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Posts Tagged ‘U.S. Treasury’

Harry BrowneThe late Harry Browne, libertarian champion and 1996 and 2000 Libertarian Party presidential candidate, started off his November 20, 2004 radio show with talk of the Federal Reserve.

At 4:32, he said:

The Federal Reserve System is not privately owned.

I wouldn’t have had as much of an issue if he said it’s not private — in drawing attention to its public aspects — but to say it is not privately owned is a complete falsehood, as it is 100% privately owned by the member banks of the 12 privately owned regional Federal Reserve banks.

At 16:08, he claimed the Fed returns “trillions and trillions” of dollars back to the U.S. Treasury each year. The New York Times reported on January 10, 2012 that the Fed returned $76.9 billion to the Treasury for 2011, and that’s with far more debt outstanding than when Browne made his comments.

I came across this excellent letter in 2010 by Harry Browne to his daughter, entitled A Christmas Gift for My Daughter, originally published on December 25, 1966, explaining why nobody owes her anything. However, when it comes to his statements on the Federal Reserve, they were an epic fail.

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Thomas DiLorenzo, professor of economics at Loyola University, associate at the Ludwig von Mises Institute, and frequent writer for LewRockwell.com, makes an incredibly misinformed statement about the Bank of England and Lincoln’s issuance of money to fund the Civil War, in a May 17, 2010 Daily Bell interview.

He states (emphasis mine):

Lincoln was almost exclusively devoted to Hamiltonian mercantilism – high protectionist tariffs, other forms of corporate welfare, a central bank modeled after the Bank of England to pay for it all, and political patronage and matching politics.

From the Bank of England’s own website, its founding document, the Bank of England Act 1694, states:

19 Their Majesties may appoint Rules for transferring: and may make the Subscribers a corporation, subject to Redemption

The Bank of England, from its inception, was a private central bank, that issued money at interest.

Lincoln, however, issued interest-free money through the public U.S. treasury, as documented in Sarah Emery’s 1887 book, “Seven Financial Conspiracies Which Have Enslaved the American People.”

In the first chapter, she writes (emphasis mine):

Following this declaration came the enactments of July 17, 1861, and February 12, 1862, authorizing the issue of $60,000,000 treasury notes, not bearing interest and payable for all debts, public and private.

Therefore, in no way did Lincoln create any central bank, let alone a private one like the Bank of England, as DiLorenzo asserts. The money was issued interest-free through the public U.S. treasury, as appropriated by Congressional legislation signed by Lincoln.

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Dr. Ravi Batra, progressive economist and professor of economics at SMU, stated his support for a partial gold-backed currency as a replacement for the U.S. dollar.

On April 30, 2010, on the Thom Hartmann show, he stated at 57:30:

I don’t know if we will ever have one world currency in my lifetime, but currency should be backed up, partially at least, by gold, so that nobody can just inflate currency to fix the problem and leave workers dry. Wages have been stagnant at the same time, so we need to have some backing for the currency as well, and that should be gold.

The U.S. dollar was on a full gold standard until 1933, when most domestic gold was confiscated and transferred not to the U.S. Treasury, but the illegal Federal Reserve. After the confiscation, the price was raised from $20.67 USD to $35 an ounce. From then until August 15, 1971, the U.S. was on a partial gold standard, with foreign currency directly convertible into gold at the rate of $35 an ounce. Since then, gold has been able to freely float, and has hit all time highs since the economic turbulence of 2008, now over $1200 an ounce.

The call for a return to a gold-backed currency truly crosses the political divide, with a progressive economist singing the praises of a gold standard along with proponents of the libertarian Austrian School of Economics.

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The Federal Reserve first starts off by telling the truth about United States Notes:

U.S. notes, the first national currency, began circulating during the civil war; they were authorized by the Legal Tender Act of 1862. The Department of the Treasury issued these notes directly. Issuance was subject to limitations; the Congress established a statutory limitation of $300 million on the amount of U.S. notes outstanding and in circulation. Although this amount was significant in Civil War days, it is a very small fraction of the total currency now in circulation in the United States.

Then, they tell a big lie:

“U.S. notes serve no function that is not already served by Federal Reserve notes.”

Completely false! U.S. Notes were issued interest-free by the government. The purpose they served was to not bankrupt the American people in funding the Civil War, by not subjecting them to an unpayable, interest-accruing debt, from the moment of creation, as Federal Reserve notes do.

They lie, not only mislead, since they give so many accurate details, only to lie about the most important distinguishing function of U.S. Notes from Federal Reserve notes — their interest-free issuance. Sarah Emery, in her 1887 work, Seven Financial Conspiracies Which Have Enslaved the American People, states: “the enactments of July 17, 1861, and February 12, 1862, authorizing the issue of $60,000,000 treasury notes, not bearing interest and payable for all debts, public and private.

The function they serve that isn’t already served by Federal Reserve notes is that not a single penny of interest was ever due on them, nor will ever be due, by the American people to the bankers or the government.

Furthermore, Federal Reserve member banks are unable to draw United States Notes whenever they please, unlike Federal Reserve notes. As the U.S. Treasury states,

A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank.

While the Federal Reserve gives some very factual information on its website, such as the fact that they don’t ‘print’ any money, in this case, however, they told a lie about U.S. Notes — their interest-free competitor.

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