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Local view: Federal Reserve has no right to print our money

Are there any counterfeit bills in the picture accompanying this commentary? It's not a trick question or a joke. Not only are there some counterfeits represented; in the truest sense, they all are counterfeit.

Money
Duluth photographer Ken Kollodge made the image using a Leica M9 camera with a Leica 90mm f4.0 Macro-Elmar lens.

Are there any counterfeit bills in the picture accompanying this commentary? It's not a trick question or a joke. Not only are there some counterfeits represented; in the truest sense, they all are counterfeit.

First, look at the paper money in your pocket. All the bills are Federal Reserve Notes. To understand how they are counterfeited, a bit of history is helpful.

Several of our Founders -- in particular, Benjamin Franklin and Thomas Jefferson -- were, for good reason, suspicious of and dead set against establishing a central bank that would be in charge of creating and determining the value of our nation's money.

Throughout U.S. history, we have had three central banks, the latest one the Federal Reserve Bank, or "the Fed." It came into existence by a congressional bill known as the Federal Reserve Act of 1913, which was signed into law by President Woodrow Wilson. This occurred on Dec. 23, 1913, during the holiday break, when barely enough congressmen were around to have a quorum to pass the bill. Wilson, reportedly, just prior to his death, lamented that by signing the bill into law he unwittingly ruined his country.

Because of the name, "Federal Reserve Bank," quite naturally, most citizens believed the granddaddy of all banks was part of the federal government. Well, it is not. Think of it more as a secret cartel of large, private U.S. banks that's more than likely coordinating with banks that aren't even American.

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The Fed creates our money and Federal Reserve Notes and regulates their worth and availability using what I and others feel are a variety of schemes.

Its powers actually are contradictory to our Constitution's Article I, Section 8, where it reads, "The Congress shall have Power (5) To coin Money, (and) regulate the Value thereof." That wording never has been amended. And anyone skeptical about the intent of the writers of our Constitution, the very next entry under the powers of Congress reads, "The Congress shall have Power (6) To provide for the Punishment of counterfeiting the Securities and current Coin of the United States." Notice it says Congress "shall" have power to, not "may" have power to.

So how does the Fed counterfeit money?

When, as a matter of law, more money is required to be spent by the federal government than was collected in taxes, the U.S. Treasury will issue bonds to be sold to raise the money. These bonds are loan instruments you and I have the obligation to pay back with our taxes. In addition, these bonds earn interest, which also has to be paid by you and me.

The U. S. Treasury issues and prints the bonds and ships them to the Fed while the Fed arranges with the Bureau of Engraving and Printing (which just printed the bonds and is part of the U.S. Treasury Department) to print and deliver to the Fed Federal Reserve Notes in the amount of the face value of the bonds it is receiving from the Treasury. The Fed pays nothing for this new currency other than the cost of the printing. According to the Bureau of Engraving and Printing, the cost of printing a Federal Reserve Note in either $1, $2, $5, $10, $20, $50 or

$100 denominations is less than

10 cents per bill.

The Fed then delivers these new Federal Reserve Notes (like the ones in your pocket) back to the Treasury as "payment" for the bonds it just received from the Treasury. The Treasury then deposits this new money in checking accounts it set up in commercial banks.

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Our government then starts to write checks on these checking accounts for things like Social Security payments, war expenditures, the maintenance of national parks, the TSA, IRS and even bank bailouts. The Fed sells the bonds to investors mainly through its network of member banks. These bonds are our debt, yours and mine. We have to pay them back with our taxes, and we have to come up with the interest payments, too, which, of course, deliver no benefit whatsoever to us, the owners of the country.

So, as easy as that, money has just been printed and created out of thin air -- that is, it could be argued, counterfeited.

Some might say, "So what?"

Because the Fed did not create an equivalent offsetting amount in value of new goods and services when it counterfeited this money and our government ended up inflating (increasing) the monetary supply by writing checks on these counterfeited money deposits, we now have more "money" circulating out there in the monetary system available to be spent, attempting to buy the same amount of goods and services in our marketplace. This, of course, is the overwhelming main cause of what we all experience daily as price inflation. Put another way, this counterfeiting causes a decrease in the buying power of our money. Tomorrow, our money will buy less than it did today. Simple as that!

So is this slight-of-hand, this carnival shell game, this counterfeiting, destroying our country as we know it? Is the end result anything less than lowering our standard of living by transferring the little bit of accumulated wealth of those at the bottom into the pockets of the few at the top? Well, make up your own mind. I suspect you can tell how I'd answer those questions.

And in case you think this is the only fraud in our monetary system destroying our country, let me assure you, it gets worse. Just read Ellen Brown's "Web of Debt" to learn more about the whole sordid, grizzly, enslaving mess imposed upon us all. Brown details various banking ruses, including their historical origins.

My exposure of the particular scheme above just scratches the surface.

Ken Kollodge of Duluth has a master's degree in philosophy and psychology from the University of Minnesota and has worked as a professional photographer for 30 years. He's been studying the banking system for three years.

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