(Week 12 - Wednesday, Oct. 29)
In yesterday's column I offered a description of how the private-bank-loan transaction by which money in the present system is created and issued is not a "loan" in the dictionary or common sense meaning of the term, but is actually a creation-and-issuance procedure by which new money is created when the banker writes the check (or electronically credits the account), and enters into circulation when the "borrower" spends it. The banker is not handing over funds that were on deposit in his bank, but, rather, is bringing an intangible value into existence that is essentially conjured "out of thin air" in a process that could more properly be called "monetization" (the assignment of monetary value to already existent wealth (i.e. collateral)).
By the terms of the contract that the "borrower" is required to sign to get the money, he agrees to take on a "debt" to the bank in spite of the fact that the money could not be properly said to have been a "loan", but rather an assignment of monetary value to the property (collateral) of the "borrower".
It must be asked, where did the bank get the privilege to effectively write the money that created a "debt" which the citizen who applied for the "loan" is obliged to bear? It proceeds from the exclusive franchise to create money granted to a private corporation by the Federal Reserve Act of 1913. The granting to a private corporation of the franchise to create the nation's money supply is unconstitutional because such authority is a legislative power, as stipulated in the Art 1, Sec 8, Para 5 of the United States Constitution (Congress shall have the power to . . . coin Money (and) regulate the Value thereof).
Notwithstanding that they have done so, it is no more justified for the Congress to abdicate this Constitutional mandate than it would be for the President to contract out his executive duties, or the Supreme Court its decision-making trust to a private contractor. President Andrew Jackson stated the matter succinctly in his message to Congress on the occasion in 1832 of vetoing the charter of the Second Bank of the United States (an institution much like the Federal Reserve):
"But if they (the Congress) have . . . power to regulate the currency, it was conferred to be exercised by themselves, and not to be transferred to a corporation. If the bank be established for that purpose . . . Congress have parted with their power for a term of years, during which the Constitution is a dead letter."
In assuming the authority to create money, the private banking system (under the direction of the Federal Reserve) has usurped a power that properly belongs to the citizenry as a whole. That it then "loans" the money so created back to them is an act of civic effrontery that We the People cannot accede to without becoming as a body citizenry accomplices to the act, and at length indentured serfs to the private interests that have been vested with this misplaced prerogative.
The resulting "debt", then, is not a common-sense debt any more than the "loan" that supposedly created it is a common-sense loan. Indeed, the very legitimacy of both concepts must be called into question. There is one more factor in this line of reasoning that needs to be established before it can be stated definitively (in my view) why our children will not inherit the "national debt". That will be the topic of tomorrow's column.
The complete set of columns from this series is posted at the following websites.