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America's Largest Debtor

AMERICA’S LARGEST DEBTOR: THE FED
Do NOT Nationalize FED Debts!
By Wayne Jett © May 22, 2019

     Finally, after more than a century, Americans have installed a truly reform (some say revolutionary) administration in Washington to restore constitutional government. Urgently needed reforms include return to equal justice under law with full respect for the Bill of Rights, and return to sound money. Ending the Federal Reserve is essential, but “nationalization” would be a big mistake. The Fed is the world’s biggest debtor, and the federal government should not assume that debt.

The Fed and FDR Change the Dollar

     Here is a summary review of the Federal Reserve. The Fed is organized as a corporation which has sold shares of its common stock to private banks doing business in America. Each bank is permitted to buy Fed shares in proportion to the amount of its financial assets relative to all bank assets in the country. Since Wall Street banks hold by far the most financial assets of any banks in America, Wall Street banks own majority control of the Fed. Indeed, the Rothschild family reportedly controls a majority of Fed shares.

     The Fed has the right and obligation to issue currency to be used as legal tender for all debts in the U. S., public or private. Fed practices have changed over the years. When Fed operations began after Congress’ approval in late 1913, dollars still could be exchanged for gold at any bank at the rate of $20.67 per ounce. 

    This changed in March, 1933, when newly elected President Franklin Roosevelt issued an emergency order requiring all gold owned by Americans (except one ounce per household) to be surrendered to the U. S. Treasury in exchange for $20.67/oz. Henceforth, Treasury would permit only foreign banks to exchange their dollars for gold. Ten months later, on January 31, 1934, FDR devalued all dollars to $35/oz of gold, and took the 69.3% profit on gold seized at $20.67/oz to fund the secret (non-U. S.) entity still known today as the Exchange Stabilization Fund.

     In his first two terms as president (1933-1940), during the depths of the Great Depression, FDR bought 13,185.3 metric tons of gold for the U. S. Treasury using tax revenues and borrowed funds. After World War II, foreign banks gradually began buying that gold with dollars, especially as expectations of further dollar devaluation grew during the 1960s. By the early 1970s, almost all of the gold bought by FDR during the Great Depression (as Americans starved to death) had been acquired from Treasury by foreign banks at $35/oz, the same price or less than FDR had paid for it more than three decades earlier.

“Floating” The Dollar’s Value

     On August 15, 1971, President Richard Nixon announced gold would no longer be exchanged for dollars held by foreign banks. The dollar’s value promptly fell by 75% as the price of gold rose from $35/oz to $140/oz in about 18 months, giving the foreign banks 300% profits on their gold purchases. That move was engineered by Undersecretary of the Treasury Paul Volcker (formerly and subsequently of Chase Manhattan Bank). 

     Volcker was appointed Fed chairman by President Jimmy Carter in 1979. As Volcker added monetary liquidity to aid Carter’s re-election in 1980, the gold price shot up from the mid-200s to a spike-high of $892/oz. Volcker then drained liquidity and interest rates jumped into double-digits during the early Reagan administration. Volcker finally added liquidity to avoid default by Mexico on loans from Wall Street banks, and the dollar stabilized with the price of gold above $300/oz.

     This leaves unstated the rampant price inflation, wage stagnation, job destruction and economic contraction caused by Fed actions. These points are related only to put into perspective the economic mayhem caused by manipulation of the value of currency, once government officials and a private central bank gain authority. Now we examine the relevant point here: the nature of currency issued by the Federal Reserve since 1971 and presently.

The Fed Is Our Debtor, NOT Our Creditor

     In the vernacular of the 1970s, the value of the dollar was “floated” (no value stated) so the “free market” could determine the dollar’s value. Another way to express the dollar’s value: essentially a matter of public psychology derived from how much work had to be done to earn it.

    In the years since 1932, the dollar has been transformed from paper money expressly exchangeable for a guaranteed amount of gold (something of actual value possessed by the owner) into a purely fiat currency with no express promise to deliver intrinsic value specifically expressed. However, the currency is labeled “Federal Reserve Note,” and contains the statement “legal tender for all debts, public and private” (thereby presenting itself to be something having value for settlement of debts).

     Currency called “dollars” issued by the Fed thereby creates a reasonable inference that the Fed will deliver to the holders of dollars the value for which the dollar has been accepted (for labor, produce, goods, land or other assets). Otherwise the Fed’s promissory notes called dollars are illusory deceptions issued to perpetrate frauds upon all who accept and use them.

     No court of law should arm the Federal Reserve with such an instrument of mass deceit. Of course, this issue should not be presented for decision by the courts of New York, which throughout their history have been organs of the international banks and their owners. The Supreme Court of the United States, freed of domination by puppets of the global cabal and assisted by able counsel, should be able to hold the Fed liable to deliver the dollar’s honest value.

The Sum of Our Fears

     What is the extent of those liabilities? The answer is surely far in excess of what can be determined from financial reporting volunteered by the Fed. The St. Louis Fed shows the monetary base currency issued by the Fed amounted to $3.235 trillion as of May 8, 2019, down significantly from $4.168 trillion as on April 15, 2015, but still nearly four times the $853 billion of February, 2008.

     And, with the Fed disclosing “only” $3+ trillion in monetary base, what consideration ought to be given to the $17 trillion rumored to have been distributed by the Fed to “international banks” around the world during and after the financial terrorism of 2008? Assuming it has all been repaid and eliminated from the economy is hard to justify, when it was done (almost surely) to “increase liquidity” of those banks to enable their purchases of hard assets at fire-sale prices during and after the 2008 debacle.

    Another major concern in the category of Fed debts is the currency involved in the “missing $21 trillion” in the accounting records of the U. S. departments of defense and housing & urban development. The records reviewed by experienced experts indicated the $21 trillion was expended, but either the source(s) or use(s), or both, could not be determined from the records presented. So the currency must have been created by the Fed and related banks.

No “Debt Jubilee” For The Fed

           The point made is this: each dollar created by the Federal Reserve is a promise to pay to the holder of the dollar the amount of value received by the Fed in exchange for it. The Fed owes those debts to every person or firm holding dollars, worldwide, and the total debts are very large. If the U. S. government chooses to end the Fed, as it should at the earliest practical date, it should do so without assuming the debts of the Fed and with plans to assess the Fed’s owners for those liabilities.