Abraham Lincoln Senate document 23, Page 91. 1865

The government should create issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity.

Section 51 of the Australian Constitution is the authority given to Parliament to make laws in certain areas. The relevant section that enables the ASP Monetary Policy to be lawfully enacted is rephrased below for ease of reading:

S51 – The Parliament shall have power to make laws with respect to:

• The national currency, coins and legal tender.
• Banking, except for State Banks (i.e. banks which are managed solely by the government within the physical bounds of the State).
• State Banks that operate beyond the physical bounds of the State.
• The incorporation of banks.
• The issue of paper money.

A common question is: "Does the government have the power to create money?". The answer is an obvious YES, due to the following:

• The dollar is the national currency - which is commonly accepted as money. So creating money is within the power of government.
• The government currently authorises the creation of coins and paper notes - consequently it can also authorise the creation of money (i.e. electronic book entries).

Money Supply

US President James Garfield - 1881. The American Plutocracy, page 158.

Whoever controls the volume of money in any country is absolute master of all industry and commerce... and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate

Once the Australian government reclaims its sovereign right to create and issue money, a related issue arises - namely that of the total quantity or supply of money in circulation, and how much money the government should inject into or remove from the economy in order to maintain a stable monetary system.

The ASP believes that the annual growth in the money supply should be linked to the annual growth of the Australian population. In this way - the greatest contributor to price inflation (i.e. monetary inflation) is removed from the equation, and any subsequent movement in the price of goods and services will be a true market signal coming from supply and demand factors.

In order to determine the annual growth in the money supply, two bits of data are required:

Annual population growth		Current Money Supply
		The RBA collates huge amounts of data - and the figure for the Broad Money supply for September 2010 is $1,303.7 billion. To get the latest figures look for the Money Aggregates - D3 spreadsheet at the RBA site here.

If we take the annual population growth rate to be 1.7% - this means that approximately $22 billion of new money can be created annually:

• Without any per capita monetary inflation, and
• Without any monetary pressure on price inflation.

Of greater interest - is that fact that since the 2009/10 Federal Budget was approximately $339 billion, this new money of $22 billion (which is 6.5% of the annual budget) can be used by the government to:

• Pay down its debt by $22 billion each year, or
• Reduce taxes by $22 billion each year, or
• Pay for new infrastructure valued at $22 billion each year.

All of this is a natural consequence of a "debt free money system" - without the population contributing a single cent, or having any per capita monetary inflation.

Sanction

P.J. O'Rourke

Giving money and power to government is like giving whiskey and car keys to teenage boys.

The power to create money - placed in the hands of government is no less a blunt instrument than having such power vested in private corporations. Sanction is required to ensure that such power is never abused by creating too little or too much money.

The ASP believes that there should be very strong sanction within law, or introduced within the Constitution - to ensure that the government cannot debase the national currency in any way, and that no entity ever wrestles the right to create money away from the people ever again. Inflation and the debasement of the national currency is theft. The fate of private citizens who steal money from the populous - should be no lesser a fate for any government that does the same.

ASP Monetary Policy

William Lyon Mackenzie King

Once a nation parts with the control of its currency and credit, it matters not who makes the nations laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.

The 3 most relevant sections from the ASP Monetary Policy that address the issues detailed above are:

• The Australian Treasury should rightfully reclaim from banks its sovereign and sole prerogative to create money - for the benefit of the Australian people.

• The Australian Treasury should pursue a stable monetary policy to preserve the value of the national currency, to maintain the nation’s money supply relative to the size of the Australian population, and to neither cause price inflation nor price deflation.

• There should be constitutional and legal sanction if the government does not meet the measures of a stable monetary policy.

If just these 3 clauses of the ASP Monetary Policy are implemented - then the natural consequences will be:

• Inflation will be stopped - and the economy will have stable prices.
• There will no longer be "boom and bust" cycles, but only a gradual increase in GDP due to increased productivity and technological advances.
• There will be no need for the government to get into perpetual debt (i.e. we will have lower taxes).
• Interest rates will be lower across the board.

4 Steps to Honest Money

Any government that has the interests of the Australian people at heart - can implement the ASP Monetary Policy in four simple steps.

Step 1 - Legislate

The legislation to be drafted will be drawn from the following 2 acts. Although these acts are American in nature - they can easily be adapted to reflect the Australian environment to meet the objectives of an honest money system:

• American Monetary Act - drafted by the American Monetary Institute
• Monetary Reform Act - posted on The Money Masters

Step 2 - Create all money

Contrary to popular belief - the RBA only creates a very small portion of the money supply in Australia. Refer to the "Foundation of Monetary Policy".

For centuries, kings and rulers created money. There is even a term that defines the value that accrues to the creators of money - know as "seigniorage".

Consequently - the creation of money by governments is not new. Even President Kennedy empowered the US government to create money by way of executive Order 11110 during 1963.

As a practical example, once the Australian government reclaims its sovereign right to create money - it may ask the RBA to credit its account with $1 million, and it will pay the RBA as follows:

• If the RBA stamped coins - the government may pay the RBA say 40¢ for each $2 coin and record seigniorage of $1.60 per coin.
• If the RBA printed notes - the government may pay the RBA say 5¢ for each $50 note and record seigniorage of $49.95 per note.
• If the RBA entered a credit balance in a computer ledger - the government may pay the RBA a small fee for this service and record the balance as seigniorage.

None of this is alien to central banks and the various Mints that do the physical printing or coining. The ASP will merely legislate that ALL money originates in this way for the benefit of the people of Australia.

Step 3 - Spend the money into circulation

The ASP believes that all newly created money must be spent into circulation - on items that have an enduring value to the Australian population as a whole, and also for our future generations. For this reason we believe that the government should spend newly created money on items such as roads, railway lines, airports, harbours, hospitals, water works, communication networks etc...

If this approach is followed, then the natural consequences will be:

• The government will own assets for the benefit of the people - debt free.
• The people/companies that constructed the asset will have rightfully earned that money.
• Tax rates will be lower (since there is no debt to service).
• Most importantly - the population will know that behind every dollar in circulation is an asset that serves the Australian people.

Step 4 - Create sanction

The ASP Monetary Policy states that government should follow a stable monetary policy, and that:

• It must preserve the value of the national currency, and
• Maintain the nation’s money supply relative to the size of the Australian population, and
• Neither cause price inflation nor price deflation.

All of these items can be carefully measured - and should the government stray from these measures, strict and swift sanction should be applied. Such sanction should be selected from a range of possibilities - with the dismissal of the government being a definite option.