From: politics@not-any-spam.com

How the American economy works
(written in plain English by castleman)

The Federal Reserve is comprised of twelve Federal Reserve bank
corporations. Every American bank must become a stockholder in a Federal
Reserve bank corporation.  There are no government-owned banks in America.

When a Federal Reserve bank wants free new Federal Reserve notes, as it
often does, it tells the U.S. Treasury department how many new notes to
print and send to it.  In other words, though the physical printing presses
for Federal Reserve notes are housed at the U.S. Treasury department, the
Treasury has no say in how many are printed nor does it get to keep the new
notes printed.  This new currency is given to the banks for free (though
they must pay a small printing charge of about 3 cents per note).

These banks then spend this new money on whatever they like; they lend it to
state and local governments, to the federal government and to foreign
governments and to private citizens.  They also spend some of this new
currency buying real estate, starting up media companies, etc.  The Federal
Reserve Bank of New York, Inc., is by far the largest of the twelve Federal
Reserve bank corporations which comprise the Federal Reserve System.  It was
reported that in 1992 this New York Federal Reserve bank received $100
billion in new dollars for free, which this bank then gave free to its
stockholder banks. This is quite a sum for a group of private corporations
to receive for free.

America's great strength was not Fed-inspired
We should point out that America did not become a superpower by issuing
Federal Reserve notes; these notes are recent arrivals.  In 1913 the
privately-owned national banks' new Federal Reserve notes joined the U.S.
government's Gold Certificates, the Silver Certificates and United States
notes.  The latter being identical to Federal Reserve notes except that they
have red serial numbers and the government gets these when they are printed.
It was made to appear within the poorly written Federal Reserve Act of 1913
that the new Federal Reserve notes were to be used only as "IOUs" between
member banks, not intended for use by the general public.  The following is
an excerpt from the Federal Reserve Act of 1913, which calls for the
printing of the new Federal Reserve notes . . .

"Federal Reserve notes, to be issued at the discretion of the Federal
Reserve Board for the purpose of making advances to Federal Reserve banks
through the Federal Reserve agents as hereinafter set forth and for no other
purpose, are hereby authorized.  The said notes shall be obligations of the
United States and shall be receivable by all national and member banks and
Federal Reserve banks and for all taxes, customs, and other public dues.
They shall be redeemed in gold on demand at the Treasury department of the
United States."
The Statutes at Large of the United States of America from March 1913 to
March 1915. Volume XXXVIII, The Federal Reserve Act, Ch. 6, 1913, Sect. 16,
pg 265.

Of all the institutions mentioned above, only the Treasury department is
part of the government. The Federal Reserve banks are all privately-owned
with private stockholders. As we can see above, the term reserve is used to
make us think it really isn't currency, as in "We won't spend it, we'll keep
it in reserve".  Or, one might think that these new notes are only intended
for use as "advances" to member banks.

How inflation works
For zero inflation to occur, a government can only print new currency to
match the new goods and services created.  But if 10 billion dollars worth
of, say, new pornography enters the market then a government can print 10
billion new dollars to match it without causing any inflation.  The problem
is, that 10 billion dollars worth of new pornography entering the market
creates social problems. This would be greater government expenditures on
crime, drug-use, counseling services for divorce, depression, etc, all of
which comes from the taxpayer. In America, however, the national banks have
been printing the currency since 1982, not the government.

If 100,000 people in America's inner cities arrive in emergency rooms with
gunshot wounds, where each patient requires $100,000.00 average worth of
hospital treatment, then the national banks can print an extra
$10,000,000,000.00 in new currency for themselves to spend without causing
any inflation.  These banks can lend and invest this money wherever they
want.  The hospitals paying these added expenses pass these new costs on to
insurance companies and the federal government.

A dangerous problem occurs when a privately-owned central bank prints the
currency because, while a government would surely not be interested in
printing 10 billion new dollars to match new problematic goods that will
cause the government to go into debt, a privately-owned central bank may
because it does not have to pay for these higher social problem costs (the
taxpayer does).  Additionally, and as is currently the case in America, when
the government is forced to spend this extra money it often must borrow it,
and it borrows it through the very same privately-owned central bank which
benefitted by the initial 10 billion dollars printed.  This is precisely
what the Federal Reserve corporation has been doing in America during the
past decade, where the 2% and 3% economic growth rates listed each year were
not a result of good manufacturing jobs being created, this was merely the
new currency printed to match the massive immigration each year, vast
amounts of new illegal drugs arriving, millions of people getting involved
in gambling, prostitution and pornography along with the resulting
skyrocketing of AIDS and STD cases, counseling for depression, family
problems, etc. The Federal Reserve corporation is owned by America's
national banks. It is not owned by the government.

If a young girl finishes school and gets a new job earning $20,000.00 per
year, then the privately-owned Federal Reserve can print $20,000.00 without
causing any inflation.  This is not "too much money chasing too few goods
and services" because there is now that exact same amount worth of new
services created.  This is known as economic growth.  If, however, this
young girl instead gets involved in prostitution where she earns $50,000.00
per year, even if this profession is illegal, then the national banks (via

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