Creature From Jekyll Island by G. Edward полностью

The second fact that needs to be clearly understood is that, in spite of the technical jargon and seemingly complicated procedures, the actual mechanism by which the Federal Reserve creates money is quite simple. They do it exactly the same way the goldsmiths of old did except, of course, the goldsmiths were limited by the need to hold some precious metal in reserve, whereas the Fed has no such restriction.

THE FEDERAL RESERVE IS CANDID

The Federal Reserve itself is amazingly frank about this process.

A booklet published by the Federal Reserve Bank of New York tells us: "Currency cannot be redeemed, or exchanged, for Treasury gold or any other asset used as backing. The question of just what assets

'back' Federal Reserve notes has little but bookkeeping significance."1

Elsewhere in the same publication we are told: "Banks are creating money based on a borrower's promise to pay (the IOU)... Banks create money by 'monetizing' the private debts of businesses and individuals."2

In a booklet entitled Modern Money Mechanics, the Federal Reserve Bank of Chicago says:

In the United States neither paper currency nor deposits havevalue as commodities. Intrinsically, a dollar bill is just a piece of paper.

Deposits are merely book entries. Coins do have some intrinsic valueas metal, but generally far less than their face amount.

1. I Bet You Thought, Federal Reserve Bank of New York, p. 11.

2. Ibid., p. 19.

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THE MANDRAKE MECHANISM 187

What, then, makes these instruments—checks, paper money, andcoins—acceptable at face value in payment of all debts and for othermonetary uses? Mainly, it is the confidence people have that they willbe able to exchange such money for other financial assets and realgoods and services whenever they choose to do so. This partly is amatter of law; currency has been designated "legal tender" by thegovernment—that is, it must be accepted.1

In the fine print of a footnote in a bulletin of the Federal Reserve Bank of St. Louis, we find this surprisingly candid explanation: Modern monetary systems have a fiat base—literally money by decree—with depository institutions, acting as fiduciaries, creating obligations against themselves with the fiat base acting in part as reserves. The decree appears on the currency notes: "This note is legal tender for all debts, public and private." While no individual could refuse to accept such money for debt repayment, exchange contracts could easily be composed to thwart its use in everyday commerce.

However, a forceful explanation as to why money is accepted is thatthe federal government requires it as payment for tax liabilities.

Anticipation of the need to clear this debt creates a demand for thepure fiat dollar.

MONEY WOULD VANISH WITHOUT DEBT

It is difficult for Americans to come to grips with the fact that their total money supply is backed by nothing but debt, and it is even more mind boggling to visualize that, if everyone paid back all that was borrowed, there would be no money left in existence. That's right, there would be not one penny in circulation—all coins and all paper currency would be returned to bank vaults—and there would be not one dollar in any one's checking account. In short, all money would disappear.

Marriner Eccles was the Governor of the Federal Reserve System in 1941. On September 30 of that year, Eccles was asked to give testimony before the House Committee on Banking and Currency.