Change Federal Reserve system and end subsidy to private bankers

James D. Shaw • mlive.com • March 19, 2011

At a time of ballooning deficits, expanding public debt and squabbles about priorities, here is something we may be able to agree on: Our banking system usurps the government’s right to create the people’s money and thus constitutes a gigantic, unnecessary subsidy to private bankers.

The Federal Reserve system gives the illusion of public money creation, in that the Treasury prints our money, yet private banks actually create it. Most people think that banks loan existing deposits, but really they use loans to create new money. Ironically, the federal debt that everyone’s so concerned about is the cornerstone of the system. The Fed “monetizes” this debt by buying treasury bonds with money it creates on the fly, which generates the “reserves” the banks leverage to loan into existence many multiples (roughly nine) of the Fed’s original outlay. Essentially, the vast majority of our money supply consists of debt to private banks on money they created from nothing. The result is an endless and unearned bonanza in the form of compounding interest paid by the rest of us.

Ultimately, the Federal Reserve system must be changed or abandoned. The best alternative is probably to have the Treasury issue debt-free money based on real goods and services provided to the government.

Read entire article here.

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2 Responses

  1. Hard to get many to understand, Goverments borrow money and pay it back with interest (that’s NOT created) yet Government can create the money themselves… and they should…
    Get the book web of dept if you need the whole truth.
    Ken

    • I read “Web of Debt” and other related books. That’s why I wrote the letter in the first place. I am aware that the gov’t borrows money it could create itself, which I thought the piece made clear.

      Actually, it’s not true that all the money created by banks is debt, because they don’t have to lend the money they create. About 30% of the money created by private banks is invested, not lent, so to that limited extent, they do create some of the money needed to pay interest.

      James D. Shaw

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