As some of us who've been around for a while have noticed, the bills in common
circulation have changed their names a couple of times. Not so long ago, they
were silver certificates, redeemable for the metal. Then, they became Treasury
notes and after that Federal Reserve notes.
Most of this came about while a complacent and ignorant population took no
notice. The issuing of currency by the Federal Reserve is unconstitutional, not
that anyone is paying attention. This is supposed to be the the exclusive power
of the Congress, most of whom have not even a passing familiarity with our
Constitution, or have only contempt for it.
Worn out bills are collected by commercial banks and returned to the Bureau of
Engraving in exchange for new notes. The old notes are shredded to confetti
and the paper recycled. They used to burn the stuff, but found that they could
sell the shredded paper for recyling. You can actually buy the shredded notes
in bags or jars as a novelty.
The vast majority of the money supply is not currency, but bank issued debt.
The present multiplier allowed to commercial banks is 10. That is, they can
lend out ten dollars for every dollar deposited in them. So it hardly matters
what happens the cash in circulation. The recent massive increase in the
apparent money supply created by derivatives is nearly incalculable, made
possible by the repeal of the Glass-Steagall Act. Money created as debt is the
root cause of our present financial debacle, and virtually all the previous
ones.
Incidentally, the Federal Reserve is not a bank and not a part of the
government. It has twelve member banks and is a privately held company. It's
instructive to read the Federal Reserve Act of 1913.
M.
