) eagles in integer units, no fraction of an eagle being allowed, each with a maximum limit of 10 eagles; and,

(3) any appropriate amount of treasury credit-note dollars with a maximum limit of 1,000 dollars each.

(B) Postal money order blanks shall have distinctive color and markings for each of the three types of standard currency, those to be denominated in standard silver or gold coin being similar in appearance to their respective silver certificates and gold certificates.

(C) Postal money orders shall be issued only for the type and amount of currency actually tendered.

(D) The fee for issuing any postal money order shall be one dollar.

(E) Except in unusual circumstances, postal money orders shall be redeemable in the designated currency at any United States Post Office within the jurisdiction of the United States within three working days of their submittal for exchange.

Read Explanation and Details for Section 11.

Part I. Banking and Monetary Reform

SECTION 12. CRIME DEFINED AND PUNISHMENT ESTABLISHED
 

(A) Any person convicted of willfully violating the monetary and fiscal responsibility provisions of this Act resulting in aggregate losses exceeding 5,000 dollars in any 12-month period shall be deemed guilty of a felony and shall be subject, on each conviction, to a fine not exceeding 5,000 dollars, or a term of imprisonment of not more than 5 years, or both.

(B) Any person convicted of any willful violation of this Act that results in the production or circulation of substandard silver or gold coin shall be deemed guilty of a felony and shall be subject on each conviction to a fine not exceeding 10,000 dollars, or a term of imprisonment of not more than 20 years, or both.

(C) Any person providing information leading to the conviction of one or more individuals for the violation of any provisions of this Act shall be paid from the United States Treasury the sum of 10 eagles.

(D) Any person who is not paid from the United States Treasury lawful money on demand for United States Silver Certificates or for United States Eagle Certificates according to the provisions of this Act shall be paid from the Treasury the sum of 5 eagles.

Read Explanation and Details for Section 12.

Part I. Banking and Monetary Reform

SECTION 13. ALL INCONSISTENT ACTS REPEALED
 

(A) All Acts or parts of Acts inconsistent with the provisions of this part are hereby repealed.

Read Explanation and Details for Section 13.

Part I. Banking and Monetary Reform

Explanation and Details
 

In a battle of knowledge between the lawyer-politicians and the public, the people fight unarmed. An elite group dominates through legal finesse. It holds the high ground, establishing rule with nothing more than technical words written on paper and a few simple principles adopted from Lex Mercatoria, nowhere officially recorded. Its real power emanates from control of America’s institutions, primarily those dealing directly with monetary and fiscal policy. Misuse of this power for its own purposes, with considerable encouragement from voters expecting to get something for nothing, led to the nation’s current economic predicament. The easiest way out of this mess requires new monetary and fiscal policies. Both systems desperately need renovation.

Monetary policy controls money creation. Most of these rules have changed little since 1913 when they were first implemented. Despite the modern appearance of the buildings and shiny new computers of the nation’s financial institutions, our monetary system is antiquated. Modern computers process numbers faster but do not improve the system’s outdated fundamental operations.

The proposed bill, the National Economic Stabilization and Recovery Act, increases the efficiency of the monetary system and immediately eliminates part of the national debt. One way or another, that $20 trillion debt, impossible to pay, must soon be discounted. Under current economic conditions and systems’ rules, this requires either general depression or hyperinflation. Both methods wipe debt off the books; both are painful processes. NESARA proposes a third method. By changing the rules it offers an engineered solution to the problem rather than insisting on additional sacrifice from those who have little more to contribute.
 

Modification of the nation’s monetary system starts with the definitions in Section 1 of Part I, Banking and Monetary Reform. Words often have legal definitions that differ from popular or colloquial usage. “Dollar” is a unit of measurement, specifically, a unit of weight equal to 371 and 1/4 grains. A price of ten dollars is semantically equivalent to a price of ten gallons. Gallons? Gallons of what? Practical applications demand an additional clarification. Individuals usually supply the answer through ignorance in the form of assumed knowledge. Their stock seems unlimited.

Words build sentences. Sentences frame ideas. Ideas lawfully expressed in statutes become law. Changing definitions of words after the fact corrupts the law. The lawyer-politicians make effective use of this tactic with one exception—their attacks on the U.S. Constitution.

In order for it to have reasonable construction the words in the Constitution must be taken at their obvious historical meaning. In 1824 Chief Justice Marshall wrote, “As men, whose intentions require no concealment, generally employ the words which most directly and aptly express the ideas they intend to convey, the enlightened patriots who framed our constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said.”[1]

On occasion, the lawyer-politicians, attempting to evade clear constitutional intent by changing the meaning of a word, encounter someone like Justice Mahlon Pitney of the 1920 Supreme Court. He declared that “Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.”[2]

Definitions are important. Misunderstanding the meaning of words used in the proposed bill might result in an incorrect interpretation of the statute’s intent when it becomes law. Furthermore, all definitions must conform to those used in the Constitution. Pay close attention to the specific definitions given for “bills of credit,” “eagle,” “interest,” “lawful,” “legal,” “legal-tender,” “money,” “payment,” “seigniorage,” “specie” and “tender.” All of the ideas found in NESARA are based on the simple legal definitions of a few dozen words.
 

Section 2 of Part I lists some obvious items as likely findings of Congress. The purpose of this section is to state the relevant facts about the issue addressed and explain why a new law is needed. New laws should not be passed without serious justification because their current total volume exceeds the ability of any human to know, let alone comply with all of them.
 

Section 3 of Part I acknowledges congressional control of the United States monetary system. This authority originates with the Constitution, contained in its monetary powers and disabilities:
 

  • Article I, § 8, cl. 2 —The Congress shall have the Power …To borrow Money on the credit of the United States[.]

  • Article I, § 8, cl. 5 —The Congress shall have the Power …To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures[.]
  • Article I, § 8, cl. 6 —The Congress shall have the Power …To provide for the Punishment of counterfeiting the Securities and current Coin of the United States[.]
  • Article I, § 10, cl. 1 —No State shall …coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts…
     

Clearly the nation’s monetary system is under the control of Congress.
 

In Section 4 of Part I Congress exercises its monetary power, directing the United States Treasury to produce three new kinds of currency: treasury credit-notes, standard silver coin, and standard gold coin. Treasury credit-notes “in sufficient quantity to replace all outstanding United States legal tender paper currency of every type” will become the bulk of the nation’s currency. All printing of previously authorized paper currency is now prohibited. Natural circulation and the resultant wear and tear will eventually eliminate the old paper currency, predominantly Federal Reserve Notes, except those items held as collectibles. Existing gold and silver certificates will not be redeemed in specie but are still usable under their current legal tender status. The bill authorizes but does not mandate production of new silver certificates and new gold certificates that are redeemable. It also provides general specifications and limitations for their production along with remedies for failure to meet those limitations.

Congress further directs the Secretary of the Treasury to begin maximum production of standard United States gold and silver coin according to the general instructions provided. A standard design unchanged for thirty years and the marking of all coins produced within a decade with the same date works to limit an excessive exchange value for the coins as collectibles and to promote their circulation.

NESARA opens the public mints to unlimited coinage. Anyone may bring gold or silver bullion to these mints to be coined. A charge, called seigniorage, keeps them self-supporting. It raises the exchange value of the standard coin to a point above the exchange value of its bullion content, another way of protecting its circulation. In addition, seigniorage makes feasible the operation of private mints in competition with government mints, assuring the efficiency of both. The Secretary of the Treasury is directed to promote and regulate such operations.

Notice that unlimited coinage at the national mints of privately owned bullion has the effect of monetizing not just U.S. owned precious metal, but the entire world supply. By honestly following this simple plan the United States will become the monetary capital of the world, its currency immediately acceptable at the published exchange-ratios anywhere on the planet. And this is accomplished at no cost to the government.

The benefits of a moral monetary system extend beyond the borders of any nation. Imagine what would have happened if the United Nations had adopted this plan and obtained its financial support from a small tax on the international trade of its members. Undoubtedly, the world today would be a far different place.

Maintaining three types of currency in simultaneous circulation requires practical solutions to two problems: One is nomenclature; the other is regulation of their exchange-ratios.

The term “dollar” has been corrupted by popular use so far beyond its original constitutional meaning that its recovery seems improbable. Under these circumstances the most appropriate solution is to assign the term “dollar” or the symbol “$” without other qualifiers to designate United States Treasury credit-notes or its subdivisions such as clad token coins and subsidiary token coins of base alloys. In contrast, terminology designating standard silver coin must contain the word “silver” as a qualifier. The term “eagle” seems adequate to identify the new standard gold coin. Specific historical coins can be identified by date and description.

To avoid the problems often encountered with fixed exchange-ratios, Congress directs the Secretary of the Treasury to determine and publish the exchange-ratios between the various currencies. This method, established as a matter of law, discharges Congress’s constitutional obligation to “regulate the Value thereof.”

Treasury credit-notes enjoy a limited legal-tender status as a default medium of exchange. If parties to a mercantile transaction fail to specify a specific medium of exchange, such as standard silver dollars or eagles, the courts must assume they intended to use treasury credit-notes. Of course, as the issuing agent, the government must accept them in payment of all taxes and fees.

Other provisions of this section give the new coinage a distinctive shape, useful for the visually impaired, and specify the method to compensate for abrasion. NESARA also repeals all existing laws authorizing government seizure of precious metals for monetary policy purposes or prohibiting the recovery and use of the bullion content of lawful coin. This enables artists to use either the coin itself or its metal content in their works. It also encourages public enforcement of the regulation of their exchange-ratio because the coins may be melted to recover the intrinsically valuable bullion without penalty.
 

Section 5 of Part I identifies the Federal Reserve Act of 1913 as the Act amended by this bill, using its original provisions for the dissolution and recovery of assets of the Federal Reserve System. In effect, this section transfers all rights and ownership of whatever kind that anyone may have in the Fed, everything from the dust on its chandeliers to the spiders under its foundations, to the United States Government. It assimilates the existing Federal Reserve System into the United States Treasury as the United States Treasury Reserve System and creates a new Board of Governors. The character of this new Board is established by specifying that twelve of its thirteen officers are ordinary citizens representing their districts, a design patterned after the jury system.

To encourage only conservative actions, NESARA reduces the current wide range of sometimes confusing and often conflicting objectives imposed on the existing Federal Reserve System to the single objective of maintaining a long-term, stable exchange value for the new treasury credit-notes. Every action by the new Board of Governors requires an affirmative vote by nine of its thirteen officers.

Some of the Board’s prerogatives are expanded. The existing Federal Open Market Committee of the Federal Reserve System is abolished, its powers and responsibilities transferred to the new Board of Governors. Also, a special account within the United States Treasury Reserve System called the Treasury Reserve Account is established, to be administered at its sole discretion.
 

Section 6 of Part I renames the twelve existing private Federal Reserve Banks as Treasury Reserve Banks, now public entities. It establishes a requisition and accounting method for the Treasury to track the production and distribution of treasury credit-notes. Denominations larger than $100 are allowed, provided their circulation is not public.

All financial instruments held by the twelve United States Treasury Reserve Banks shall be delivered to the Office of the Director of the Board of Governors of the Treasury Reserve System and exchanged for treasury credit-notes from the Treasury Reserve Account at an equivalent face value of one for one. These treasury credit-notes may then be used for the ordinary operating expenses of the Treasury Reserve Banks. This will effectively eliminate or keep the necessary charges for their services very low for an extended period. It also provides one method of slowly releasing them into general circulation, preventing economic shock. Once these funds have been expended, the Treasury Reserve Banks must charge a sufficient amount for their services to remain self-supporting.

As the obligations of the United States are received in the Office of the Director of the Treasury Reserve System, they will be delivered to the Secretary of the Treasury. Appropriate action by the Secretary cancels them out of existence. Notice that all commercial instruments other than those of the United States, such as private commercial paper and the financial instruments of other nations, remain under the control of the Board of Governors of the Treasury Reserve System.

The Office of Comptroller of the Currency becomes responsible for regulation of the United States Treasury Reserve Banks. Except for an absolute prohibition against making dispersals from accounts that contain no funds, they continue normal operations. Their exact status is deliberately left as an open question. The Comptroller of the Currency may operate them under commercial contracts or the current staff might become government employees. It is contemplated that, at some future time, their physical assets and ordinary banking functions might be sold back into the private sector. This option should be kept open. 

United States Treasury Reserve Banks now operate as direct agents of the Treasury. They obtain the standard gold and silver coin from the Treasury as it becomes available. Individuals may exchange their paper currency for coin at the published ratios.
 

Section 7 of Part I compensates the former owners of the private Federal Reserve Banks for cancellation of their outstanding capital stock. They are paid in newly printed treasury credit-notes at the price previously fixed by law. Stock not redeemed in 90 days becomes worthless.

All government obligations, both foreign and domestic, held by the nation’s commercial banks are exchanged for treasury credit-notes, on a dollar for dollar basis, with their district Treasury Reserve Banks. Ultimately, the Secretary of the Treasury cancels the U.S. obligations. The new law prohibits commercial banks from purchasing or holding the income-producing instruments of the United States, or those of other nations, effectively eliminating much of their influence on monetary policy.

These actions amount to a direct reduction of the public debt, and at virtually no cost. To see how this is accomplished, follow the money’s path. The Treasury prints new money, swapping it for the government’s income-producing obligations held by the old Federal Reserve System. When this system is absorbed into the Treasury, it gets that money back, essentially paying itself for its own obligations with a small printing cost. Using this money again, the Treasury buys its income-producing obligations currently held by more than ten thousand of the nation’s banks, either as fractional reserves or for their own investment accounts. The Secretary of the Treasury then cancels these government obligations, eliminating billions of dollars of public debt.

By limiting commercial bank reserves to treasury credit-notes, which produce no direct income, the national economy remains largely unaffected. Most of the exchanged treasury credit-notes rest quietly in bank vaults as reserves, out of the stream of commerce. Because they are not in public circulation, they do not bid the price of consumer goods higher.

Swapping treasury credit-notes for the government’s income-producing obligations is remarkably fair. It prevents taxpayer support of the banks through double use of the same funds, first as income producers for the banks and then as an expansion base for the banks’ monetization of the public’s debt. From now on, commercial banks must earn their living through direct service to the community, not at taxpayers’ expense.

Similarly, the private debt of the American people can be reduced by astronomical amounts simply by requiring repayment of principal on secured loans before a bank begins to earn the monetization-fee and by prohibiting compounded monetization-fees. These rules would only apply to financial institutions that make secured loans on a fractional reserve basis. Such loans are nothing more than monetization of the borrower’s own debt, an extension, not of bank credit, but of the national credit through the bank’s license to create money.

Current loan equations based upon compounded interest:

Compound interest

where:

T = total amount of debt
P = principal; equal to the original investment
i = interest rate per interval, expressed as a decimal
n = number of equal intervals

Amortization

where:

R = amount of periodic payment
L = amount of the loan
i = interest rate per interval, expressed as a decimal
n = number of equal payments

New loan equations based upon simple monetization fee:

Section 7F Equations

where:

R r = repayment rate, $ per $ per month
n = number of equal payments, months
fm = bank monetizing-fee per month, expressed as a decimal
Cf = cost factor for the loan
L = amount of the loan
Mb = base monthly payment
Cb = base cost for the loan

Applying these rules to outstanding loans immediately reduces the private debt of the American people. Lowering the debt-service burden associated with secured loans allows an ordinary working family a modern lifestyle it can afford. It also assures that the banks fulfill a very necessary “public purpose” which, as the Supreme Court noted in 1896, was the reason for their creation by the government.

Banks are compensated for this midstream change in rules in several ways—by a monthly service charge not exceeding 25 dollars, retroactively and on future loans, and by origination fees and points on new loans. Discount points are limited to a maximum of 5 percent of the principal loan amount and reduced proportionally as the annualized rate of the monetization-fee increases. This encourages low rates.

Under these rules, and in the absence of fraud, bank failures and taxpayer bailouts become a thing of the past. It will be almost impossible to suffer loss on a secured domestic loan with the principal paid up front. And, in contrast to the perpetual expansion of compounded interest charges, the new repayment equations always converge to zero under any repayment plan. Defaults occur only if the borrower fails to make the payments specified in the original contract or to arrange for new terms through renegotiation.

The Office of the Comptroller of the Currency is responsible for the day-to-day regulation and normal operation of the nation’s commercial banks. With all regular banking operations controlled from this office, the Board of Governors of the Treasury Reserve System can concentrate on monetary policy.

Several restrictions are imposed by Congress on all financial institutions operating within the jurisdiction of the United States. To avoid the appearance of impropriety they may not grant loans to themselves nor to their directors, major stockholders, officers or employees or to members of their immediate families. To reduce public confusion, and the opportunity for mismanagement of funds, separate accounts of record must be maintained for each type of currency. Converting funds between any two of the three different types of accounts requires the written authorization of the owner.

To avoid legal confusion with credit-note dollar accounts, all such accounts are general warrant deposits—fungible accounts allowing banks to return property like-for-like, and all demand credit-note dollar accounts are strictly custodial accounts. Deposits to other types of credit-note dollar accounts, such as certificates of deposit, require the depositor to be informed about and acknowledge the account contractual status. This helps to avoid confusion with credit-note dollar accounts.

All gold and silver accounts are custody accounts only, the ownership of these funds remaining vested in the depositor. These specie accounts earn no income because they can never be used as fractional reserves for credit expansion or as the basis for loans. A financial institution may even impose service charges for their maintenance. Checkable accounts or travelers checks on gold or silver accounts are strictly prohibited, blocking another avenue for fraudulent activity.

On the positive side, gold and silver accounts help satisfy Congress’s moral and constitutional obligations for creating a lawful currency system. Individuals not wishing to participate in a fractional reserve money system have a clear alternative. If a financial institution fails, the owners of gold and silver accounts receive preferential treatment for recovery of their funds. Such accounts may also prove useful in international trade.

This bill forces no one to use hard currency. A casual look at the figures and that impractical dream of the ‘goldbugs’ evaporates like dew in the hot morning sun. The United States holds a trifle more than 260 million troy ounces of gold as monetary reserves, roughly 28 percent of the world’s total, or about one eagle for every citizen. Selling it at $400 per ounce, above the current market price, raises only a little more than $100 billion. That amount pays approximately five months interest on the nation’s outstanding debt.

What about silver? True, the U.S. Treasury owns more silver than gold but it is worth much less. The world’s total reserve base is only about 420,000 metric tons. Coin all of it into silver dollars, nearly 17.5 billion of them, and sell them at $4 each, a little more than the current market price. The total, $70 billion, will not pay the interest charge on the national debt for four months.

Merely hinting that the United States intended to sell all its gold and silver at market prices would drop their value into the cellar. Mining stocks would plummet. Gold and silver mines would close as their operation became unprofitable. It would be much cheaper to mine the U.S. Treasury.

Monetizing all the nation’s gold and silver will not pay any portion of the national debt. Bank accounts in lawful money will be restrictive, earn no interest and may suffer the insult of maintenance charges. It is most unlikely that specie will return to general circulation. Much of it remained in bank vaults even while the nation was on various metallic standards. Facing these difficulties, why bother with a complex system using three types of currency?

With a cast of characters selected and the stage set, use your imagination and let the play begin.

Suppose Congress instructs the Treasury to sell small-denomination, nontransferable interest-bearing gold and silver savings bonds to U.S. citizens through their bank specie accounts. These bonds are redeemable in 5 to 20 years, interest paid annually, calculated in specie but paid in treasury credit-notes at the current exchange-ratio. Americans could exchange their paper currency for lawful money, deposit the coin in a specie bank account, then convert those funds to interest-bearing gold or silver savings bonds.

This immediately creates a tremendous circulating market for the Treasury’s gold and silver coin, most of which never leaves the vaults. The sale of $50 billion in specie bonds at par removes that amount in paper currency from general circulation. Under the new banking rules, the bonds are nontransferable, thus the bonds never enter the stream of commerce and cannot replace the paper currency. Nor under the new banking rules can the bonds be used as bank reserves. Due to the expansion factor built into the fractional reserve monetary system, the nation’s available currency and credit drops, perhaps by $500 billion.

At the least such a move is sharply deflationary, and probably recessionary. Since the nation’s aggregate of currency and credit is only about $3,000 billion, the government would have to increase the money supply before the economy collapsed. Suppose Congress decides to accomplish that increase by redistributing the proceeds from the bond sales as restricted bank reserves, setting the restricted reserve requirement at 10 percent. State and local governments could borrow funds for infrastructure projects from local banks equal to 10 times the reserve amounts (provided local taxpayers agree to new taxes to repay the loans).

Everybody wins. The federal government, using the bullion now collecting dust at the Treasury, redirects a significant portion of net national production toward rebuilding a crumbling America, new roads, bridges, and other public facilities including water supply and waste disposal plants. Bankers earn a fee for handling the transaction. Voters once again get back into the loop. Proposed projects die without local approval. Lastly, because principal is repaid before the monetization-fee, low debt-service factors on long-term projects keep the cost down and local taxes low.

If this strategy seems vaguely familiar, it should. Jay Cooke would recognize it as the flip side of his plan to finance the Civil War. In this instance the government leverages its gold and silver to generate billions of dollars for much-needed capital improvements. Wise selection of public projects will increase national efficiency, ultimately lowering the nation’s debt. The financing technique employed is an adaptation of the Guernsey plan. It keeps local bankers and voters directly involved where it counts the most, their pocketbooks.

Other versions of this general strategy may apply in international commerce. A foreign nation—China, Russia, India, South Africa—having gold and needing technological assistance and investment capital for infrastructure projects might find both in an American corporate partner. Suppose that the foreign gold is delivered to the U.S., coined and deposited in a gold account. With Congressional approval, those funds are converted to gold savings bonds, the proceeds being designated as restricted bank reserves for a loan to finance a specified project.

Everybody wins again. The foreign partner gets an infrastructure project—a national communications system, power production or transmission facilities, a water or sewage treatment plant, heavy construction equipment, etc.—financed at a very low debt-service burden. An American corporation gets a major international sale, creating local jobs and reducing this nation’s trade deficit. The bank earns its fee and, after loan repayment, the gold is returned with interest, or perhaps recycled into a new project.

When conventional solutions fail, consider creative alternates. Fair deals work for everybody. Foreign aid projects that benefit the American taxpayer while helping others make good sense.
 

Section 8 of Part I imposes a progressive excise tax on the monetization-fee or interest income of all financial institutions or persons who make commercial loans of currency for profit. These provisions raise revenue for the government but also, and perhaps more important, discourage excessive debt-service burdens. This tax is especially appropriate for those financial institutions that use a government-issued license to operate a fractional reserve system.
 

In Section 9 of Part I Congress creates a United States Treasury Credit-Note Exchange-Value Index. This index, initially set at 100, tracks the exchange value of treasury credit-notes. Congress then directs the Board of Governors of the Treasury Reserve to adjust the sum of the nation’s currency and credit to maintain that value, setting the target range between 97 and 103. These provisions eliminate the conflicting goals of monetary policy.

The Board of Governors administers monetary policy through four major regulation tools: 1) by setting the percentage of reserves required of commercial banks; 2) by setting the national discount interest rate, the rate at which commercial banks may borrow funds from their district Treasury Reserve Banks; 3) by purchasing income-producing United States Treasury obligations in the open market; and 4) by impounding and extinguishing funds within the Treasury Reserve Account or by transferring funds from the Treasury Reserve Account to the United States Treasury.

To curb some problems inherent in fractional reserve systems, NESARA provides for new or modified regulation tools.

One of the most troubling problems is associated with the credit expansion and contraction multiplier factor. A 5 percent reserve requirement sets it at 20, the reciprocal of the reserve percentage expressed as a decimal number (1 divided by 0.05 = 20). Most of the trouble occurs during periods of monetary contraction, the Great Depression being a notable example. As the nation’s total stock of money falls, the banks, forced below their reserve requirements, call in loans. To improve their loan/reserve ratio they may call in loans from some of their best, most solid customers. Local bankers do not repossess the family farm out of malice. Heaven forbid they should ride a tractor for a living! They are compelled to act by banking rules they never wrote.

Few people protest a large multiplier factor during monetary expansion, with the economy booming and money flowing freely. But on the downside, good hardworking people get hurt. Unable to pay off their loans, they go broke, slowing down the economy and making a bad situation worse. Engineers call this system nonlinear and describe it as operating with a negative stability factor. People ruined by it call the system an atrocity.

A more charitable attitude blames inadequate design. One set of uniform rules applied despite condition or consequence explains a large part of the problem. To improve the character of fractional reserve systems, change the rules.

Banks that temporarily fall below their reserve requirements, particularly when the cause is a sudden shift in national monetary policy, are not necessarily insolvent. Under NESARA’s rules they are not penalized if they make no new loans until 90 days after their reserve ratio recovers and if they do not call for immediate repayment of any outstanding loans that are performing within normal limits. A bank is declared insolvent only when its reserves fall below 50 percent.

To improve its reserve ratio a bank may borrow funds from its district Treasury Reserve Bank at the national discount interest rate set by the Board of Governors. Each district Treasury Reserve Bank may obtain these funds from the Treasury Reserve Account, paying that account one-half of the interest income earned as a fee for their use. This provides a source of income to the Treasury Reserve Banks, possibly reducing their charges for other banking services.

A fifty-fifty split of interest income between the Treasury Reserve Banks and the Treasury Reserve Account is arbitrary, there being no compelling reason for Treasury Reserve Banks to pay a fee. Other figures in the bill, such as the amount of excise tax imposed on monetization-fee or interest income and the target range for the Treasury Credit-Note Exchange-Value Index, are equally arbitrary. Congress must set the final numbers which should be based on studies of computer simulations of the economy.

The Board of Governors may purchase income-producing United States Treasury obligations from the open market with treasury credit-notes. Their former prerogative of selling these obligations vanished with the requirement to transfer all they receive to the Secretary of the Treasury for cancellation. Buying on the open market adds treasury credit-notes to the economy, increases bank reserves and expands national credit through use of the multiplier factor. It also reduces the national debt because of the cancellation process. But, under NESARA’s new rules, the Board of Governors cannot reverse the process since they cannot sell what they do not have. This prohibits them from increasing the national debt, an option best left in the hands of an elected Congress and its authorized agent, the United States Treasury.

To offset this loss, NESARA gives the Board of Governors a powerful new regulation tool. They may impound and extinguish funds within the Treasury Reserve Account or disburse them in one of several ways, effectively using the multiplier factor to contract or expand national credit.

The Treasury Reserve Account functions as a currency reservoir, acting as a shock absorber during periods of rapid economic change. Part of the national sales tax collection is diverted to this account, making it a potent tool for fine tuning the economy. Control of these funds enables the Board of Governors to execute national monetary policy without the usual abrupt shifts in interest rates or in the reserve requirements for commercial banks.

During periods of national prosperity,—a thriving economy, government revenues increasing and expenditures for public support programs decreasing—funds accumulating in the Treasury Reserve Account could be used to retire part of the national debt. Keynesian economists, those who advocated deficit spending in times of depression, now have the opportunity to test the second half of their theory, using surpluses to pay off debt in times of abundance.
 

Section 10 of Part I provides a method for eliminating the unfair advantage that banks operating on a fractional reserve basis have over other financial institutions, such as limited membership credit unions serving their local communities. NESARA enables them to operate on a restricted fractional reserve basis, either individually or as an association, by meeting certain minimum requirements and obtaining a limited bank charter. Alternately, they may achieve the same objective as a partner with an existing bank.
 

In Section 11 of Part I Congress authorizes new types of postal money orders conforming to the three types of standard currency. A distinctive color for each type helps prevent misunderstandings. Because postal money orders must be purchased with cash, those denominated in silver dollars or eagles are issued only in integer units of standard coin.

Maximum limits are set on each postal money order purchased by type: 1,000 silver dollars, 10 eagles, and 1,000 treasury credit-note dollars. Regardless of type, the fee for each is one dollar. Note that the use of the term ‘dollar’ without other qualifiers designates a treasury credit-note or its subdivisions in clad or base metal coin. Except in unusual circumstances, any United States Post Office within the jurisdiction of the United States is required to redeem postal money orders in the designated currency within three working days of their submittal for collection. Examples of reasonable exceptions include “inability to perform” such as during catastrophic events - fires, earthquakes, storms, etc. - or with post offices located aboard U.S. ships at sea.
 

Section 12 of Part I deals with enforcement of the Act. Willful violation of its monetary and fiscal responsibility provisions resulting in aggregate losses exceeding 5,000 dollars in any 12-month period is a felony. The penalty for each conviction is a fine not exceeding 5,000 dollars, or a term of imprisonment of not more than 5 years, or both. Each conviction for willfully counterfeiting or circulating substandard silver or gold coin earns a fine not exceeding 10,000 dollars, or a term of imprisonment of not more than 20 years, or both. Although not the death penalty imposed by the Founding Fathers in the Coinage Act of 1792, this is definitely enough to get one’s attention.

Other provisions of this section encourage citizen enforcement. A reward of 10 eagles is offered for providing information leading to the conviction of one or more individuals in willful violation of its provisions. The redemption by the United States Treasury on demand in specie of any new United States Silver Certificates or United States Eagle Certificates produced under this legislation is paramount for a moral monetary system. Congress therefore directs that the Treasury shall pay a penalty of 5 eagles for any failure in this regard.
 

Section 13 of Part I simply repeals all previous legislation or any parts of previous legislation inconsistent with the provisions of this part.


 

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