Are Federal Reserve Notes Real Money

Congress is asking. And in hearings on July 27, a group of experts laid out their reasons why the Federal Reserve needs to go digital. Here are a few of their arguments. Payments are expensive. Every citizen is given a number (.the red number on the Birth Certificate) and each live birth is reported to be valued at 650,000 to 750,000 Federal Reserve dollars in collateral from the Fed. The best way to determine whether a note is genuine is to rely on the security features, such as the watermark and security thread. Counterfeit detection pens are not always accurate and may give you false results. To learn about these and other security features in genuine Federal Reserve notes, visit the U.S. Currency Education Program website. We talk about the jab, thinking for yourself, what lawful money is, and the crimes and inflation created by the federal reserve act.

The constitution in ArticleI, section 10 reads 'No state shall...coin money, emit bills of credit,make any thing but gold and silver a tender in payment of debts...' This means that the only constitutionally valid forms of money are goldor silver coin. This is called 'lawful money.' U.S. paper moneyused to be redeemable in lawful money, but no more. Our monetarysystem is based on unconstitutional forms of money. At least, thisis how a few conspiracy theorists see it.

The source of their confusion iseasy to see and, in this case, easy to understand. Simmons (1939)and Cross (1939) shed some light on the subject. The phrase 'lawfulmoney' had appeared repeatedly in the money and banking laws of the U.S.in the first half of this century, but had never been explicitly defined. It first appeared on February 25, 1862 when Congress authorized the issueof greenbacks and declared them to be 'lawful money and a legal tender'for all debts, public and private. 1This terminology may have been adopted to promote the acceptability ofthe currency, since the occasion was the first in which Congress attemptedto make a paper money a legal tender. 3 At this point in time, then, the terms 'lawful money' and 'legal tender'had no distinct meaning. They were they same thing.

During the Civil War era Congressgave several types of money the status 'lawful money.' On March 17,1862 Congress declared that Treasury notes (not the T-note debt instrumentwe know by that name today) were lawful money. February 12, 1862saw Congress make clearinghouse certificates a lawful money. Afterthe Civil War, on July 12, 1870, Congress placed the U.S. back on the goldstandard and specified what types of money national banks could count tomeet their legal reserve requirements. 'The terms 'lawful money'and 'lawful money of the United States,' the Act read, 'when applied tothese banks shall be held and construed to mean gold or silver coin ofthe United States.'1 So, by 1870 greenbacks,Treasury notes, clearinghouse certificates, and gold and silver coin wereall 'lawful money.' The annoying part, though, is that Congress neverstated exactly what lawful money was supposed to be. The only concreteconclusion that can be reached is that lawful money and legal tender weretwo separate things. Lawful money was money that banks could counttoward satisfying their reserve requirements. Legal tender was anymoney that government would accept in payment of taxes. Some moneywas lawful money, but not all lawful money was legal tender. Andvice versa. Confused?

One last example of the confusionCongress created on the lawful money topic concerns Federal Reserve notes. Prior to 1933-34, they were redeemable at any Federal Reserve bank 'ingold or lawful money,' and Federal Reserve banks were compelled to holda 35% reserve 'in gold or lawful money' behind their deposits. Congressdid not use the phrase 'in gold or in other forms of lawful money.' It definitely set the terms in contrast to each other. This leadsone to conclude that Congress did not deem gold to be lawful money, whichat the time would have been absurd. 1

After 1933 all forms of U.S. moneywere conferred with legal tender status. This set up a paradox forcurrency redeemability. Federal Reserve notes and U.S. Notes, forexample, were redeemable in 'lawful money,' but what was lawful money? Because redeemability had ended, there was no longer any distinction betweenlawful money and legal tender. Federal Reserve notes were thereforeredeemable with other Federal Reserve notes, or with U.S. Notes, or withany other legal tender.

Federal Reserve Money

To illustrate how some people wereconfused by this, consider the following correspondence between the U.S.Treasury and citizen of Cleveland. 2

The Federal Reserve - Why US Currency is Not Real Money

Gold and silver are considered real money in most parts of the world. Even in the united states of America, legal tender was backed by gold or silver until 1968 when the Federal Reserve Bank, finally convinced the congress to allow the FRB to remove any kind of real money backing whatsoever.

Before we get into how the Federal Reserve Bank operates, we should comprehend what money is. So let us take a look at the definition of 'money' from before the Federal Reserve Bank 'changed' it for most Americans. In Black's Law Dictionary, 4th edition, we find,

“MONEY. In usual and ordinary acceptation it means gold, silver, or paper money used as circulating medium of exchange, And does not embrace notes, bonds, evidences of debt, or other personal or real estate. Lane v. Railey, 280 Ky. 319, 133 S.W.2d 74, 79, 81.”

Are Federal Reserve Notes Real Money

So now we are all clear that 'money' means gold or silver or a paper representation of gold or silver. We will take a look at one of the 'paper representations' below. We also know that it does not mean a promisory note or an I owe you.

Are Federal Reserve Notes Real Money Made

An understanding of how the Federal Reserve Bank operates in conjunction with the federal government is important to understand why we would no longer have a gold standard for currency. The Federal Reserve Bank purchases, at cost, currency from the United States. The cost is about 2 ½ cents per bill. It matters not whether the bill is a 1 dollar bill or a 1,000 dollar bill. The cost is 2 ½ each. The federal reserve bank then loans the money back to the federal government at face value and is paid back with interest. The interest is in the form of funds collected through the voluntary 'income tax' system.

If the FRB was required to back money with gold, then it could not have so much money at the stroke of a keyboard. All they have to do is tell the federal government when to print more money, the federal government then applies ink to paper, and presto, money magically appears.

One of the ways that the FRB has taken gold out of the standard is by, through the lending industry, not accepting gold or silver as a 'liquid asset'. What the lending industry is saying is 'We don't accept money as a liquid asset.' After wall, isn't that what gold and silver coins are? They are money. What some people do not realize, is the value of gold and silver has not risen in the last century. That is why the dollar amount imprinted on a one ounce gold coin is still $50. What has changed is the value of the currency that the federal government permits to be used. This currency is debt back by debt.

We used to back our money with gold or silver. US currency actually stated on the bill that it was redeemable for X amount of gold or silver or it was redeemable for X 'Dollars'. You won't find anything of the sort on a Federal Reserve Note.

The following is a ten dollar bill printed in 1934. Note the large print along the center bottom states, 'WILL PAY TO THE BEARER ON DEMAND TEN DOLLARS'. Obviously, that indicates that the bill itself is not in fact money at all, but guaranteed that the bearer would be paid money when he turned in the bill to the US Treasury or 'any Federal Reserve Bank'.

The fine print in view of Hamilton's gaze (Click on image for larger view) states, 'THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE, AND IS REDEEMABLE IN LAWFUL MONEY AT THE UNITED STATES TREASURY OR ANY FEDERAL RESERVE BANK.' (Empasis added) This serves as further evidence that this piece of paper is nothing more than a promissory note and is, in fact, not money. This piece of paper merely represent the guarantee of payment of money. So what has changed?

Now, we simply get the piece of paper. There is no money, just paper. It has no value other than what we give it. That is why the value of it continues to decline. There will come a day, as has happened in every country using a fiat money system, that the 'money' will be worthless and those who thought enough in advanced to take it upon themselves to collect real money, ie: gold and silver, will be the only people who will survive the fiat currency collapse. It is estimated that an once of gold will cost $1,000 by the year 2010. (As we can see from when this article was orignally posted on our old site, we have far surpassed the amount predicted. As a matter of fact, gold has just recently dipped back to $1,300 per ounce.) Have you purchased any gold coins yet? You better start.

I recommend purchasing both gold and silver coins. When the FRN system finally collapses, you will need some smaller coins to use in trade. One of the best places to trade for gold or silver coins is through Bullion Direct® in their Nucleo Exchange. There you can buy and sell gold and silver with other individuals with Bullion Direct® serving as an intermediary. That way a 3rd party confirms what you are purchasing. You can then have them hold the gold in their safe or have them deliver it to you. Either way, you will own real money instead of fiat money.

You might find it hard to understand how the FRN system could collapse. For many decades the US dollar has been considered by the rest of the world as the most stable currency with which to trade. So even though a buyer and seller were neither located in the United States, they would still use the US dollar for the trade. For example, if Argentina sold oil to China, the US dollar is what China used to pay Argentina for the oil. When other countries stop using the US dollar for trading, the dollar will become more and more devalued making the cost of living soar. There are already numerous countries using other forms of curreny for trade due to the insecurity of the US dollar. The more others turn away from trading with the US dollar, the more likely this collapse. The day that no other country will take the US dollar in trade, will be the day that 49,000,000 (49 million) people on food stamps will be told by the US government, 'Sorry, we have no food stamps for you this month. We will notify you when we do.' What do you suppose will happen when 49,000,000 hungry people are told they will not receive their food benefit from the federal government?

Federal Reserve Notes For Sale

How prepared are you?

Defend Freedom™

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