To Free A Lender-Owned Nation
The rich ruleth over the poor, and the borrower is servant to the lender.
IV. Increasingly Absurd Tricks Miss The Point
This is the last of four articles writing up a litigation I filed in federal court in San Francisco on December 28, 2011, against the U.S. Treasury. Johnson v. Department of the Treasury of the United States, et al., case No. CV11 6684 (NJV). The suit alleges suppression of the great benefits that would accrue to the government, if United States notes were to replace Federal Reserve notes.
Part I introduces the issues.
Part II explains the scaffolding of facts and law that raises the issues.
Part III summarizes the "Treasury-Fed Coin-Swap Cover-Up," and uncovers the face-value fiat money tax.
Part IV uncovers the full interest relief.
1. The Suppression Of Interest Relief Per Coin-Swap
Though this be madness, yet there is method in't.
[Shakespeare, Hamlet, Act 2, Scene 2]
Here is how the 1990 report explains its rule that, when a $1 coin is put into circulation and a $1 note is withdrawn from circulation, there is no net gain of interest relief to the taxpayer (page 42):
"Currently, the Treasury receives the Federal Reserve's earnings on assets associated with the outstanding 1-dollar Federal Reserve notes. Generally, the difference between the face value of the notes and the cost of printing and an allocation of Federal Reserve operating costs is used by the Federal Reserve to purchase Treasury securities, which make up the Federal Reserve's portfolio. The Federal Reserve credits Treasury with the earnings received from those investments. If notes are withdrawn from circulation, the portfolio and its earnings are reduced accordingly. We estimated the average Federal Reserve portfolio earning rate to be 4.61 percent, the same rate we used for the model's discount rate. We multiplied this rate by the decreased value of l-dollar notes in circulation to calculate the loss in portfolio earnings."
In other words, as later GAO reports more simply put it, for coins that replace a note, there is no net interest relief gain, because the interest relief on a dollar's debt reduction is cancelled by the loss of interest returned by the Fed, from holding a dollar less in government debt. Thus, the later reports more simply calculate the interest relief using only the count of coins added to the currency. If the replacement ratio is 1.5, then the interest relief accrues from only the added 50% of circulating dollars.
Once again, the model impertinently presumes government debt. Government freedom from debt would void the proposition that, when a coin replaces a note, the government must lose the interest returned in Fed profits, on a dollar's worth of government bonds. There would be no government bonds. See Part III, footnote 5. But the rationale is more messed up than that. It is missing essential details.