The Federal Reserve Must Go (Snyder)

  1. dub
    33,892 Posts.
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    " ....... Previously, I have written about how this works…

    When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.

    Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.

    The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.
    (http://theeconomiccollapseblog.com/...ral-reserve-and-start-issuing-debt-free-money)


    This doesn’t seem to make any sense at all.

    Why does the U.S. government have to borrow money that the Federal Reserve creates?  Why can’t they just create the money themselves?

    This is the big secret that nobody is supposed to know about.

    Theoretically, the federal government doesn’t have to borrow a penny.  Instead of borrowing money the Federal Reserve creates, it could just create money directly and spend it into circulation.

    But then we wouldn’t be 20 trillion dollars in debt.

    Once the Federal Reserve has received U.S. Treasury bonds in exchange for the “Federal Reserve Notes” that the federal government has requested, the Fed auctions off those bonds to the highest bidder.  But as I have noted so many times before, this process always creates more debt than it does money…

    The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.

    But wait.

    There is a problem.

    Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.

    So where will the U.S. government get the money to pay that debt?

    Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.

    But that never actually happens, does it?

    And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.
    (http://theeconomiccollapseblog.com/...ral-reserve-and-start-issuing-debt-free-money)

    Beginning in 1913, this process has created an endless debt spiral that has resulted in the U.S. being 20 trillion dollars in debt.  It is the biggest mountain of debt in the history of the world, and it didn’t have to happen.

    In fact, if we had been using debt-free money all this time we could theoretically be completely out of debt.   ......"


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    dub
 
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