Money issued at interest by the Fed
This is part of a transcript of a conversation between Dan Benham (realdemocracy.com) and "Mr. Ron Supinski of the Public Information Department of the San Francisco, Federal Reserve Bank … on October 8, 1992."
CALLER - Where does the Federal Reserve get Federal Reserve Notes from?
MR. SUPINSKI - They are authorized by the Treasury.
CALLER - How much does the Federal Reserve pay for a $10 Federal Reserve Note?
SUPINSKI - Fifty to seventy cents.
CALLER - How much do they pay for a $100.00 Federal Reserve Note?
SUPINSKI - The same fifty to seventy cents.
CALLER - To pay only fifty cents for a $100.00 is a tremendous gain, isn't it?
SUPINSKI - Yes
CALLER - According to the U.S. Treasury, the Federal Reserve pays $20.60 per 1,000 denomination or a little over two cents for a $100.00 bill, is that correct?
SUPINSKI - That is probably close.
CALLER - Doesn't the Federal Reserve use the Federal Reserve Notes that cost about two cents each to purchase U.S. Bonds from the government?
SUPINSKI - Yes, but there is more to it than that.
CALLER - Basically, that is what happens?
SUPINSKI - Yes, basically you are correct.
CALLER - How many Federal Reserve Notes are in circulation?
SUPINSKI - $263 billion and we can only account for a small percentage.
CALLER - Where did they go?
SUPINSKI - Peoples mattress, buried in their back yards and illegal drug money.
CALLER - Since the debt is payable in Federal Reserve Notes, how can the $4 trillion national debt be paid-off with the total Federal Reserve Notes in circulation?
SUPINSKI - I don't know.
CALLER - If the Federal Government would collect every Federal Reserve Note in circulation would it be mathematically possible to pay the $4 trillion national debt?
SUPINSKI - No
CALLER - Am I correct when I say, $1 deposited in a member bank $8 can be lent out through Fractional Reserve Policy?
SUPINSKI - About $7.
CALLER - Correct me if I am wrong but $7 of additional Federal Reserve Notes were never put in circulation. But, for lack of better words, were "created out of thin air " in the form of credits and the two cents per denomination were not paid either. In other words, the Federal Reserve Notes were not physically printed but, in reality were created by a journal entry and lent at interest. Is that correct?
SUPINSKI - Yes
CALLER - Is that the reason there are only $263 billion Federal Reserve Notes in circulation?
SUPINSKI - That is part of the reason.
CALLER - Am I mistaking that when the Federal Reserve Act was passed (on Christmas Eve) in 1913, it transferred the power to coin and issue our nation's money and to regulate the value thereof from Congress to a Private corporation. And my country now borrows what should be our own money from the Federal Reserve (a private corporation) plus interest. Is that correct and the debt can never be paid off under the current money system of country?
SUPINSKI - Basically, yes.
CALLER - I smell a rat, do you?
SUPINSKI - I am sorry, I can't answer that, I work here.