The proposed three part reform of our currency system would have the U.S. Government directly spend the money into circulation rather than the present method of allowing the banking system to create the money and then the government borrowing the money. Funding such infrastructure expenses through bonds generally doubles to triples their final cost.

The reform avoids this expense by removing the fractional reserve provision of the present system, which in effect allows the banking system to create the much needed new money that must be continually introduced into the economy, as population and economic activity expands; or when emergencies such as Katrina, or warfare require great expenditures. Under the reform only the U.S. government, not the private banking system would be allowed to create money.

"What we're proposing is very similar to the 'Chicago Plan' which came out of University of Chicago economists in the 1930's and was widely supported nationwide by the economics profession back then," said Zarlenga.

Under the plan the government spends the new money into circulation on necessary infrastructure, including education. A presentation at the conference by the American Society of Civil Engineers pointed out the deteriorating condition of American infrastructure, which currently receives an overall grade of D, and is predicted to reach D- soon.

MOST OF KATRINA'S DAMAGE ON NEW ORLEANS COULD HAVE BEEN AVOIDED

"This method of introducing new money through infrastructure creation and repair would actually have stopped most of the damage and loss of life in New Orleans because the money would have been available to repair the levees, and they would have probably held" said Zarlenga. "The difference is that under the present private control, money goes largely into speculative bubbles, including wall street games and real estate" he said, "Under societal control it would go much more toward promoting the general welfare. Inflation is avoided because real material wealth has been created in the process, and catastrophic loss including loss of life is prevented."

The keynote speaker at the conference was Congressman Dennis Kucinich, on the topic of Economic Justice. The American Monetary Institute is a 501c3 publicly supported charitable trust organized in 1996 to promote the independent study of monetary history, theory and reform. This was the institutes first public conference and annual conferences are planned.