The most obvious benefit is the accumulation of face-value $1 payments per coin, received upon delivery to the Fed. Presently counted as a reduction of senior debt held by the public, it is by far the largest fiscal benefit, over any time period. Yet the numerical amount is never counted as considered as a benefit. In the entire series of reports, the dollar amount is stated only twice, and only incidentally, even though the interest relief from that reduction of debt is the one benefit that is reported. Just so, the 2011 report estimates a net $5.8 billion reduction in the debt held by the public, if that, after 30 years. This omits an early receipt of $13.75 billion, gradual receipts in excess of $30 billion, and 81.5% of the interest relief from each coin that replaces a note, which adds another $14.5 billion.
You read the GAO rationale. "Fed profits are returned to the Treasury. [5] When a Fed $1 note is taken out of circulation, the Fed loses the very same interest from its profits, as the Treasury gains in interest relief from the coin. When the Fed's profits are returned to Treasury, the loss cancels out the gain. It's a wash! Everything is transacted in United States money and bonds. The Fed is part of the government. It doesn't matter that the Fed issues the currency, and the Treasury issues bonds. In the big picture, bonds are also a form of money, and in many ways the better form."
Can the Treasury and the Fed take the nation for such a perfect idiot? Well, yes. They already have, since 1913, haven't they?
Come to think of it, the Fed's payment for each dollar coin is by computer credit to a checking account, backed up by only a small fraction of its value in real currency. The nation accepts a figment of a dollar, in exchange for a sparkling, authentic United States, presidential dollar coin. Yet the nation is grateful. It's the one little opportunity that it can't be denied, to make its own money.
3. The Curiouser and Curiouser Coin-Swap Question is the Monied Interest's Achilles' Heel
"How can I be the wrong Alice, when this is my dream? And who are you, if I might ask?"
[Lewis Carroll, Alice in Wonderland ]
The one little opportunity that it can't be denied, to make its own money? Until two weeks ago, that is, when Fed complaints of oversupply at last drummed the Treasury into halting dollar-coin production, except to meet coin-collector demand. Re this sea change, even the title of the Treasury press release is a lie: Reducing the Surplus Dollar Coin Inventory, Saving Taxpayer Dollars. The taxpayer's savings of $50 million per year in production and storage costs is far more than offset by the concomitant loss of face-value seigniorage. The Fed's Annual Report to the Congress on the Presidential $1 Coin Program (page 6) shows 358 million $1 coin orders over the last year. After deducting the $50 million costs, taxpayers benefited by $308 million, plus compounding interest relief on that amount.
It's the Fed, not the Treasury, that gains from the stoppage. One cannot blame the Fed for stopping the irritating $1 per coin payments to the taxpayer, for more coins than its banks can or could care to put in circulation. But one can blame the Fed for collaborating in the misrepresentation of taxpayer savings. By curtailing coin deliveries in this false fashion, it would seem the Fed has succeeded, for the foreseeable future, in burying the coin-swap question.
So what? Coinage is a routinely ignored, tiny $40 billion in total. [6] Sure, understating coin revenues must spell happy days to the Treasury, cozy visits to the Oval Office, and favors to a tacit Fed. Suppose the Executive does get free play over a small revenue stream of a few hundred million bucks. Seems like good sense to provide some such executive pressure safety valve. In any case, no coin question can be a big deal.
The big deal is the coin-swap question. Because coins are true United States currency, comparing the benefits of coins with Federal Reserve notes must in dollar amounts either validate or silence the growing chorus of Greenbackers, advocating that Federal Reserve notes be generally replaced with United States notes, to realistically eliminate the deficit and balance the budget. In answering the coin-swap question, understating coin revenues keeps the public in ignorance of the great benefit of such a general note-for-note currency conversion. The general name for this benefit is "tax." The bulk goes into the pockets of the private banking interests represented by the Federal Reserve System.
The correct coin-swap numbers validate Greenbackers. Understating the benefit from a full dollar-coin-swap is necessary to keep buried the same core deception that, with respect to all Federal Reserve currency, fools and bullies [7] the government into forever rolling over a growing "debt held by the public." This class of government debt is defined as government debt not owed to another governmental account. It has the highest payout priority, above entitlements. Though owed to the public, because entitlements are held as treasuries in government trust accounts, they are classified as "intragovernmental debt." [8]
The core deception is that Federal Reserve notes are United States notes, or as good as. This falsehood is nationally imprinted, by the subprime techniques detailed above, giving rise to the now universal habit of calling them U.S. bills. Sure, the U.S. label is not without some justification. The Federal Reserve Board is presidentially appointed, and its currency is a creature of statute. Under Section 16 of the Federal Reserve Act, Federal Reserve notes are not only mandatory legal tender, but also mandatory "obligations" of the United States. However, the crucial distinction is ownership. The Fed lends, the nation must borrow, and the borrower is servant to the lender.
A parallel deception is that the Federal Reserve is the government. The 2011 GAO report is full of it. And in many ways and parts the Fed certainly is part of the government. A Fed employee, at any level, could easily start thinking himself part of the government -- especially its most privileged part. An inn, somewhere in the Alps. You, from the Fed, are sharing a cocktail with one of those rarer central bankers, who is part of his government. You do the same sort of work, which means that you are part of the government here, in fact. It's what you do.
These and like inculcated synonyms perpetuate the nation's continuing culture of shameful servitude to the very clique that the Framers took exceptional pains to exclude from the constitutional convention and debates -- the "the Monied interest," [9] then as now more interested abroad. [10]
Call the Fed what you will. What matters is that the Fed's account is not a government account.
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