The Treasury Dollar: Plan

Abstract

The Coronavirus pandemic calls for both emergency supply-side productive mobilization and demand-side spending support measures. Measures of the latter kind are fortunately now under discussion in Congress. What remain to be developed are two things: first, complementary supply-side measures – as urgent as demand-side ones in light of social distancing’s suppressive effects on productive activity; and second, both the funding measures those efforts require and a payments infrastructure through which funding, and spending – including remote spending – can be channeled both now and in future. The plan offered here accordingly calls for: • Immediate suspension of Section 14 of the Federal Reserve Act (FRA), which prohibits direct Fed purchases and monetization of Treasury securities. • Immediate opening of the FRA Section 13(3) Discount Window, and the Section 372 Member Bank ‘bankers acceptance’ authority, to additional forms and higher amounts of monetizable collateral than currently accepted. • Expeditious issuance of a new dollar-valued ‘Treasury Dollar Bill’ and ‘starter deposits’ thereof in Treasury Direct Accounts (TDAs) for all citizens and legal residents through the already existing, 24/7 digital ‘Treasury Direct’ portal. • Immediate designation of Treasury Dollar Bills as legal tender, or in the alternative, opening of Fed Transaction Accounts (FTAs) paired 1-1 with TDAs, into which Treasury Dollar Bills can be converted 1-1 into Fed dollar bills. Treasury used to issue dollars (‘Greenbacks’), so TDBs aren’t ‘exotic.’ • Immediate establishment of universal P2P connectivity among all TDAs or FTAs, such that all citizens and legal residents can make payments to one another electronically via smartphones or other electronic devices in literally any legal transaction. • Cryptographic and legal protection of financial and data privacy of all TDA or FTA accounts and transactions. • Payment of interest on TDA or FTA accounts, both to afford more efficient monetary policy transmission and to render transparent, as should always be done in a Democratic Republic, the essential identity of all sovereign monetary liabilities, be they Federal Reserve Notes (‘dollar bills’) or Treasury securities (notes, bills, and bonds).