Banking: Go Global or Go Local

With Ron Paul's call to "End the FED." There is heated debate about whether our banking system should go global in support of the Bank of International Settlement "Special Drawing Rights" or "Go Local" with "State Banking Initiatives." I am of the opinion that this "go global", "go local" scenario is a false dichotomy. There is another choice. Instead, I say let's follow the Constitution and let the national government do what the national government should do and the local government do what the local government should do. According to the Constitution, the US Treasury should create or "coin" all the money and local banks should be empowered to have direct access to US Treasury money to administer loans to credit-worthy individuals and groups in their community. In this way, it is not an "all global" or "all local" solution. Part of the economy needs to go national, and the other part needs to go local.

NATIONAL
Let a portion of the money supply (m0, m1, m2) representing circulating money be backed by gold and silver. The US government may need to nationalize gold mines in some way because the global elites have a deBeer's-like monopoly on gold and have been withdrawing it from the market to keep prices artificially high, and to create artificial scarcity. In exchange the US could give back all federal lands and other mineral rights to the States.

The US TREASURY must create all the money in our economy. This means a conversion from Fractional Reserve Banking to Full Reserve Banking. We can't allow banks to create 90% of the money supply out of thin air.

LOCAL
Let m3 be money created by the US treasury that is used by local and state banks to issue no-interest, fee-based loans for non-depreciating assets like land, and real-estate. A person is able then to get a loan, pay a fee (loan origination, monthly service) which generates revenue for the bank and the federal government as a "voluntary tax" but the borrower builds equity from day 1. IF the borrower fails to make a payment, that payment is deducted from his equity in the asset. Thus the loan becomes a reverse mortgage at any time.

Banks would be FULL RESERVE as deposited money would not be used to make new loans. All new loan money would come from the US Treasury. This would control inflation. When new money needs to be created, new loans are made as needed to meet the demands of innovation. When the people have a lot of savings, they don't need loans, and money supply is stable. Amortized loans no longer drive inflation either. The new money created for m3 is not backed by gold but by the non-depreciating asset that this money is being used to purchase.

No m3 no-interest loans would ever be made to purchase stock, derivatives, or other speculative financial instruments. Money is never used (leveraged) to make more money. When new money is needed, the US Treasury creates the money 100%. This money being used to make money is what creates the inequality in our current system.

THE PURPOSE
This system would protect these Safety Society Banks from the business cycle, inflation, and from runs on the bank. There may be other banking and financial institutions that due other risky things (venture capital), but our Safety Societies which form the foundation of national and local economies are shielded from the storms of financial risk as much as possible. So far, this nation has been plagued by one banking failure and panic over another and we all have been brought up to falsely believe that this is some-how normal. This doesn't have to be. WE CAN PROTECT OUR BANKS.