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What is official ‘legal tender’? Does Ben Bernanke create ‘legal tender’ money via his QE operations??

March 8, 2013

Are gold coins being used as legal tender today? What about silver coins? What about paper Federal Reserve Notes? What has our Congress approved as our ‘legal tender’ (money)? My review of our ‘legal tender’ laws leads me to the conclusion that ‘legal tender’ is suppose to be our paper Federal Reserve Notes. The State of Utah has recently made silver and gold official legal tender…but this provision is currently meaningless as silver coins and gold coins exceed the face value imprinted by the Mint. Arizona is also considering a bill that would allow silver and gold to serve as ‘legal tender’. To date, however, the only physical THING approved by our Congress to serve as ‘legal tender’ is the U.S. paper Federal Reserve Note. The implication of the ‘legal tender’ laws is that our currency unit is a paper note (a physical note made from paper and ink). Our Bureau of Engraving and Printing creates these paper notes at their two printing facilities.

If the paper Federal Reserve Note is our official ‘legal tender’ money, then where does the digital dollar fit within our legal system on money. We now have mostly a digital dollar (some 96% of all money transactions are now digital) which are created from the conscious decisions of our Central Bank and their member banks. For example: Ben Bernanke creates some $85 billion of digital units (called dollars) every month to purchase mortgage assets and government assets. Does Ben create paper Federal Reserve Notes for these purchases? I don’t think so! What Ben does is increase his computer account (called the System Open Market Account) by merely pressing computer buttons. Ben creates no paper Federal Reserve Notes during this process. So if Congress has declared that our paper Federal Reserve Note is official ‘legal tender’, then doesn’t our Congress need to declare the digital dollar illegal as official ‘legal tender’?

Has our Congress any awareness of the nature of our money units today? Ben Bernanke has spoken to the media and the public many times describing his actions on the creation of digital units. He has stated that he is NOT printing any paper Federal Reserve Notes. Our Bureau of Engraving and Printing does print paper Federal Reserve Notes, however, this printing amounts to mostly replacing worn out paper notes from the circulating market. We now have only some 4% of circulating paper Federal Reserve Notes. This transition from paper to digits has occurred mostly since 1998 yet our Congress has not noticed this unique difference (it seems). Would our Congress approve of Ben’s QE operations if they fully understood the nature of this process? Would they approve of allowing Ben and his FOMC committee to create digital units ‘out of nothing’ (their consciousness)? It’s an interesting question!

My sense is that most of our representatives in Congress have little understanding on the issues of money or the nature of how our banking system operates. Do any of these representatives understand that our monetary unit (the dollar) is now a mental abstraction (a no thing unit)? There is no tangible existence to our monetary unit today. Do any of these elected representatives understand that Ben and his Committee merely ‘thinks’ up QE amounts (dollar numbers) and then they use the Central Bank’s Desk Computer at the New York Federal Reserve Bank as the means to increase their System account? Do any of these elected representatives understand how monetary policy is used to manipulate prices, values, and interest rates in the greater global markets? My sense is that our Congress is living in the ‘dark’ on all these important monetary issues.

If ‘legal tender’ money is officially our paper Federal Reserve Note (as seems evident from my research), then it would appear that the transition of our Unit of Account (the paper dollar) into a mental abstraction (a unit of consciousness created digitally) would be important legally. Would this mental abstraction qualify as official ‘legal tender’ money in a Court of Law? That is my question! My sense is that if this issue were seriously pursued legally in a Court of Law, we would discover that our current imaginary dollar and the monetary process of money creation from bits and bytes (via the computer) would be declared illegal and a fiction. Americans would immediately abandon this fictional monetary unit!

Take the time to check out what our Congress has approved as ‘legal tender’ money. Ask your Congressperson if he/she knows what our official Unit of Account is supposed to be. I think you will discover that the paper Federal Reserve Note (now only some 4% of the dollars in circulation) would be the only legal tender money officially allowed. As Ron Paul has stated many times publicly, the Fed should be abolished as it does not represent American values on money. Creating dollars ‘out of thin air’ (nothing but the consciousness of Ben and his Committee) is morally and legally corrupt. Think for yourself on this issue! That is my missive for today! I am:

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