REPORT DEAD LINKS --- we can't keep this site up-to-date without your help BEWARE! Much of the following report is inscrutable to me (mrc). That is more than likely my fault. I simply do not understand what Mr. Cook is driving at in lots of places. It may very well be that Mr. Cook knows way more than I do and is writing over my head. Even so, I am putting it up because (a) it shows some diligence in gathering information, (b) it points to some good sources, and (c) it serves as a good example of a certain kind of bias. I am guessing, I do not know this for sure -- but I think it was written for a group of people who are convinced that the whole money system is bogus and we are not liable for federal taxes. (mrc). The footnotes (fn) below are by (mrc) Found from a link at <<http://www.kamron.com/debt_reduction_causes_depression.htm>> This article often uses caps that confuse the issue BANK DEPOSIT MONEY Reading about Federal Reserve is guaranteed to either bore you into submission or make your eyes cross like a siamese cat, but you really should give it a try. Because when you begin to understand how it all works, you will begin to understand WHY the IRS wants your checkbook money (not your cash) AND why, as a holder of bank checking and/or savings accounts, you are (through adhesion contracts) required to file. (fn 1) Since the establishment of the Bank of England, central banks and their member commercial, chartered and other banks throughout the world, including the United States (the Federal Reserve) operate after the DEPOSIT MONEY creating, lending and banking techniques developed by the Bank of England. The First and Second Bank of the United States were also central banks -- but were short-lived because our Founding Fathers were aware (fn 2) of the potential pernicious socio-economic consequences and government indebtedness that can emerge in the wake of a central bank It might be of interest to note that, contrary to the widespread educated assumption, the central banks are not owned by governments. As a matter of fact, neither the English, French, German nor the United States government owns any stock in the central bank of its country. (fn 3) The Bank of England is run entirely as a private corporation; the stockholders elect the board of directors, who rotate in holding the governorship office. In the United States the Federal Reserve banks are also run by stockholders, the commercial banks, which elect the board of directors, who in turn govern the respective Federal Reserve banks. (fn 4) CENTRAL BANK, WHAT IS IT? Central banks are the commercial bankersâ banks. The 12 Federal Reserve banks are the central banks in the United States. They are primarily the commercial bankersâ banks, in which the commercial banks have their checking accounts. The commercial banksâ checking accounts in the Federal Reserve banks are known as the commercial banksâ âreserve accountsâ. The âreserve accountsâ of the commercial banks DIFFER from those of the general public, commerce and the Governmentâs checking accounts. All others, that is, the general public, commerce and the governments (federal and other) must DEPOSIT (lodge) funds, either coin or paper currency, business or paychecks, and the governments deposit (lodge) their tax revenue funds into their checking accounts, to LAWFULLY DRAW PAYMENT checks on their checking account deposits. However, commercial banks collectively CANNOT add anything to their reserve account deposit credits with their own bank-house checks. The Federal Reserve banks provide their member banks with âreserves account deposit-creditsâ through their Open Market purchases and investments, paid for with Federal Reserve bank credit funds. Federal Reserve bank credit âfundsâ consist of checks drawn upon NO BANK DEPOSITED FUNDS. In this way the commercial bankâs âreserve account deposit-creditsâ are created with the Fedâs bounce-proof checks -- indirectly as FREE GIFTS to commercial banks -- which reserve account deposit-credits are 100% convertible into federal reserve notes cash currency upon bank request. Putting the above into the simplest of terms: Federal Reserve bank credit, which is also known as âhigh power moneyâ and is equivalent in value to physical cash currency, is created simply by a Federal Reserve bank officer drawing a check upon no bank deposit account, as payment for a Federal Reserve purchase or investment. To make that check (or checks) good, the Federal Reserve simply asks the Treasury Departmentâs Bureau of Engraving to print up enough Federal Reserve notes currency to make those checks good. (2) From a 1906 essay by Paul Warburg, reputed author of the 1913 Federal Reserve Act, updated 1991 by Peter Cook, M.S.C., C.M.E. (3) Bank reserves cannot be paid for by private banks. Reserves can be shifted from bank to bank after they are created. âMoney Factsâ, a supplement to âA Primer on Moneyâ, printed for the House Banking and Currency Committee, 1964, 88th Congress, 2nd Session. (4) The Federal Reserve has no checking account anywhere in the country. Federal Reserve Bank of Boston, page 17 and âPrimer on Moneyâ, page 34. (5) âReadings on Moneyâ, Federal Reserve Bank of Richmond, page 31, and also in the âA Primer on Moneyâ, page 43. (6) âFederal Reserve is different... it has no bank deposit anywhere in the country...â Federal Reserve Bank of Boston in a 1977 publication titled âPutting It Simply... The Federal Reserveâ, page 17. (7) â...it (the Federal Reserve) never has a problem of making its checks good because it can obtain the $5, $10 etc. bills necessary to cover its check simply by asking the Treasury Departmentâs Bureau of Engraving to print them.â âMoney Factsâ, a supplement to âA Primer on Moneyâ printed for the use of House Banking and Currency Committee in August of 1964, 88th Congress, 2nd Session. âDEPOSIT MONEYâ CREATING... WHERE AND HOW DOES IT ALL BEGIN? The money systems of the world, including in the United States, operate on a two-level system. Both levels are based on âpromise to payâ -- historically to pay gold, and in our time to pay legal tender cash currency. Even though the Federal Reserve bank credit funds in the commercial banksâ reserve accounts are 100% convertible into Federal Reserve notes cash currency to banks, the Federal Reserve bank credit HAS NOT BEEN DECLARED LEGAL TENDER CURRENCY in the July 23, 1965 Coinage Act, U.S. Code Title 31, S. 392. The central banks, that is the Federal Reserve in the United States, promises its member banks to pay them physical cash currency on demand for the amount of Federal Reserve bank credit funds they have on record in their reserve accounts in the Federal Reserve banks. The Federal Reserve banks can always make those promises good, because they can purchase the physical federal reserve notes cash currency from the Treasuryâs Printing and Engraving Bureau for the cost of paper, ink and printing labor. [Per Treasury Dept. letter of 3/10/78, 1.5 cents per bill of any imprinted denomination. Per Detroit Free Press of 5/4/95, 4 cents per bill.] There are no known laws limiting central banks as to the money volume of reserve credits they can create. There is no known law limiting the Federal Reserve as to what dollar amount of Federal Reserve bank credit funds the federal reserve banks can or may create, or extend. In the second or lower level of the worldâs money and banking system are the commercial or chartered banks which are members of the central banks. The commercial banks in the United States are members of the Federal Reserve banks. In the second or lower level of money creating, the banks operate on the same âpromise to payâ principle as the central banks. However, the commercial banksâ promises to pay are limited. The commercial banks must have Federal Reserve bank credit deposit-credits in their reserve accounts at Federal Reserve banks before they can create any commercial bank deposit-credits, either for bank expenditures, bank loans, or for bank investments. The Federal Reserve bank created deposit-credits are formally known as âFederal Reserve Bank Creditâ. The commercial banks created deposit-credits are known simply as âBank Creditâ. The two âCreditsâ resemble each other to the extent that both are nothing more than simply checking accout deposit-credits transferable by check. Thatâs where the similarity ends. The Federal Reserve bank credit, dollar amounts, are 100% convertible into federal reserve notes cash currency on commercial bank demands. However, the aggregate commercial bank credit is only FRACTIONALLY convertible, at any point of time, into federal reserve notes cash currency. If the so-called bank âreserve requirementâ is 10%, that means that only $1 of $10 in the checking accounts of bank clients is convertible into cash currency. That is why the prevailing money and banking system is often referred to as a âfractional reserveâ system. (fn 5) Footnotes are below ---------- end ------------
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