Fix the Fed
I've started a petition at: http://www.change.org/petitions/president-obama-fix-the-fed , which asks President Obama to: Order the U.S. Treasury to purchase the Federal Reserve; to have the Treasury issue debt-free U.S. currency; to instantly reduce our national debt by $2 trillion by shredding the Treasury Bonds currently held by the "Fed;" to pay down the rest of the national debt as quickly as possible, while keeping inflation below 4%; to have the Open Market Committee include members representing banks, large corporations, small businesses, farming, labor, homeowners, and consumers; and to televise their meetings, live.
Background: It seems senseless to seek answers to questions about the U.S. economy, budget and national debt without examining the actual sources of our nation's money.
First, we Americans don't have a government-issued currency. George Washington graces the face of a one dollar Federal Reserve Bank Note. The Fed is a system of privately owned banks that loan money to the United States and, like all banks, they charge us interest. Even with interest rates at historic lows, we taxpayers will pay about $450 billion this year for the privilege of having the Federal Reserve issue our money, nearly as much as our national defense budget.
America borrows money from the Chinese, Canadians and little old ladies, but mostly we borrow money from the Federal Reserve. Where does the Federal Reserve get their trillions of dollars? Glad you asked. They create it out of thin air. The Fed takes a piece of paper, writes $10,000 on it and purchases a United States Treasury Bond. Now, we tax-paying citizens are obligated to pay both the principal and interest on that bond and our national debt just went up $10,000.
Question: If a privately-owned bank, the Federal Reserve, can just print words on a piece of paper and call it a dollar, why can't the U.S. Treasury do the same? Answer: They can. I have a $2 bill that has "United States Note" printed across the top instead of the usual, "Federal Reserve Note." It's a collector's item and I paid $5 for it on eBay, but its significance is priceless. This $2 bill is proof positive that U.S. Treasury can create our nation's money. T he U.S. Government is not only capable of creating debt-free money, it is Constitutionally mandated to do so, but it doesn't. We don't have to fake "borrow" anything from the Federal Reserve and with every dollar that our Treasury issues, we can reduce our federal debt and stop those endless, senseless interest costs.
The Federal Reserve currently holds more than $2 trillion in U.S. Treasury Bonds. They were bought with money that is already in circulation and all we have to do is shred those bonds and our national debt will be instantly reduced by that amount. The bad news is that these bonds are held by a privately owned bank and the owners probably have other plans for "their" money. The good news is that the U.S. Treasury can purchase the Federal Reserve Banking System for $450 million. The U.S. Treasury should buy the Federal Reserve System from the private investors who own and run it. We keep the workers employed doing the same job as they do now in the same buildings, using the same equipment, and at the same pay. The biggest difference would be that they would be working for the U.S. Treasury Department and not a private corporation out to make the most money possible, any way it can, for its owners. That is accomplished by replacing the decision makers with an assortment of people from different walks of life, not just wealthy bankers. There should be no secret overseas money or gold transfers, no buying and selling foreign currencies to prop-up or destroy other countries, no secret meetings, no insiders with foreknowledge of market swings, no "fleecing the flock," no wild money supply or interest rate swings, no cronies or competitors overseeing our banking system, and no whatever else we don't even know about. Everything would be open and above board -- and audited by the Government Accounting Office - Just like it always should have been.
The Fed's "Open" Market Committee should actually be OPEN - televised live and the members making our nation's big money decisions shouldn't just be wealthy bankers, they should also represent homeowners, labor, farmers, small business, and large corporations. All major players in our economy should have a seat at the "big-people" table and an equal vote on the direction of the money supply.
All the money in circulation in the U.S. was originally loaned to us by bankers charging us interest, so we can never get rid of our debt. Let's say that the total amount of money in circulation in the U.S. was $100, $15 loaned to us by the Federal Reserve and $85 loaned to us by banks, and they all charge 5% interest every year. At the end of the first year, there's $100 in circulation, but we owe the bankers $105. How can we pay them back? The problem's the same whether you're talking about a $100 economy or $100 trillion, and one year or one hundred. There is built-in failure with this system and every 10 years or so, we have another round of recession and foreclosures. Property, on which people have made payments for years, is confiscated by the bankers and resold. This periodic redistribution of wealth is not an efficient plan for the workers of our country -- Only the bankers. Also, with our current, inane debt money system, the cost of borrowed money is added into the price of every product and service bought and sold. Eliminate debt-based money and you eliminate a host of concomitant economic ills. If we did, a ll U.S. products would be more competitive on the world market because we would be competing against countries still stuck with their inefficient, marked-up, debt money systems. The first countries to advance away from the old, 1600's style debt money, will have an absolute advantage over all the others in our globalized world market.