The NMRA addresses each of Griffin’s identified pathologies with structural reforms that align closely with Austrian prescriptions:
Abolition of Fractional Reserve Banking: The NMRA prohibits commercial banks from creating money through lending. Banks may only lend funds they have borrowed from the new Monetary Authority (MA) or raised through private capital (Darville & Shipley, 2025). This directly eliminates the mechanism Rothbard (1994) identified as the root cause of inflationary credit expansion and the business cycle.
Centralized, Transparent Money Creation: Rather than allowing private banks to create money as a byproduct of lending, the NMRA vests money creation exclusively in a new public authority—the U.S. Treasury Department of Money (DoM). Critically, this authority operates under an open-access digital ledger, potentially blockchain-based, providing real-time public visibility into all monetary creation and distribution (Darville & Shipley, 2025). This transparency directly counters the opacity Griffin (1994) identifies as central to the Fed’s power.
Rules-Based Monetary Policy: The NMRA replaces discretionary monetary policy with a Money Stability Index (MSI), a composite of real-time economic indicators including GDP nowcasts, inflation expectations, labor market data (U6 unemployment, job quits rate, labor force participation), and business sentiment (Darville & Shipley, 2025). Money supply growth is targeted to approximate real GDP growth plus inflation targets. This rules-based approach is consistent with Hayek’s (1945) argument that systematic rules outperform discretionary central planning, and with the broader Austrian preference for constitutional monetary constraints over bureaucratic judgment.
Restrictions on Government Borrowing: The NMRA imposes strict limits on civil government borrowing, generally restricting annual borrowing to amounts repayable through anticipated tax revenues, with exceptions only for congressionally declared wars or national emergencies (Darville & Shipley, 2025). This directly addresses Griffin’s (1994) critique that the Fed enables chronic deficit spending by removing the monetary mechanism that makes it possible.
Public Benefit from Seigniorage: Under the current system, commercial banks capture the profits from money creation through interest on loans. The NMRA redirects this revenue—interest collected by the MA/DoM—into the U.S. General Fund or a Money Creation Surplus Fund for debt reduction and infrastructure investment (Darville & Shipley, 2025). This aligns with the Austrian principle that money creation should not be a source of private profit at public expense.
Comparative Analysis: Griffin’s Critique and the NMRA Response
| Griffin’s Identified Problem | NMRA Proposed Solution |
| Money created as debt by private banks | Money created solely by public MA/DoM |
| Fractional reserve banking enables inflation | Fractional reserve banking abolished |
| Discretionary Fed policy causes boom-bust cycles | Rules-based MSI governs money supply |
| Fed enables unlimited government deficit spending | Strict borrowing limits on civil governments |
| Opacity and lack of accountability | Open digital ledger and citizen dashboard |
| Private banking profits from money creation | Seigniorage revenue flows to public fund |