A1: No. Congress turned over the power to issue currency to a contracted central bank in 1913. The Federal Reserve Act grants 12, privately owned banks the exclusive right to print all U.S. legal tender.

The process works like this:

First, the government sells bonds to raise spendable capital. The Fed buys all the government bonds the general public, to include other governments, does not buy. To accomplish this, the Federal Reserve Bank writes a "check" to buy the notes from the Treasury. This "check" is not a check in the normal sense, it is a simple accounting entry registered with the U.S. Treasury. In other words, there is no backing collateral for the check residing in a bank account, it is best called "new currency" or "freshly printed money," as is effectively created on the spot, by the powers granted to the private member banks in the 1913 Federal Reserve Act.

Next, by calling these "purchased" bonds new banking reserves, the bonds are used as collateral for all U.S. banking institutions, so they may create nine or more equivalent interest bearing notes via normal bank function. In this very real sense, the national debt is approximately ten times the advertised amount which only includes interest due on the fraction owed directly to the Federal Reserve, but the people also owe interest on the additional currency created via normal fractional reserve banking.

The currency that the Federal Reserve created on the spot, and gave to the Treasury in exchange for the bond, is accounted for in the national debt, as borrowed with interest due the owner of the note, the Federal Reserve banks. It is then spent by the government. This is the sole source of the macro economic phenomenon called monetary "inflation." The larger pool of monetary currency, the less each unit of currency is worth.

The currency that commercial banking institutions created created on top of the Fed's bond collateral, is the source of all the bank loans made to businesses and individuals around the world and carried on the books.

A basic "follow-the-money" flow of monetary instruments is:

Government Debt --> Securities Asset --> Federal Reserve Check --> Government Deposit --> Government Check -->Commercial Bank Deposit --> Bank Reserves --> Excess Reserves --> Bank Loans --> Bank Currency --> People's Money Supply

It boils down to this:

The Federal Reserve's sole function is to sell freshly printed government spending money to finance whatever budget deficit the U.S. Congress wishes to run. They call this a loan, with both fees and interest due. The new currency issue dilutes the total currency pool, devaluing previously existing currency a precisely corresponding amount.

The people pay for the new currency issue via a hidden tax on everything, known as inflation.

The Fed accrues interest and fees on the new currency.

Congress is allowed access to any amount of additional funds it wants to spend without overtly raising taxes. [Answer submitted on Jul 8, 2008 10:26 AM]

A2: Yes, President John F Kennedy issued Executive Order 11110 which gave back the Government power to print money and issue the currency. [Answer submitted on Nov 28, 2008 3:30 PM]

A3: Executive Order 11110 is, in fact, still valid as it has never been rescinded. [Answer submitted on Jan 4, 2009 6:08 PM]

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A1: Private. It was created/authorized by the government with the Federal Reserve Act in 1913, but is not managed by nor accountable to the government. [Answer submitted on Sep 28, 2008 1:18 PM]

A2: It is a part of the government. See http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm. The previous answer is incorrect. [Answer submitted on Oct 15, 2008 8:53 AM]

A3: this is an excerpt from the aforementioned website:

---

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government." ---

it doesnt make it any better though [Answer submitted on Oct 15, 2008 3:31 PM]

A4: The Federal Reserve Banks are not federal instrumentalities. In Lewis v. United States of America the court ruled that the Federal Reserve Banks are,"independent, privately owned and locally controlled corporations",and there is not sufficient"federal government control over 'detailed physical performance'and 'day to day operation" of the Federal Reserve Bank for it to be considered a federal agency. [Answer submitted on Oct 15, 2008 7:18 PM]

A5: In addition, Congress has NEVER required an independent audit of the Federal Reserve System. [Answer submitted on Oct 29, 2008 8:53 AM]

A6: In response to the website mentioned in A2 - The claims on the site that the Fed Reserve is not a private, profit-making institution can be refuted with only minimal research. It puts the word owned in quotes, indicating that one might want to check with their definition of the word. It might be true that no one is the owner of record, but then I can place all of my possessions in a trust that I control and not "own" anything.

Be careful of the word ownership here. A better terminology is who CONTROLS the federal reserve and what are its functions? And why does it not answer to anyone or undergo audits? [Answer submitted on Nov 14, 2008 4:24 PM]

A7: As stated, A2 is incorrect. The Federal Reserve Banks are privately owned, for profit entities. To learn about the system and it's banks, you can read many books about the Fed like "The Creature from Jeckyll Island". [Answer submitted on Nov 23, 2008 2:09 PM]

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A1: The FDIC essentially has an unlimited line of credit to the Treasury, so no in the short run. In the long run, if the FED cannot supply borrowed money to the treasury to pay the FDIC bills, then possibly. [Answer submitted on Oct 1, 2008 7:33 AM]

A2: If there were no FED, as this bill aims to see, then all FDIC insurance would come directly from the national budget controlled by the Treasury, and if I'm not mistaken, those funds would be borrowed from the American people, or from their general fund, instead of the FED. [Answer submitted on Oct 8, 2008 8:30 AM]

A3: In reference to answer 2, the money granted to the government from the FED must be payed back by the people just as the FDIC insurance would. [Answer submitted on Oct 15, 2008 3:35 PM]

A4: The FDIC is an insurance fund. The banks pay money to the FDIC in exchange for insuring their deposits in the event of collapse. The FDIC can exist without the Federal Reserve. [Answer submitted on Oct 24, 2008 12:41 AM]

A5: To my knowledge, the FDIC usually steps in before a bank is completely bankrupt and sells the banks assets to cover the deposits up to the guaranteed amount.

The FDIC doesn't let the bank run itself into the ground then have new money printed to fix everything. They step in when the bank can no longer guarantee payment of what it owes to its investors/account holders, they sell off the banks assets, and they use the proceeds to first payback the guaranteed $100,000/$250,000 amounts, then with whatever is left over, they attempt to pay back the remaining balances. [Answer submitted on Aug 27, 2009 5:00 PM]

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A1: The 16th amendment [Answer submitted on Nov 12, 2008 7:16 PM]

A2: Uhh, the 16th amendment allows it. Then Congress created the IRS. The IRS can then create administrative laws telling you how much to pay in taxes. Instead of asking where's the law, I think a better argument would be that forcing us to fill out a 1040 is in direct contradiction to the 5th Amendment to the Constitution. [Answer submitted on Nov 12, 2008 11:53 PM]

A3: The 16th Amendment never received the votes necessary for ratification, and therefore is not Constitutionally binding. [Editor's note: This is patently false.] [Answer submitted on Nov 13, 2008 8:27 AM]

A4: 26 USC Section 1 levies a tax on all "taxable income" in excess of a threshhold amount. The matter then evolves squarely on what is "taxable income.'If one has "taxable income," then one is liable for such a tax. Thus, to argue that there is no law is just plain false. [Answer submitted on Nov 20, 2008 3:54 PM]

A5: Actually, A3 is correct. Check Supreme Court rulings on the matter after the amendment was supposedly ratified. The income tax is illegal under due to the fact that the government can only issue tariffs on goods bought and sold, not income derived from labor. [Editor's note: Conspiracy theories about the legitimacy of federal taxes are not on topic on this website. It is, further, a scary thought to imagine a world without income tax and all of the services the federal government provides. I pay my tax with pride, and you should too.] [Answer submitted on Nov 23, 2008 2:13 PM]

A6: HR2755, gives the right to issue and print money back in the hands of the Government, where it belongs and under our control, through our elected representatives. Check Surpreme Court ruling Chas.C. Mach. Co. v. Davis, 301 US 548, 581-582,(1937), there are a couple of earlier rulings, basically saying that the 16th Admendment instilled no new taxing power on the Federal Government. To me, it is basically a slavery tax. I do the work and the Government, collects money. It needs to be apportioned throughout the States as the Constitution states, very clearly. The Government has so many different avenues which they already tax us. And the guy who pays his taxes with pride, if he is that happy he can pay mine too. [Answer submitted on Nov 29, 2008 7:53 PM]

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A1: Woodrow Wilson, who was president during the creation of the Federal Reserve later said "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men." [Answer submitted on Nov 18, 2008 9:29 PM]

A2: We did not give Congress permission to give away that power. [Answer submitted on Nov 22, 2008 11:28 PM]

A3: The Federal Reserve Act was brought through congress around the holidays so that most of the representatives would be at home with their families. Only the Congressmen working for the banking interests were present for a vote. As mentioned above Woodrow Wilson won the presidency with the help of the banking interests and later regretted signing it. But before all that the panic of 1907 happened. JP Morgan essentially sparked it to create fear and get congress to come around to the idea of a central bank as a stabilizer. Any person can see they are not. Just look at the insane inflation in the last century. From our countries inception until the fed there was about one cent of inflation. Now look at where we are, its so obvious that it stems from the Fed. [Answer submitted on Nov 23, 2008 1:26 AM]

A4: Don't we have a quorum (mininum amount of people needed) to pass legislation?

I thought Madison was the 'Pres. that beat the [central bank/] banks'? And Lincoln before him?

Also - JFK signed a presidential decree (executive order) for the Govt. to bring back the gold/silver standard about 2 months before he was murdered for it - Hmmm some number like Executive Order 11115 or something... That was going to get rid of the Fed.

I guess that all who have tried to free the country were murdered for it? Lincoln, JFK, etc. [Answer submitted on Nov 25, 2008 3:45 AM]

A5: Actually, Lincoln served after Madison. Also, Andrew Jackson is the main president known for killing the bank (he was so proud of this accomplishment that his tombstone says "I killed the bank"). [Answer submitted on Dec 13, 2008 9:21 PM]

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A1: The government could create money as money - debt free. Money created by the government from thin air goes into the pockets of contractors and public service personel and is thus recirculated into the economy. The money created should be used for infrastructure projects that contribute to the growth of the economy to avoid inflation. Alternatively, money could be created as the economy expands and be a response to deflation caused by a genuine increase in productivity. [Answer submitted on Nov 22, 2008 9:58 PM]

A2: The Congress through the Treasury would coin money. It would have to be gold backed of course. It would return to the system before the Fed was established in 1913. That would mean no inflation and no perpetual debt and true economic freedom. [Answer submitted on Nov 23, 2008 1:15 AM]

A3: The government would quit borrowing money and print it interest free. No bonds would need to be issued. There is one plan at: http://www.monetary.org/amacolorpamphlet.pdf [Answer submitted on Nov 23, 2008 9:23 AM]

A4: The US Treasury prints money (or creates on the books) for the Federal Reserve notes now. Without the Fed, the Treasury could still create the money but not pay interest on the created money, just as they did under President Lincoln with Greenbacks and President Kennedy. The Treasury would not owe interest to a private bank system since they wouldn't be borrowing the money back. [Answer submitted on Nov 23, 2008 2:07 PM]

A5: Bonds will still be issued for people to hold, just like any other commodity in a safe. They also represent a "promise of payment of value" by the government. The bonds would also be issued to banks as infusions by the government to help lending, but strict limits on monetary creation would prevent the fraud we have today.

Bankers would have to wade in the same money pool as the rest of us and this would help control inflation and keep interest down, since banks could compete with no tampering by the government.

The bottom line is, if you eliminate the need to borrow to maintain a money supply, you get more responsible behavior by the investment class. You also ensure buying power, which reduces the need to borrow in the first place.

Sure, bankers would lose, but who is really going to be sad for them? [Answer submitted on Nov 27, 2008 11:20 AM]

A6: Actually, the Fed does not print money. The monies created by the Fed are created on paper as a loan that is created out of thin air and is basically worth the amount of real property owned by the person who took out the loan. all real currency that is in circulation is printed at a US Treasury Mint.

[Answer submitted on Jun 25, 2009 8:51 AM]

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A1: Executive order 11110 was dispositioned. See:

http://www.archives.gov/federal-register/executive-orders/1963-kennedy.html

I have read the text of 11110 and it does not strip anyone of anything. It merely grants the Treasury the power to print money against silver bullion. As there is no more silver bullion, Executive Order 11110 is no longer relevant, hence dispositioned.

Executive order 11110:

http://www.lib.umich.edu/govdocs/jfkeo/eo/11110.htm [Answer submitted on Dec 9, 2008 12:37 AM]

A2: "merely grants the Treasury the power to print money against silver bullion."

That's a big "merely".

If you understand currency, you'd understand that as soon as the Treasury started doing that everyone would demand treasury notes rather than reserve notes because the treasury notes would be backed by silver and retain their value.

The market pressure for treasury notes would inherently put the fed out of business.

[Answer submitted on Mar 10, 2009 5:28 PM]

A3: Monopolies don't work when there's competition. Kennedy's Executive Order would have had everyone using United States Notes backed by Silver. No one would want a Federal Reserve Note backed by force of military action if you don't accept their worthless paper. [Answer submitted on May 27, 2009 12:15 AM]

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A1: NO! Article 1, Section 8, Clause 4 gives CONGRESS and only Congress the power to coin money. This power was completely usurped by the Federal Reserve Act of 1913, which is the law that should be repealed. You can't repeal any part of the original constitution, in the first place (though those in power have effectively repealed it in total). The Constitution is the law of the land, by which all other laws are measured. [Answer submitted on Feb 11, 2009 8:43 PM]

A2: The Constitution cannot be repealed but it can be Amended. Were Congress to have done that in 1913 all of the States would have to have been involved, thus exposing by debate what the Act was all about. The World Bankers of that day weren't as sure of passage so that is why on Dec.23,1913 they rushed it through Congress so Woodrow Wilson , who was put there for that reason, could sign it into law without the full attendance of Congress. [Answer submitted on Feb 21, 2009 5:37 PM]

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