Jan Kregel — Wright Patman’s Proposal To Fund Government Debt At Zero Interest Rates: Lessons For The Current Debate On The Us Debt Limit

When the Honorable Marriner S. Eccles, Chairman of the Federal Reserve Board, was before the Banking and Currency Committee of the House . . . on Tuesday, September 30, 1941, I interrogated him about how he obtained for the 12 Federal Reserve banks the $2,000,000,000 in Government bonds, which the System is now holding and charging the Government interest thereon . . . :
"How did you get the money to buy those $2,000,000,000 in Government securities? “

"We created it.

"Out of what?"
"Out of the right to issue credit, money.
“And there is nothing behind it, is there, except the Government’s credit?

“We have the Government bonds.

"That’s right; the Government’s credit.”

Levy Economics Institute of Bard College Policy Note
Wright Patman’s Proposal To Fund Government Debt At Zero Interest Rates: Lessons For The Current Debate On The Us Debt Limit 
Jan Kregel

Kregel has served since 2006 as Professor of Finance and Development at Tallinn University of Technology, Tallinn, Estonia. He is an adjunct professor at Johns Hopkins SAIS (SAIS), whose Bologna Center he co-directed in the late 1980s, and a visiting professor at the University of Missouri–Kansas City. He is also one of the Senior Scholars at the Levy Economics Institute of Bard College. Until 2007, he was Chief of the Policy Analysis and Development Branch of the Financing for Development Office of United Nations Department of Economic and Social Affairs. Until 2004, he was High Level Expert in International Finance and Macroeconomics in the New York Liaison Office of UNCTAD, being in essence its chief economist. For many years, he held the Chair for Political Economy at the University of Bologna.