By Greg Coleridge

The institutions that create and distribute money in our nation and throughout much of the world are diseased.

Monetary systems are supposed to ensure that economies are healthy, just and sustainable. They shouldn’t benefit the 1% at the expense of the rest of us.

The COVID-19 pandemic has exposed and worsened the inherent crises in our medical and economic system. The same is true of our monetary system, which in its own right is as invisible, harmful and widespread as the virus, but was unjust, unsustainable and undemocratic long before the first cough, sneeze, or breath from a coronavirus-infected person occurred on US shores.

The Federal Reserve System, our nation’s central bank, composed of 12 Regional Reserve Banks, creates money out of thin air — as do all commercial banks across the country.

The Fed will be issuing money in the current crises by literally entering numbers in bank accounts of some corporations as loans and to other corporations to purchase assets, mainly corporate bonds. The Fed will create the money and decide the major corporate recipients of the trillions. It will also dole out an additional several hundred billion dollars from the government’s recent stimulus bill to large corporations.

A return to economic “normalcy” post COVID-19 won’t happen and shouldn’t be our goal. Now is the time to organize for economic and political systemic change, including a democratized money system that will serve the interests of people and communities over those of Wall Street and other financial interests.


The U.S. Constitution (Art 1, Sec 8) authorizes Congress to “coin” (a verb) money. Money creation, along with spending and taxes, are the three major economic tools of the federal government. Federal spending and tax policies (which receives the most public attention) repeatedly favor the super rich and corporations – including the several trillion dollars worth of bills recently passed by Congress. Monetary policies are different. They not only favor the rich and corporations. The corporations are the decision-makers.

Without a shot being fired or tanks rolling into the nation’s capital, corporate interests pulled off a financial corporate coup with passage of the 1913 Federal Reserve Act – capping a century long struggle between banksters and the public over who (or what) should have the right to have their hand on our nation’s money spigot. Previous efforts to privatize/corporatize money creation were beaten back when both the corporate charters of the private First National Bank (1811) and Second National Bank (1836) weren’t renewed.

The Federal Reserve System is largely a private/corporate network – more beholden historically to its Regional Banks and their banking corporation members than to the public.

All new money in our nation, minus coins, is created by banks out of thin air with only a small percentage, if any, of deposits to back them up. Most of the new money is interest-bearing loans for homes, vehicles, business creation/expansion, etc., which is debt. New money is also used to buy Treasury bonds and other securities, which is also debt.

Let this sink in. Congress can only literally nickel and dime the issue of money creation. Our government currently cannot create money as an asset – unable to use one of its three constitutional financial tools to respond to our unprecedented economic crisis that is decimating individuals, small business, local and state governments, and the larger economy. The creation and distribution of money by banks is the most economic and democratically damaging form of privatization/corporatization in our society.

Robert Hemphill, former Credit Manager of the Federal Reserve Bank of Atlanta, chillingly described decades ago this reality:

“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”

Banks’ legal authority to create money as debt led to loans for speculative stock investments in the 1920’s, the subsequent stock market crash and the Great Depression. It resulted in bank lending for risky mortgages in the late 1980’s that banks mixed together, what they called “securitized,” with AAA ratings and sold off to unsuspecting investors that eventually crashed – causing massive losses of money and homes, but also billions for bank bailouts during the Great Recession. Senator Dick Durbin’s refreshingly honest observation explained the reason for the bank bailouts: “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”


A financial reckoning was imminent before COVID-19 – in no small measure due to the Fed’s power to create money as debt. Its persistent low interest rates allowed corporations to borrow money cheaply — not to expand research & development or to raise worker salaries to increase benefits, but for stock buybacks to pump up share prices. This increased payouts to CEOs with compensation packages that included equities. It also drove up the stock market and further widened the rich-poor gap since the rich disproportionately own stocks. Wall Street’s health, though, didn’t reflect the growing sickness of main street or the side or back streets of our economy.

The Fed has injected more than $9 trillion in short term loans, called “repo loans,” to Wall Street to keep the interbank loan market from collapsing since last September. This propped up and concealed at least one “too big to fail” bank (the suspicion is J.P. Morgan Chase) from default.

The recently passed CARES Act included $454 billion for the Treasury Department earmarked to the Fed to help big businesses. The Fed leveraged the amount ten times to create over $4 trillion(1) in loans to banks and other corporations. Just recently, the Fed expanded the program to include even larger businesses with even more debt due to the coronavirus. Who receives the cash will be decided by private banks, not our government — despite the $454 billion being public funds. Boeing and Carnival Cruise lines are among the early loan recipients — the former having their profits crash following their planes doing the same before the coronavirus struck. Some, if not all, of the nearly half-trillion dollars will be spent buying junk investments from banks and other corporations, which incentivizes risky investments when you know you’ll always be bailed out for bad bets.

Just to make it as difficult as possible to, if nothing else, shame banks into acting at least somewhat publicly accountable, the Fed has not committed to disclosing the bank recipients of the $9 trillion in repo loans. Moreover, the CARES Act suspends the Freedom of Information Act (2) for the Fed and allows it to hold secret meetings on corporate bailouts with no publicly-released minutes. Further evidence that banking corporations rule.


At some point, of course, the bills will come due. The public will be on the hook to pay at least the interest on a $27 trillion or larger national debt by year’s end. This will consume an even larger share of our federal budget. We all know what that means.Without money creation in our public/democratic financial tool kit, we’re left with just spending and taxes. The perennial debate will commence over whether to slash social programs (which will include entitlement programs like Social Security and Medicare, as well as programs that help those in our nation most in need) promoted by Republican vs raising taxes on the super rich and corporations (and maybe, just maybe, even puny military spending cuts) offered by Democrats. The truth is both parties can slash and tax away, but it still won’t come close to taking a real bite out of the debt. Selling or leasing every public asset or service to corporations will be debated. Economic Einsteins will also suggest addressing the debt problem by simply borrowing more — analogous to the belief that you can drink yourself sober.

Being in debt means being in servitude to those who own the debt. Most of us work a large part of the year to pay banks mortgages, credit cards, student loans, auto loans and other debts. In the case of the federal government, debt takes the form of Treasury bonds – which right now are owned by the Fed, but also by banks, mutual funds and pension funds. More than one quarter (3) of US debt, however, is owned by foreign nations, with the major holders being China, Japan, Brazil and the UK. These countries at some point might come calling to pay up. If we don’t have the cash or the dollar is deemed worthless due to all the money printing, then it may be our national parks, forests of other physical assets that are handed over to the countries or their national-based corporations. It’s what the US-dominated IMF and World Bank have done for decades toward other countries as “conditions” for loans.


A “sovereign or just money” (4) system is the alternative to our socially, economically and politically diseased bank-created money system. Public creation of money must go beyond minting coins. It happened before when the Lincoln administration issued debt-free “Greenbacks” to finance the Civil War. A democratric money system must also include ending the ability of banks to create money as interest-bearing debt.

Such a system doesn’t have to be created from scratch. The National Emergency Employment & Defense (NEED) Act (5) was introduced in several Congressional sessions, most recently in 2011 by former Congressman Dennis Kucinich and the late John Conyers.

The NEED Act would create public money as an asset. It would gradually eliminate our federal debt, spend public money to meet a variety of human and physical infrastructure needs creating millions of jobs, provide funding to state and local governments, and even provide a “citizens dividend,” along with many other provisions. Since newly created U.S. money would be spent on real goods and services, there would be no inflation, as economic/mathematical analysis concluded (6). Additionally, banking corporations could no longer create money out of thin air as debt by computer keystrokes.

The beauty of the Act is that its transformative proposal accomplishes what most of the public believe already exists. Thanks to Wall Street, their media mouthpieces and economic cheerleaders, we’ve all been conditioned to accept these three monetary facts:

  1. The Federal Reserve is public

  2. The U.S. government creates all of our money

  3. Banks only lend what they have in reserve

Reality for more than a century has been just the opposite. The NEED Act is monetary jiu jitsu. Its major transformative provisions are precisely what we’ve been led to believe has existed all along. It’s extremely rare that any profound proposed systemic change is based on core elements already widely perceived as the truth by the public. Thank you very much Wall Street banksters and your sycophants!

The NEED Act needs updating. The Alliance for Just Money is circulating a petition calling for the Establishment of a National Commission of Inquiry Into the Money System of the US (7) to deal with the issue proactively. We can’t wait until economic conditions further deteriorate and banking corporations gain ever more profits and power.

The NEED Act, Medicare for All, national paid sick leave and unemployment insurance are among several policies that the current COVID-19 and economic crises have exposed as being urgently needed. Enactment of any of them is extremely difficult in a politically rigged system dominated by the super rich and corporate entities.

Banking corporations are among the most politically potent. The Finance, Insurance and Real Estate (FIRE) industry continues to be #1 (8) in political campaign contributions/investments in the current election cycle, as it has been for many years. Seats on the House Finance Service Committee are among the most coveted (9) since the financial industry rains campaign contributions down on its members, which has increased in size to 61 from 44 members since 1980.

Canadian Economist William Hixson summed up the societal challenge of creating a democratic money system:

“The very idea of a government that can create money for itself, allowing banks to create money that the government then borrows, and pays interest on, is so preposterous that it staggers the imagination. Either everyone in government in charge of the procedure is lacking in intelligence or they have been bought and paid for by those who profit from their skullduggery and their infidelity to the public interest.”


It may be that none of these needed changes occur until all of their respective advocates come together in a larger movement of movements. Included in this should also be Move to Amend’s We the People Amendment (10) to the US Constitution to abolish corporate constitutional rights and declare that political money in elections is free speech — a solution that would make it easier to achieve all of these and other separate social and economic ills.

The challenges are immense. The crises are enormous. Our solutions must be equivalent in scale.

COVID-19 looks to be the pin that has popped the “Everything Bubble” financially, opening the possibility for a reset of our economy, as well as our governing institutions and social order to be more authentically democratic, decentralized, just and sustainable. Promoting half-measures is comparable to premature ending of stay at home orders to flatten the coronavirus curve. The problems and virus will simply continue.

Fundamental system change is the only approach to curing our monetary pandemic and other structural diseases.

Greg Coleridge is Outreach Director of the national Move to Amend Coalition (