Wednesday, April 27, 2011

All money is currency but not all currency is money

Fiat Currency:
Section 31 U.S.C. 5103, defines legal tender as "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."
Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank. 
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.
By law, Federal Reserve Notes (FRNs) are money, a tightly controlled, tangible product with severe penalties for their unauthorized reproduction.
FRN's (a.k.a. Dollars) are the primary unit of account by which all public/private debt can be extinguished.  They are also a medium of exchange and are assumed to be a store of wealth.
Fractional Reserve Currency:
Commercial banks do not create money as defined by law.  They create a "money substitute" a.k.a. "book keeping money", a.k.a. "electronic digits", a.k.a. "Credit Dollars", a fractionalized derivative of the primary money, Federal Reserve Notes, that is denominated in dollars.  This practice is known as Fractional Reserve Banking (a practice that has been destroying economies, countries and lives for over 600 years).
'Credit dollars' are a debt generated pseudo-currency that is denominated by a unit of account (FRNs). Unlike money (by a strict definition), credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply.
Credit as currency is, quite simply, a promise to pay FRN's (dollars) upon demand as well as over time.  The everyday physical representation of that promise is the debit/credit card, which is the hallmark of modern computerized, fractionalized, debt driven commercial/investment banking.  Literally billions of dollars' worth of transactions are conducted in credit currency each and every day without any thought given to the un-fulfill-able promise that backs its use or the inevitable consequences of its failure.
Our economy is totally dependent upon the continuing flow of digits, which necessitates the continued expansion of public/private debt as well as the continued expansion of assets and asset values, for its survival.
Unlike FRNs, which are an obligation of the government (the provision of a monetary system) and a liability of the Fed (financially liable for every FRN in circulation) .  Credit, when used as a currency, is not covered, thus the need for the FDIC.  The objective of the FDIC is to re-digitize credited deposits (positive credit) that have reverted to their natural state of bank debt upon its failure.  In other words; the FDIC's function is to keep the illusion of "credit is money", and the fractionally reserved banking system that issues and administers this "money substitute", alive. 

Credit has no legal standing as currency, but all debts incurred through its use as such, are legally binding.

How Currency Gets into Circulation

The Chicago Plan Revisited

Aside From Erroneously Calling Bankster Credit, 'Money'

Michael Kumhof Gets Most Of It Right.
He Misses On The Current Fiat

To Be Continued.....

** Without skipping a beat, they took the old "Gold Standard" accounting practices (where governments borrowed or owed gold and went into debt) and applied them to the Fiat as if they were the same!

82 years later and not a hint that anyone has caught on to that scam!

And now they have you convinced that the "Credit" the Fed and the banksters are creating is 'Fiat' too.

It’s as I’ve stated before (revised):

1787 - 1834
Gold, Silver = Money
Paper = A Proxy For Money
Credit = Debt

1834 - 1933
Gold = Money
Paper = A Proxy For Money
Credit = Debt

1933 - 1990
Paper gets Promoted = Money (Fiat)
Credit = Debt

1990 - Present
Paper = Money (Fiat)
Credit = Debt + A Proxy For Money

In Progress
Credit/Debt gets Promoted = Money = Perpetual Debt

We’ve Been Weaned!

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