Page 124 - Fruits from a Poisonous Tree

108 Fruit from a Poisonous Tree
WHAT IS MONEY vs. FEDERAL RESERVE NOTES

“A Federal Reserve Note (is) merely an IOU.” Here’s how it works. When
the politicians want more money, they dispatch a request to the Federal
Reserve for whatever sum they desire. The Bureau of Printing and Engraving
then prints up bonds indenturing taxpayers to redeem their debts. The bonds
are then ‘sold” to the Federal Reserve. But note this unusual twist. The
bonds are paid for with a check backed by nothing! It is just as if you were
to look into your account and see a balance of $505 and then, hearing that
government bonds were for sale, write a check for $1billion. Of course, if
you or I did that, we would go to jail. The Federal Reserve bankers do exactly
that, with no fear of losing their freedom. In effect, they print the money
that enables their check to clear.” – James Dale Davidson, Director, National
Taxpayers Union
“The creation of a loan is little different when you go to your
neighborhood bank. Again, the ‘money’ that is loaned is created out
of thin air, with nothing more than a book entry! Let us see how a
bank creates a mortgage lien on a house: A man who owns a building
lot and has $20,000 needs an additional $75,000 to build a house.
If the banker finds the collateral sufficient, he may credit the man’s
checking account with $80,000 – minus several ‘points’ for expenses –
against which checks can be written to pay for construction. When the
house is completed, it will have a thirty-year lien at 12 or 15 percent.
After working 30 years to liquidate the debt, the owner will have paid
perhaps $300,000 for something that did not cost the banker a dime
in the first place. This is the magic of fractional reserve banking.” – The
Battle for the Constitution, Dr. Martin A. Larson
Some 97% of the money supply is made up predominantly of book
entries, about 3% actual coin and paper currency. The system needs a
continuous and increasing cycle of borrowing, debt, and refinancing, or the
entire system will collapse:
“If all the bank loans were paid off tomorrow morning, no one
would have a bank deposit and there would not be a dollar or coin
or currency in circulation. This is a staggering thought. We are
completely dependent on the commercial banks. Someone has to
borrow every dollar we have in circulation. If the banks create ample
synthetic money, we are prosperous; if not, we starve. We are absolutely
without a permanent money system. When one gets a complete grasp