I
106TH CONGRESS
1ST SESSION
H. R. 1452
To create United States money in the form of noninterest bearing credit
in accordance with the 1st and 5th clauses of section 8 of Article
I of the Constitution of the United States, to provide for noninterest
bearing loans of the money so created to State and local governments
solely for the purpose of funding capital projects.
IN THE HOUSE OF REPRESENTATIVES
APRIL 15, 1999
Mr. LAHOOD introduced the following bill; which was referred to the Com-
mittee on Banking and Financial Services, and in addition to the Com-
mittee on the Budget, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To create United States money in the form of noninterest
bearing credit in accordance with the 1st and 5th clauses
of section 8 of Article I of the Constitution of the United
States, to provide for noninterest bearing loans of the
money so created to State and local governments solely
for the purpose of funding capital projects.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘State and Local Gov-
ernment Economic Empowerment Act’’.
SEC. 2. FINDINGS.
The Congress hereby finds the following:
(1) As of the date of the enactment of this Act,
money is principally created in the domestic econ-
omy by banks through the process known as ‘‘de-
posit expansion’’ under which credit is extended by
banks to customers in exchange for the assumption
of an obligation by each customer to repay the
amount of any such credit with interest.
(2) The creation of money through the exten-
sion of credit and creation of debt, a traditional
banking function, preceded the establishment by the
Congress of, first, the national banking system and,
subsequently, the Federal Reserve System.
(3) The constitutional authority to create and
regulate money does not limit the Federal Govern-
ment to creating money through the production of
coins or currency or the process of debt creation but,
except for a brief period during the administration
of President Lincoln, the Federal Government has
not exercised such authority more broadly.
(4) The creation of money by the banks in con-
junction with the Federal reserve banks does not
limit the constitutional authority of the Congress to
create Government credit funds in the form of non-
interest bearing credit to fund a legislatively ap-
proved program or prevent the Congress from cre-
ating such funds.
(5) The creation of noninterest-bearing govern-
ment credit funds in measured or limited increments
for the purpose of funding capital and environmental
projects in the public interest—
(A) will allow projects to be built for 1⁄2 to
1⁄3 the normal cost; and
(B) will allow more necessary projects to
be built at a lower cost to the taxpayers and at
the same time build additional wealth in the
communities where such projects are located.
SEC. 3. CREATION OF MONEY.
(a) IN GENERAL.—Pursuant to the exercise by the
Congress of the authority contained in the 5th clause of
section 8 of Article I of the Constitution, the Secretary
of the Treasury shall have money available for purposes
of this Act in an amount equal to the product of—
(1) the population of the United States, as de-
termined by the Secretary of Commerce on the basis
of the 1990 census; and
(2) $1,400.
(b) LOAN AGREEMENT.—The money referred to in
section 3(a) shall be created by having the Secretary of
the Treasury and the Board of Governors of the Federal
Reserve System enter into a Loan Agreement in accord-
ance with the following requirements:
(1) The Board shall lend the United States
Treasury 
an 
amount 
up 
to 
a 
total 
of
$360,000,000,000 at the rate of not more than
$72,000,000,000 per annum (on a cumulative basis)
in each of the 5 years commencing 60 days after the
date of the enactment of this Act.
(2) The Secretary of the Treasury shall pay an
annual fee to the Board (the amount to be nego-
tiated between the Secretary and the Board) to
cover the administrative costs the Board incurs in
acting as the agent of the Administrator appointed
under section 4(b). The amount of this administra-
tion fee each year shall be charged to the recipients
of the noninterest bearing loans made to them dur-
ing the year pursuant to section 7(e), pro rata to the
amount of such loans.
(c) EXERCISE OF SOVEREIGN CAPACITY TO CREATE
MONEY.—
(1) IN GENERAL.—Any amount made available
pursuant to this Act shall be treated as money cre-
ated in the sovereign and exclusive capacity of the
United States, in accordance with the Constitution,
to create money.
(2) EXPENDITURE OF TAX REVENUE OR BOR-
ROWED FUNDS NOT AUTHORIZED.—No provision of
this Act shall be construed as authorizing the ex-
penditure of funds derived from revenues imposed
and collected by the United States Government
under any provision of law or from amounts bor-
rowed by the United States Government pursuant to
chapter 31 of title 31, United States Code, or any
other provision of law.
(d) BUDGET TREATMENT.—
(1) NONAPPLICABILITY OF PROVISIONS APPLI-
CABLE TO RECEIPT AND EXPENDITURES OF REV-
ENUE
AND
BORROWED
FUNDS.—For purposes of
title 31, United States Code, the Congressional
Budget and Impoundment Control Act of 1974, the
Balanced Budget and Emergency Deficit Control
Act of 1985, the Budget Enforcement Act of 1990,
or any other provision of law—
(A) money created under this section shall
not be treated as revenue when it is created or
made available to the Administrator under sec-
tion 4(b) nor shall it be treated as revenue by