Under "Pure Money" Proposal, U.S. Would Create New Money Streams to Address Urgent National Needs

Newswise — CHESTERTOWN, MD—Washington College history professor Richard Striner has written a groundbreaking book that explains how the nation’s system for creating money came to be, and then proposes a change that could pay for critical national needs without raising taxes, feeding inflation or growing the deficit. In How America Can Spend Its Way Back to Greatness: A Guide to Monetary Reform, just released by Praeger, Striner revives and updates once prominent but largely forgotten economic theories about government-created money with what he calls his theory of “Pure Money.” Since the nation’s founding, banks have created most of America’s money supply “from out of nothing,” he explains, but a better system would give the government the power to create money, as well. “Under my proposal, Congress would vest itself with the power to create money through direct electronic processes, just the way banks do it under the Federal Reserve system, and then spend it—not lend it but spend it—directly into the bank accounts of government employees and vendors. We would have these twin streams of electronic money creation, one from the banks and one from the government, converging in one monetary pool that the Federal Reserve can tweak as necessary to counteract inflation, the same way the Fed rides herd on inflation now.”

By integrating the “Greenback” method of government-created money with the fiscal and monetary status quo, Striner argues, the United States could spend its way back to greatness. Through a carefully monitored system, the federal government would create the funds needed to repair the country’s crumbling transportation infrastructure, maintain national defense, engineer solutions to the worst-case effects of climate change, and tackle other national necessities that our current political and economic gridlock is failing to address.

Striner, whose father was a business school dean at American University with a Ph.D. in economics, is a noted historian of presidential power, particularly that of Abraham Lincoln, who has also written about literature, film and economics. Known as an intellectual maverick, he first presented the ideas in the book as a cover story for the Winter 2012 issue of The American Scholar, a magazine published by Phi Beta Kappa. He stresses that he wrote both that article, “How to Pay for What We Need,” and the new book for general audiences, using clear, vivid terms to explain what money actually is and how it gets into circulation. Most Americans have no idea how the current system of fractional reserve banking works, he says. By providing a history of monetary policy, including the respected economists, businessmen and political leaders of the past who advocated for “greenback” policies, he lays the groundwork for his new concepts. “I would argue that in today’s electronic age, money is tantamount to energy, direct free-flowing power to purchase. And the profession of economists would be clearer if that fact were acknowledged.”

Richard Striner is under no illusion that his theory is an easy sell. But he believes in the book’s proposals and is ready to fight for them. “Like most Americans, I am appalled by the magnitude of the problems crying out for remedial action in America,” he writes in his preface. “And I am even more appalled by the straitjacket that our fiscal politics impose upon our once-great nation. ... The Pure Money proposal is, among other things, a summons to fight and fight hard.”

And if the hard fight were won? “I think my book could revolutionize politics and finance in this country,” Striner says. Win or lose, his readers will have learned how we got to this point in our national money story, and just where our money, or purchasing energy, might one day go.