Chase thought it a hazardous thing, but we finally
accomplished it, and gave the people of this Republic the greatest blessing
they ever had -- their own paper to pay their debts.
[Abraham
Lincoln, letter of
December 6, 1864 ]
There is real sense
in which Federal Reserve notes are as good as United States notes. Under the Federal Reserve
Act, Fed notes "shall be obligations of the
United States." This means that
they too are backed by the nation's faith and credit. In 1971, when Nixon took the U.S. off the
international gold standard, it had been the Treasury that redeemed Federal
Reserve notes in gold, not the Fed. Ever
since, Fed notes have been a "fiat" currency.
The public automatically pays a
flat tax on each note, called "seigniorage," equal to the note's face value,
minus production and processing costs. When the United States issues a note, the tax goes to the Treasury. But
when the Fed issues a note, the Fed takes the tax. [1] For, although printed by the Treasury and
backed by the government, Fed notes are bank notes,
printed as ordered by the Fed. The Fed
owns the notes, and pays the Treasury the cost of printing them. [2]
Thus, the Fed is gifted with a
monopoly in issuing notes on the nation's faith and credit, and receives assets
equal to the face-value of each note it puts into circulation (minus print/process
costs). And although the Fed supposedly returns
all its "profits" to the government, the increase in assets does not count as
profits, Fed shareholders receive a 6% dividend, and the returns to the
government amount to only a fraction of
the taxpayer's penalty, as I shall show in Part III, re the coin-swap question. The
rationale for this homage to the Monied interest is that the government cannot
be trusted to print its own money, whereas the Monied interest can, under the
presidentially appointed Fed board.
The new petition bears the caption: " End the Debt Crisis with
debt-free United States Notes!" It seeks to rescind
this gross capture of the nation's fiat money power and tax, by categorically
replacing Federal
Reserve notes with United States notes. I urge you to
read and sign it. [3]
3. The
Unconstitutionally Unlimited Gift of Face-Value Fiat Money Tax
An unlimited power to tax involves,
necessarily, a power to destroy.
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