How Does NESARA Compare to Other Proposals?
G. Edward Griffin
 

G. Edward Griffin, author of The Creature from Jekyll Island, has publicly stated opposition to NESARA. Yet, as you will discover, many of the proposals made by Griffin in his book are remarkably similar to elements of the NESARA proposal. What follows is a comparison of the two proposals. Griffin’s reform proposal is provided in bold font, with a comparison to NESARA immediately following.

1. Repeal the legal-tender laws. Both plans repeal legal-tender laws. In addition to replacing Federal Reserve Notes (FRNs) with U.S. Treasury Credit-Notes, NESARA also restores gold and silver coin to circulation [Part I, Section 4(G)(3)]. People will be free to use any of the three currencies. In private exchanges, buyers and sellers are free to contract in the medium of exchange they wish to use, including currencies other than the new Treasury credit-notes, gold or silver coin. With respect to government exchanges, one of the three currencies must be used, but no government can refuse payment in any of the established currencies. With respect to adjudication of contractual disputes regarding currency, NESARA establishes credit-notes as a default currency only if the parties to a contract failed to negotiate and establish the form and substance of the medium of exchange [Part I, Section 4(C)]. Furthermore, NESARA prohibits depository institutions from commingling currency types without a depositor’s affirmative permission [Part I, Section 7(E)]. Lastly, the old federal tax on state-bank notes was repealed several years ago. Thus, theoretically state and private banks already may issue their own currency. The gold-clause restrictions also were repealed several years ago, therefore consumers may already use gold and silver in private contracts.
2. Freeze the present supply of Federal Reserve Notes, except for what will be needed in step number eleven. Both plans halt the introduction and circulation of interest-bearing Federal Reserve Notes (FRNs). NESARA replaces FRNs with debt-free U.S. Treasury Credit-Notes [Part I, Section 4(A) and (B)]. The portion of the national debt held and “owned” by the Federal Reserve System is paid for in full with credit-notes and the Fed System is effectively abolished [Part I, Section 5(F) and 6(C)]. With respect to FRNs remaining in circulation, they will be replaced one-for-one as new credit-notes are introduced into circulation [Part I, Section 4(D)].
3. Define the “real” dollar in terms of precious-metal content. Both plans restore ties between circulating currencies and the physical world. NESARA retains the original statutory definition of a dollar, that is, 371.25 grains of silver [Part I, Section 4(G)(1)].
4. Establish gold as an auxiliary monetary reserve. Both plans restore gold coin to circulation [Part I, Section 4(G)(2)]. NESARA does not place gold and silver on a fixed bimetallic exchange standard [Part I, Section 4(G)(6)]; that was one of the flaws of the original coinage acts—fixed ratios do not work. By statute NESARA establishes the definition of a dollar as a specific weight of silver [Part I, Section 4(G)(1)]. Gold coins will circulate containing a known fixed weight of gold, but the market will determine the exchange value of that gold coin with respect to silver and Treasury credit-notes. In fact, the exchange values of all three currencies float in a free market because the paper currency is not compelled to be exchangeable one-for-one but is determined by the market [Part I, Section 4(B)(7)].
5. Restore free coinage at the U.S. Mint. Both plans restore free coinage. NESARA not only restores free coinage of gold and silver at the U.S. mints [Part I, Section 4(G)(5)], but also permits the minting of private stocks of silver and gold into lawful coin [Part I, Section 4(H)] which will help to keep both the U.S. and private mints honest. The metal content of the various coins is established by statute [Part I, Section 4(G)].
6. Pay off the national debt with Federal Reserve Notes. Both plans eliminate the debt held by the Fed by eliminating the Fed. Under NESARA, the abolished Federal Reserve Banks are resurrected as U.S. Treasury Reserve Banks [Part I, Section 5(F) and 6(A)], but under a different nature. All assets of the Federal Reserve System are purchased with newly printed Treasury credit-notes at the original nominal stock price of $100 [Part I, Section 6(B)]. To eliminate the portion of the national debt held by the Fed, all securities and debt instruments held by the Fed system are exchanged for Treasury credit-notes [Part I, Section 6(C)]. By statute, the U.S. Government debt instruments must then be destroyed [Part I, Section 6(C) and (D)]. As the exchange is made, the new U.S. Treasury Reserve System replaces the abolished Fed and those new credit-notes immediately become property of the people via the Treasury; thereby eliminating the quasi-public, quasi-private nature of the monetary system. That currency is placed into the newly created Treasury Reserve Account [Part I, Section 5(D)], a currency shock absorber, and is not introduced into circulation, thus is not inflationary. Likewise, all member and non-member reserve banks must exchange their government debt instruments for credit-notes [Part I, Section 7(B)]. Under NESARA, all fractional reserve banks are prohibited from using anything other than the new Treasury credit-notes as reserves [Part I, Section 7(C)]. Because government debt instruments were used as reserves, credit-notes exchanged for those government debt instruments will be held as reserves, will not be introduced into general circulation, and therefore are not inflationary. However, NESARA does not force private investors (that is, insurance companies, union retirement funds, fractional reserve banks who hold government bonds in trust for their consumer accounts or as security against customer loans, that little old lady down the street with her U.S. Savings Bonds, etc.) to sell that part of the national debt they own privately. However, the NESARA plan does allow for the newly created Treasury Reserve Board to buy back privately-owned public debt. Ideally, buying back this debt is a sound idea. However, unlike buying back the debt owned by the Fed system and financial institutions, buying back debt from private owners is inflationary and the new Treasury Reserve Board will have to exercise caution as they buy and cancel that debt. Regardless, the entire national debt can never be eliminated as long as Congress possesses constitutional authority to borrow (Article I Section 8 Clause 2). The difference under NESARA is that such borrowing occurs only with currency already in circulation, and is therefore not inflationary.
7. Pledge the government’s hoard of gold and silver. With respect to the remaining FRNs in circulation, after eliminating the Fed’s portion of the national debt, Griffin’s plan requires all FRNs to be “redeemable,” that is, exchangeable one-for-one in gold and silver coin. This requirement contradicts Griffin’s own statement that fixed ratios do not work. NESARA does not require new credit-notes to be “redeemable” in specie [Part I, Section 4(B)(7)], nor is that desirable—the market only should determine the exchange rates of the various currencies in circulation. NESARA prohibits commingling of currency types [Part I, Section 7(E)], and provides a nationally published exchange index [Part I, Section 4(G)(6) and 9(A)] so that people will know the exchange rate of credit-notes, gold, and silver coin.
8. Determine the weight of all the gold and silver coin owned by the U.S. government and then calculate the value of that supply in terms of real (silver) dollars. Calculating the amount of currency in circulation based upon total commodity metals essentially forces the currency to a fixed exchange value, contradicting Griffin’s own observation that fixed ratios do not work. Fixed exchange values among lawful currencies have often been tried and have always ultimately failed. Under NESARA, the government only establishes monetary standards (that is, the fundamental currency unit—a dollar—is defined as a specific weight of silver), but the people acting through a free market establish the exchange value of the three types of currencies.
9. Determine the number of all the FRNs in circulation and then calculate the real-dollar value of each one by dividing the value of the precious metals by the number of Notes. NESARA requires no such calculations. Free markets best determine the exchange value of the circulating currencies.
10. Retire all FRNs from circulation by offering to exchange them for dollars at the calculated ratio. NESARA requires that all FRNs be retired [Part I, Section 4(A), (B), and (D)], but compels no affirmative schedule or deadline. FRNs are merely replaced and removed from circulation as the new credit-notes are introduced into circulation. Notice that at the instant NESARA becomes law, the character of the existing FRNs changes into the character of the new credit-notes [Part I, Section 4(D)]. That is, both types of notes will be equal in exchange value and neither is issued at interest [Part I, Section 4(B)(4)]. In addition, notice that large amounts of FRNs are currently held in foreign accounts both by individuals and governments. The NESARA Institute sees no compelling reason to exchange FRNs for gold or silver coin at a fixed pre-calculated rate. Foreigners may exchange their FRNs for gold and silver coin at the market rate, the same as U.S. citizens. Better yet, they should be encouraged to spend those FRNs in the American markets for American goods and services. Regardless, both plans remove FRNs from circulation.
11. Convert all contracts based on FRNs to dollars using the same exchange ratio; including mortgages and government bonds. NESARA does not force the rewriting of any private contracts. NESARA does change the accounting practices for secured loans obtained from fractional reserve banks [Part I, Section 7(F)]. Congress has the unquestioned authority to do this because most banks operate under federal license and the terms of that license are subject to legal change at any time (see FAQ). NESARA encourages that parties of any future exchange contracts stipulate the form of currency they use. However, if the parties fail to stipulate a form of currency, by statute, Treasury credit-notes will viewed by the courts as the default currency [Part I, Section 4(C)]. With respect to buying back government debt, more than likely governments will use credit-notes and not gold and silver coin. However, that should not be an issue for people who do not want to accept credit-notes. They need only read the latest published market exchange index [Part I, Section 4(G)(6)] and then proceed to any financial institution to exchange those credit-notes for gold and silver coin.
12. Issue silver certificates. Both plans encourage silver certificates. NESARA allows for—but does not demand—the printing of silver and gold certificates [Part I, Section 4(I)]. Additionally, to help facilitate the transfer of payments in gold and silver coin, NESARA requires the postal service to print silver and gold money orders [Part I, Section 11]. Many years ago, when the government quit issuing notes in denominations larger than $100, some of the old cattlemen, who had always dealt in cash, bought and traded unsigned large denomination Postal Money Orders so they wouldn’t have to carry a large wad of paper money. Paper currency had been more convenient than gold coin and large denomination Postal Money Orders proved more convenient than small denomination paper currency. Some people today still use this practice. In a free society, there is always a way to exchange goods and services. Furthermore, nothing in NESARA prevents the private issue of silver or gold certificates. If the government fails to recognize a legitimate need, private companies might fill that void.
13. Abolish the Federal Reserve System. Essentially, both plans abolish the Federal Reserve System. NESARA removes the Fed—and government—from the currency creation process, but maintains some of the former Fed’s duties under the new Treasury Reserve System, such as check clearance, currency exchange value monitoring, etc., and under new rules [Part I, Section 5(F) and 6(G)]. Congress still will have constitutional authority to borrow money (Article I Section 8 Clause 2), but must do so only from currencies already in circulation. Their profitable business of creating and obtaining first use of currency out of government debt in collusion with the former Fed comes to an abrupt end.
14. Introduce free banking. Both plans encourage free banking. Furthermore, NESARA restores banking to its original public service role. That is, banks will exist to serve consumers, and not the other way around. Because of the way NESARA restructures loan equations for secured loans made on a fractional reserve basis [Part I, Section 7(F)], both lenders and borrowers win (see Imagine Legislation That…, FAQ). Lenders see principal repaid in entirety before being allowed to collect contracted monetization fees. This simple change helps borrowers create equity much faster, reducing debt loads and reducing risk of defaults. Because risk is greatly reduced, the “need” for FDIC and other “insurance” programs disappears (Imagine Legislation That…). Perhaps we could then find a good use for that several billion of dollars earmarked for such use that would no longer be needed as federal insurance against bank failures. Financial institutions will be prohibited from commingling currency types [Part I, Section 7(E)], ensuring safety for depositors. Gold and silver deposits are not allowed to be used in reserve calculations [Part I, Section 7(C)], nor can any demand deposits be loaned to bank customers [Part I, Section 7(G)(6)], nor can checkbook accounts be offered on those gold and silver deposits [Part I, Section 7(G)(4)]. Gold and silver deposits will be strictly custodial in nature [Part I, Section 7(G)(3)]. These requirements ensure that all demand deposits, regardless of the substance of the currency, are 100% secured. Time deposits, of course, are contracts of a different nature. With respect to free banking, the old federal tax on state-bank notes was repealed several years ago. Therefore, theoretically state banks could issue their own currency and thereby introduce another form of currency not dependent upon the federal government. Their challenge would be to achieve a numerical advantage over an honest nationally recognized currency. Without possibility of gain, they have no incentive to proceed. Still, circumstances might change. Several years ago, California issued state “warrants” in payments of its debts which the local banks accepted as money—discounted for a fee of course.
15. Reduce the size and scope of government. NESARA initially offers a politically doable, revenue neutral proposal. However, the key word is initially. NESARA eliminates a large portion of the national debt and discourages Congress from creating currency out of thin air and backed by no wealth. Additionally, American consumers will find themselves with more purchasing power as 1) the currency becomes more stable (less inflation/deflation), and 2) debt loads change as NESARA restructures secured loans made on a fractional reserve basis. As Americans become debt-free they will rediscover ownership of resources, and will become less dependant upon government welfare programs, thereby reducing the size of government. NESARA also replaces the federal income tax with a national retail sales and use tax, and, to eliminate any concerns of regressive taxation, exempts many categories of necessities from the tax. [Part II, Section 5(A) and (C)]. Without the hidden, embedded cost of the income tax, consumers again win and discover stronger purchasing power with their hard-earned dollars. However, like Griffin’s plan, NESARA does not provide solutions for all categories of social problems. NESARA does very much open the doors to changes, but unfortunately most of the government welfare is now on auto-pilot, and changes to those “entitlement” programs will not result directly from NESARA, but indirectly. Returning resources to the people must be established before cutting government assistance, not vice-versa. Cutting assistance first likely would create political backlash, encouraged by the politicians, and resulting in the restoration of that assistance plus additions and further increases of federal authority. History demonstrates that most failures of the federal government result in a bigger, more powerful and intrusive federal government. The key then is first returning and restoring resources to the people, then dismantling the social welfare mind-set. The rest will follow.
16. Restore national independence. Like Griffin’s plan, NESARA provides no specific mechanisms to withdraw from various international political fronts, but certainly opens the doors for such transitions. As the American economy booms from the changing character of debt, other nations will be forced to join the parade or fall behind. After NESARA is enacted the need for wealth redistribution on an international scale will follow the same path as nationally.

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As you have noticed, the two plans are remarkably similar. What then, are the key differences between Griffin’s plan and NESARA? There are chiefly two differences.

One difference is that Griffin requires all paper currencies be redeemable in specie, that is, gold and silver coin. Yet, in Griffin’s own words, fixed ratios do not work. NESARA provides for gold and silver coin to circulate, as well as a paper currency; but does not require that paper currency to be redeemable one-for-one. Instead, NESARA allows the free market to determine the exchange rate of that new paper currency.

Griffin’s concern for one-for-one redeemability is commendable. His concern is based upon Congress’s ability to use the current system to create currency out of thin air, via the “Mandrake Mechanism” of the Fed. However, reviewing the NESARA plan reveals that Congress is deprived of that “hidden” ability. Under NESARA, the Treasury Reserve Board can buy debt; but unlike the current Fed which holds that debt for later sale to the public, must cancel and destroy those debt instruments [Part I, Section 6(C) and (D)]. Therefore, the “Mandrake Mechanism” is effectively quashed. Eliminating the “Mandrake Mechanism” is one of the goals of Griffin’s plan and NESARA effectively accomplishes that.

Some people might ask then, if the “Mandrake Mechanism” is eliminated, how does the Treasury create or extinguish the paper currency, as needed to maintain an inflation of zero? The simple answer is that under NESARA the Treasury has no authority to create currency. Currency creation occurs only at the local community level, and is determined by the free market. However, the Treasury, using the new mechanism known as the Treasury Reserve Account [Part I, Section 5(D) and 9(B)(4)], can and will regulate the amount of credit-notes in circulation. The Treasury has no authority to control or regulate the gold or silver in circulation.

Because under NESARA the “Mandrake Mechanism” no longer exists, Congress must borrow only currency already in circulation. NESARA restores respectability to the word “borrow.” More importantly, with respect to the circulating paper currency, understand that inflating the currency occurs largely through the “Mandrake Mechanism,” not at the local commercial bank level. The reason is that the Fed creates currency out of thin air, and that newly created currency is backed by no goods and services. All currencies, regardless of form or substance, are fundamentally backed by goods and services. Therefore, the major mechanism of the currency inflation machine is dead.

Yet, students of the NESARA proposal will notice that banks (and some credit unions [Part I, Section 10]) continue to operate on a fractional reserve basis. That is, such institutions will be able to create currency out of thin air.

Although Griffin’s plan requires no fractional reserve operations, first notice how NESARA greatly impedes the usual mischief that occurs in such systems. First, no commercial paper may be used as reserves, but only Treasury credit-notes [Part I, Section 7(B) and (C)]. This eliminates the motivations to influence national monetary policy. Second, notice that NESARA provides new lending equations [Part I, Section 7(F) and What’s In It For Me?]. Those new equations provide tremendous stability to the lending system—both borrowers and lenders benefit. Most importantly, the trickle-down pyramid effect of fractional reserve banking that starts with the Fed is destroyed. That is, the multiplication factor caused by the Fed pumping currency into the economy no longer exists. Therefore, currency creation will be greatly regulated by the reserve amounts at each lending institution. That is, although lenders may still operate on a fractional reserve basis, with no multiplier effect from the Fed, the rate at which reserves grow will be impeded.

NESARA allows currency creation to continue, but only at the local level. The fundamental thesis behind that reason is a concept called virtual wealth. Virtual wealth is defined as “potential wealth to be created through future production and assumed to currently exist for accounting purposes; wealth that could be created provided all requirements for its production existed.”

Consider an application for a new home loan. That home does not yet exist; but within a few weeks or months after the currency is created, that home (wealth) soon exists. The concept of virtual wealth allows a productive society to tap into the future of productive labor. Most importantly, unlike under the current system with the Fed, notice how that locally created new currency is backed by goods and services.

Yet, sharp students will notice that even locally the instantaneous creation of currency is inflationary.

With respect to the micro level, that is, if observed only on a case-by-case basis, yes, allowing lenders to create new currency on a fractional reserve basis is inflationary. All currency created at the local level is always inflationary at the very instant the currency is created, because that currency represents an element of demand that did not exist a moment ago. However, when that currency is used to buy goods and services and the very act of its creation makes the production of those goods and services possible, you have an example of virtual wealth. More importantly, stating that such currency creation is inflationary and implying great damage by such acts is looking only at half the picture. You have to distinguish between micro and macro changes to the aggregate system. At a macro level, that is, in the aggregate, local currency creation (inflation) will be offset at the same instant elsewhere in the aggregate by currency elimination (deflation) because another person is repaying a similar loan. As long as the aggregate Supply = Demand there is no problem; in fact, exactly the opposite, something real is created out of a pure concept.

The other difference between Griffin’s plan and NESARA is that Griffin has publicly stated that he believes the NESARA proposal merely shifts from the Fed system to politicians the ability to create currency out of thin air. Yet, as we have shown here and throughout the web site, under NESARA Congress no longer has that hidden power. Currency creation can occur only at the local community level and Congress can borrow only existing currency already in circulation.

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Notice: This document was created without any direct contribution from Mr. Griffin. The information we have posted was done strictly through reading Mr. Griffin’s book, The Creature from Jekyll Island. We will heartily update this page based upon any meticulous and well-pleaded response that Mr. Griffin might provide.