IS THERE ANY MONEY IN AMERICA?
The Federal Reserve Notes that we call dollar bills, and circulate among ourselves as, money, is not true money. They are exactly what they say they are, "Notes" i.e. evidences of debt. The monetary system that we have is one in which debt has been monetized. How did that come about?
95% of Americans today do not know that their government effectually declared bankruptcy in 1933, in the passing of House Joint Resolution 192 (a):
"every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or in a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against Public Policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any such coin or currency which at the time of payment is legal tender for public and private debts."
What this resolution meant was that from that point on no payments would be possible with constitutional money, i.e. gold backed currency. Payment in gold was now declared to be against public policy. Effectually this was bankruptcy. We were unable to pay our debts. From this point on payment of debt with substance was replaced with discharge dollar for dollar in whatever coin or currency Congress declared to be legal tender. What has Congress declared to be legal tender today? Federal Reserve Notes, which are evidences of the government's debt to the Federal Reserve. As crazy as this may seem, we pay or discharge debt with debt.
The Federal Reserve Creates Money Out Of Nothing By Monetizing Debt.
To understand how the money or the money supply is created, let us take for example the President's recent request before Congress for $87 billion for reconstructing Iraq and fighting terrorism. Now we may be oversimplifying this in order to make it easy to understand the principle behind money creation.
- Congress, as the trustees of the bankruptcy, agrees to allocate $87 billion. Now it seems like this money is already in the Treasury. But it isn't. It has to come from somewhere.
- They then go to the Federal Reserve and ask Mr. Greenspan for a loan of $87 billion.
- Mr. Greenspan says, "sure, but give me $87 billion worth of Treasury Bills."
- The government prints up some nice looking T-Bill certificates. These are simply promissory notes to pay back the Federal Reserve.
- Mr. Greenspan then takes out his pen and writes a check for $87 billion. Unlike your personal check account, there is no money on deposit against which that check is written. This money is created out of thin air with nothing more than a book entry. If you did that you would go straight to jail.
- The Fed sells the T-Bills, the proceeds of which cover the check for $87 billion.
- The U.S. Bureau of Engraving is then instructed to print $87 billion worth of Federal Reserve Notes. These notes are merely IOU's.
- The government then puts those notes into circulation. It then pays its debts with promises to pay, IOU's, to the Federal Reserve. Of course in our electronic digital age, the money supply is made up largely of book entries, transferring digits from one account to another. Only 3% of the money supply is in coin and paper currency.
- We then circulate these notes among ourselves as money. Really they are EVIDENCES OF THE GOVERNMENT DEBT TO THE FEDERAL RESERVE. We pay our accounts with evidences of the government's debt. The debt is not really paid. It is discharged from one person to another.
Even high ranking government officials agree that this is how the banking system works today. Representative Wright Patman, former Chairman of the House Banking Committee said "The Federal Reserve Banks create money out of thin air to buy Government bonds... The Federal Reserve Bank is a total money making machine."
Our money system therefore is one in which debt, starting with the government's debt, and private debt, is monetized. It is amazing to think that if everyone paid back what they have borrowed, there would be no money in circulation. All paper currency and coins would be returned to the banks vaults, and there would not be one dollar in any one's checking accounts.
In 1941, then Federal Reserve Bank Chairman, Marriner Eccles was asked to give testimony before the House Committee on Banking and Currency. The chairman of the committee, Congressman Wright Patman, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933:
Eccles: "We created it."
Patman: "Out of what?"
Eccles: "Out of the right to issue credit money."
Patman: "And there is nothing behind it, is there, except our government's credit?"
Eccles: "That is what our money system is. If there were no debts in our money system, there wouldn't be any money."
For a more detailed presentation of the creation of the money supplies see, THE MANDRAKE MECHANISM.
ESSENTIALLY, WHAT THE GOVERNMENT DID WAS, FUND ITS OWN ALLEDGED LOAN. The government provided the funds through its promissory note (T-Bill), which the Fed sold into the Bond Market. So it wasn't actually a loan. It was an EXCHANGE! The government exchanged its T-Bill IOU for the Fed's check. There never was a loan.
In return for the Fed check, the government has to make a pledge of collateral equal to the face value of the $87 billion of Federal Reserve Notes placed in circulation. The collateral, which Congress pledges, is the total land, labor and assets of the American people.
To pay the interest owed to the Federal Reserve, the government raises taxes from the citizens. It's really crazy; why would the government pay interest on paper that it has the power to print interest free, without the Federal Reserve, and not have to raise taxes to pay the interest? Because it is has declared itself bankrupt - it has no choice. It is subject to the control of its creditor.
The worst thing is that we can never get out of bankruptcy, because under the present system the only way to create money supply is by an ever increasing, escalation of debt. And it is impossible to pay back the national debt, because the interest, usury, which is charged, is not being created.
At present the national debt is way more than $7 trillion. According to Federal Reserve CPA's, if you factor in Social Security and Medicare, etc. it is over $43 trillion. The total value of all land in the United States is valued at less than $43 trillion. In other words, our liabilities are more than our assets, and increasing exponentially. We are a bankrupt nation.
It is very obvious who controls the government and the people of the United States; the one who controls the bankruptcy and the creation of money through debt, the Federal Reserve. "The borrower is the slave of the lender." Proverbs