The Federal Reserve - Why US Currency is Not Real Money

Gold and silver are considered real money in most parts of the world. Even in the united States of America, legal tender was backed by gold or silver until 1968 when the Federal Reserve Bank, finally convinced the congress to allow the FRB to remove any kind of real money backing whatsoever.

An understanding of how the Federal Reserve Bank operates in conjunction with the federal government is important to understand why we would no longer have a gold standard for currency. The Federal Reserve Bank purchases, at cost, currency from the United States. The cost is about 2 ½ cents per bill. It matters not whether the bill is a 1 dollar bill or a 1,000 dollar bill. The cost is 2 ½ each. The federal reserve bank then loans the money back to the federal governmnet at face value and is paid back with interest. The interest is in the form of funds collected through the "income tax" system.

If the FRB was required to back money with gold, then it could not have so much money at the stroke of a keyboard. All they have to do is tell the federal government when to print more money, the federal governmnet then applies ink to paper, and presto, money magically appears.

One of the ways that the FRB has taken gold out of the standard is by, through the lending industry, not accepting gold or silver as a "liquid asset". What the lending industry is saying is "We don't accept money as a liquid asset." After wall, isn't that what gold and silver coins are? They are money. What some people do not realize, is the value of gold and silver has not risen in the last century. That is why the dollar amount imprinted on a one ounce gold coin is still $50. What has changed is the value of the currency that the federal government permits to be used. This currency is debt back by debt.

We used to back our money with gold or silver. US currency actually stated on the bill that it was redeemable for X amount of gold or silver or it was redeemable for X "Dollars". You won't find anything of the sort on a Federal Reserve Note.

The following is a ten dollar bill printed in 1934. Note the large print along the center bottom states, "WILL PAY TO THE BEARER ON DEMAND TEN DOLLARS". Obviously, that indicates that the bill itself is not in fact moeny at all, but guaranteed that the beaer would be paid money when he turned in the bill to the US Treasury or "any Federal Reserve Bank".

The fine print in view of Hamilton's gaze (Click on image for larger view) states, "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE, AND IS REDEEMABLE IN LAWFUL MONEY AT THE UNITED STATES TREASURY OR ANY FEDERAL RESERVE BANK." (Empasis added) This serves as further evidence that this piece of paper is nothing more than a promisory note and is, in fact, not money. This piece of paper merely represent the guarantee of payment of money. So what has changed?

Now, we simply get the piece of paper. There is no money, just paper. It has no value other than what we give it. That is why the value of it continues to decline. There will come a day, as has happened in every country using this money system, that the money will be worhtless and those who thought enough in advanced to take it upon themselves to collect real money, ie: gold and silver, will be the only people who will survive the fiat currency collapse. It is estimated that an once of gold will cost $1,000 by the year 2010. Have you purchased any gold coins yet? You better start.

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