Federal Reserve Note Reduced to Junk Bond Status

The currently accepted U.S. currency is the Federal Reserve Note. Its use was authorized as “public policy” by Congress with House Joint Resolution 192 in June, 1933, but no Constitutional amendment has ever been offered or authorized to accept this fraudulent, debt-based paper currency as “legal tender” in the United States’ Supreme Law of the Land.

Since its inception, the Federal Reserve Note has lost over 90 percent of its value and is currently valued at only six cents of the former U.S. silver dollar. This is causing Americans to work harder for less gain and forcing both parents to work longer hours away from each other and their children.

The reason for this is that the Federal Reserve Note is brought into being entirely by the citizenry taking on debt and it all must be paid back, with interest, by society taking on new debt.

For example, suppose we wiped the slate clean and started our money system over again using the current Federal Reserve scheme. Our hypothetical example would have no money in circulation and no money owed to the banks. In order to bring money into circulation, it would have to be borrowed. So, Sam comes along and borrows $1,000 into existence. The bank he borrows from creates the money as a book entry and “loans” it to him. He spends it on a used car and now there is $1,000 in circulation that never existed before. Hence:

Money in existence:                 $0.00

Sam's loan                     + $1,000.00

Current amount

of money in circulation    $1,000.00

Now a year goes by and Sam has to pay that loan back with interest. If the interest is a simple 10 percent accruing annually, he'll owe $1,100.00 to the bank. Nobody else has borrowed any money into circulation, so there is still only $1,000 available to pay a $1,100. debt. How can Sam acquire the money to pay the interest and still keep some money in circulation? Enter Sarah, who borrows $1,100 from the bank, which again creates it from nothing as a book entry. She then buys a boat from Sam and he pays his loan back with interest. If no other money gets borrowed then the amount in circulation stays the same:

Current money in circ.     $1,000.00

Sarah's loan                  + $1,100.00

Sub Total                            2,100.00

Sam's loan payoff         - $1,100.00

Total money in circ.         $1,000.00

The problem here is that the total outstanding debt has increased from $1,000.00 to $1,100.00 because Sam's loan, with interest, was discharged by Sarah's new loan - much the same way as paying one credit card with another.

Under the Federal Reserve's ponzi scheme, all old loans are paid/discharge with new loans. Since the inception of the Federal Reserve in 1913, all loans have been discharged by new loans to society; every bank loan, credit card loan, municipal bond, highway bond, school bond, savings bond, Treasury bill, ever extended since 1913 is still outstanding and accruing interest on the backs of the current generation of borrowers. All bank loans are paid/discharged by bits and pieces of hundreds, if not, thousands of other people's bank loans as an entire society borrows the bank's book entries into circulation and uses that debt to pay each other's debt. The debt never goes away, but continually expands upward to the financial benefit of the banks who are empowered by Congress to create the money from nothing.

The major problem is as more money is created and loaned into circulation to pay ever-increasing compounding interest, it becomes more plentiful and subsequently loses its value. This function of money devaluation causes inflation, which is where prices of all products and services rise to offset it.

In the next issue of the Fort Fairfield Journal, I will use a real-world scenario to illustrate how we all pay our bank loans, municipal and education bonds and credit card payments with other people’s bank and credit card loans - plunging our society further and further into debt while bankers are earning money on loans of money created literally from nothing but thin air.