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Debt-Free United States Notes Were Once Issued Under JFK And The U.S. Government Still Has The Power To Issue Debt-Free Money

Most Americans have no idea that the U.S. government once issued debt-free money directly into circulation.  America once thrived under a debt-free monetary system, and we can do it again.  The truth is that the United States is a sovereign nation and it does not need to borrow money from anyone.  Back in the days of JFK, Federal Reserve Notes were not the only currency in circulation.  Under JFK (at at various other times), a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government without any new debt being created.  In fact, each bill said "United States Note" right at the top.  Unfortunately, United States Notes are not being issued today.  If you stop right now and pull a dollar out of your wallet, what does it say right at the top?  It says "Federal Reserve Note".  Normally, the way our current system works is that whenever more Federal Reserve Notes are created more debt is also created.  This debt-based monetary system is systematically destroying the wealth of this nation.  But it does not have to be this way.  The truth is that the U.S. government still has the power under the U.S. Constitution to issue debt-free money, and we need to educate the American people about this.

Posted below are pictures of the front and the back of a United States Note printed in 1963 while JFK was president....

Notice that there is a red seal instead of a green seal on the front, and it says "United States Note" rather than "Federal Reserve Note".

According to Wikipedia, United States Notes were issued directly into circulation by the U.S. Treasury and they were first used during the Civil War....

They were originally issued directly into circulation by the U.S. Treasury to pay expenses incurred by the Union during the American Civil War. Over the next century, the legislation governing these notes was modified many times and numerous versions have been issued by the Treasury.

So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?

It seems rather stupid, doesn't it?

Well, that is what Thomas Edison thought too.

Thomas Edison was once quoted in the New York Times as saying the following....

That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt.

Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.

But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good.

Our current debt-based monetary system was devised by greedy bankers that wanted to make huge profits by creating money out of thin air and lending it to the U.S. government at interest.

Sadly, the vast majority of the American people have no idea how money is actually created in this nation.

In a previous article about money and debt, I explained how more government debt is created whenever the U.S. government puts more money into circulation....

When the government wants more money, the U.S. government swaps U.S. Treasury bonds for "Federal Reserve notes", thus creating more government debt.  Usually the money isn't even printed up - most of the time it is just electronically credited to the government.  The Federal Reserve creates these "Federal Reserve notes" out of thin air.  These Federal Reserve notes are backed by nothing and have no intrinsic value of their own.

When each new Federal Reserve Note is created, the interest owed by the federal government on that new Federal Reserve Note is not also created at the same time.

So the amount of government debt that is created actually exceeds the amount of money that is created.

Isn't that a stupid system?

The U.S. Constitution says that the federal government is the one that should actually be issuing our money.

In particular, according to Article I, Section 8 of the U.S. Constitution, it is the U.S. Congress that has been given the responsibility to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".

So why is a private central banking cartel issuing our money?

As is the case with so many other issues, we desperately need to get back to the way the U.S. Constitution says that we should be doing things.

The debt-based Federal Reserve system is literally stealing the future from our children and our grandchildren.

Back in 1910, a couple years prior to the passage of the Federal Reserve Act, the national debt was only about $2.6 billion.

A little over 100 years later, our national debt is now more than 5000 times larger.

So why don't we just admit that this system simply does not work?

Our current debt-based monetary system also requires very high personal income taxes to pay for it.

In fact, it is no accident that the personal income tax was introduced at about the same time that the Federal Reserve system originally came into existence.

Our children, our grandchildren and many generations after that are facing a lifetime of debt slavery because of us.

As I have written about previously, if the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

Neither the Republicans or the Democrats are proposing any solutions to this problem.  Rather, both parties are only trying to slow down the rate at which we are going into even more debt.

But the truth is that the federal government does not have to go into a single penny of additional debt.

How could this be?

It is not too complicated.

If Congress took back the power over our currency and started issuing debt-free money a lot of our problems could be fixed.

A basic plan would look something like this....

#1) The U.S. Congress votes to take back all of the functions that it has delegated to the Federal Reserve and begins to issue debt-free United States Notes.  These United States Notes would have the exact same value as existing Federal Reserve Notes, and over time all existing Federal Reserve Notes would be taken out of circulation.

#2) The U.S. Congress nationalizes all debt held by the Federal Reserve.  That would instantly reduce the national debt by 1.6 trillion dollars.  In fact, there are a few members of Congress that have already proposed this.

#3) A Constitutional amendment is passed limiting future U.S. government deficits to a reasonable percentage of GDP.  Any future deficits would not be funded by borrowing.  Rather, future deficits would be funded by newly created United States Notes.  Therefore, the federal government would never again accumulate another penny of debt.

And it would be important to inject new money into the economy from time to time.  When existing money is destroyed or when the population grows it is important to inject a certain amount of new money into the system in order to avoid deflation.

#4) The existing national debt would be very slowly paid off with newly created United States Notes.  The U.S. government spent over 454 billion dollars on interest on the national debt during fiscal year 2011, and over time this expense would go to zero.

If the national debt is paid off slowly enough, it would not create too much inflation.  I believe that it could be paid off gradually over 50 years without shocking the economy too much.

There are some that would object to any measure that would ever cause a small amount of inflation, but my contention is that we have created a $15 trillion dollar debt mess for future generations, and it would be absolutely criminal to pass that legacy on to them.

We created this mess, and it is our responsibility to clean it up.

While there is certainly a danger that we would have a limited amount of inflation under a debt-free monetary system such as the one described above, the reality is that we are absolutely guaranteed inflation under the Federal Reserve system.

Most Americans believe that inflation is a fact of life, but the sad truth is that the United States has only had a major, ongoing problem with inflation since the Federal Reserve was created back in 1913.

If you do not believe this, just check out this chart.

Sadly, the U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created.

So, yes, there would be a need for strict monetary discipline under a debt-free monetary system, but it would be hard to do worse than the Federal Reserve has already been doing.

And Congress could always slow down inflation using other methods.  For example, raising the reserve requirements for banks (which should be done anyway) would help keep inflation in check.

If the above proposals were adopted, the end result would be something that we could all live with.  The Federal Reserve system would be abolished, the national debt burden on future generations would be wiped out, the economy would not have to go through a devastating economic collapse that could last a decade or longer, and we could eventually make a fairly smooth transition to "hard money" if we wanted to after the national debt is gone.

Is there any other proposal out there that does all of those things?

There are many out there that would dispute some of the points above, and debate is good.  By engaging in debate, we can hopefully help educate the American people about the nature of money.

The key is to get rid of our current debt-based Federal Reserve Notes and replace them with debt-free United States Notes.

The American people need to understand that it is a lie that the U.S. government "must" borrow money from somebody else.

When the U.S. government borrows money, it slowly transfers wealth from the American people to those that lent it.

At this point, we have created a financial nightmare for future generations that is unlike anything the world has ever seen before.  We owe it to future generations to eliminate the debt problem without destroying the United States economy.  Adopting debt-free money would allow us to do that.

But sadly, neither political party is even talking about debt-free money.  In fact, most of the politicians in both political parties probably do not even know what debt-free money is.

So we need to get the American people educated about these things.  Because if we stay on the course that we are currently on, an economic collapse is inevitable.

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  • plasmaborne

    Lincoln Kennedy were both killed by the banking interests of the 1% for issuing debt free Treasury Notes.

  • Sebra Leaves

    Thanks for reminding us.

  • Sebra Leaves

    We should ask Kucinich and Ron Paul if their plans to take back currency control includes the issuance of debt free dollars.

    • Libertarian777

      clearly you have no clue.
      Ron Paul wouldn’t ‘take control’ of the currency.

      He would implement competing currencies and let the FREE MARKET decide which currency rules.

      Kucinich on the other hand is a greenbacker

    • EdL

      We already issue debt free dollars. They are dollar coins.

  • Hangemhi

    Kevin2 is on to something – as are you Michael. Try looking at it this way – the “debt” isn’t really debt if it can be nationalized and paid off. Right? I mean if you had a printing press, would you ever be in debt?

    Once you realize that Michael’s proposal is possible (maybe not realistic) we as a nation can simple stop calling it “debt” because it really isn’t. Certainly not the kind of debt you and I have when we get a mortgage or credit card. More on this idea:

    – American consumers send China (worthless) dollars – they send us real goods in return. China prints their own money, so when a Chinese manufacturer trades his U.S. dollars in for Yuan, the Chinese gov prints up (worthless) Yuan and now the government owns the (worthless) U.S.dollars. To fool their population into believing the U.S. Dollar means anything to a country with it’s own currency and it’s own printing press it turns around and invests in U.S. Treasuries. Now Americans think we are worse off and Chinese think they are funding us. But isnt that backwards???

    The Fed allows this charade because they know the Chinese will never need the U.S. Dollars back (again, because they have their own currency) and the Fed can pay the interest on this so-called “debt” by printing new (worthless) U.S. dollars. So ask yourself…… does this “debt” matter? Is it even “debt” when a printing press can fund it? Note too that this money mostly does not make it into the real economy – it does in china but not here unless the chinese government buys the empire state building or Pebble Beach or some hard asset.

    Now how about U.S. treasuries that grandma buys, or that pension funds and hedge funds buy? Is that “debt”? No, it isn’t for the same reason – because the Fed can print to pay it back (ask yourself if your debt would be debt if you also had a printing press – of course not). This is more like a gift – a guaranteed safe haven investment for any willing buyer.

    Once you change what you call the “debt” you can see that it can grow forever – see Japan. Rogoff is WRONG, the reason hyperinflations happened when debt to GDP reached a certain level was when the debt was owed it another currency. So if we owed the Chinese in Yuan we would be in major trouble. If we owed the Chinese in gold – or in gold backed money – we would be in major trouble. And we would have to print to pay for it because they would want their money back. But they don’t need U.S. Dollars and we don’t owe them yuan or gold.

    So lighten up everyone, we are not in real “debt”. Yes, our economy is in trouble, and deficits do matter, and we have done some serious malinvestment and the banksters are robbing us blind, but we are NOT saddling our grandchildren with U.S. Government debt, and we are NOT about to enter a hyperinflation.

  • Don Levit

    Hangemhi wrote:
    Now how about U.S. Treasuries that grandma buys or that pension funds and hedge funds buy? Is that debt? No, because the Fed can print to pay it back. A guaranteed safe haven investment for any willing buyer.

    As far as grandma and the pension funds go, they actually paid real dollars for that debt. I would call that “funded” debt. Hedge funds I am not sure about, but if they do not pay full price up front as grandmad did, that is “unfunded” debt.
    A good example of unfunded debt is Medicare Part D, which is funded 75% by general revenues. This is an immediate budget expense, and increases the deficit.
    Do you think Part D federal expenses is funded or unfunded debt?
    Or, to you, does it make a difference?
    I liked what you said about a willing buyer. What if the federal government itself is the willing buyer?
    Don Levit

  • Libertarian777

    FIAT currency is the ISSUE. Whether issued by the Fed or the Treasury, if it’s FIAT it will be inflated.

    Stop with this Ellen Brown, Gertrude Coogan, Bill Still Greenbackers nonsense.

    A dollar was defined as 371 grains of silver.
    US silver certificates are what the counterfeit FRNs were modeled after (look at a silver certificate and look at a $1 FRN, they look the same).

    If you need any more proof of the greenbacker fallacies read this:

    Greenbackers still believe in central economic planning, except instead of the Fed doing it they want the US treasury to do it. There IS NO DIFFERENCE.

    • Lennie Pike

      That was a lie.

    • Lennie Pike

      Probably sounded like the truth to you though.

  • cedarx

    I would like to add that the Federal Reserve

    is a SECRET organization !!!!

    The owners of the Federal Reserve will

    not “allow’ their identity to be known !!!!

    • fuktwittertwattter

      Why would they show their identity to earth scum like you? They are God’s Chosen People and have all rights and you US American Public are their Slaves!

  • D. Devil’s Advocate, Esq.

    If Congress is our putative savior in this debt crisis, we are well and truly fooked. Sh-ite Mussel-ams, who birthed the Beast from Jekyll Island in the first place? With the executive branch as midwife and big business handing out the cigars?

  • Allen

    One way or the other we are going to get out of this mess. You know why? Because a lot of us are waking up. And the people that are younger than us are watching and waiting and understanding. And by the time my little brother (he’s 14. I’m 31) gets my age we will have figured this thing out.

    Of course, we need the military on our side and a lot of them are waking up too. This is the most exciting time to be alive.

  • Bob Marshall

    Too many have come to depend on the government to take care of them.look at credit card debt in America today. Both congress and millions of citizens have the same problem. Spending on credit is out of control. Sooner or later, the bills become due.

  • Nathen

    Why have a money system period I believe the term rescource based economy is possible. jacque fresco seems a truely intelligent human being. I see some flaws in his solution ,but I do think greater risk usually means greater reward.

  • Edward

    I read all the comments……whew……It is definitely interesting. Hoover is the one President that signed a paper from congress in the middle of the night , turning the Federal Reserve into a private bank, which also in the” paper” he signed, turned loose all power of regulation, no regualtion? Ha!, then I own you, is the way it is right now

    • Brent Bergeron

      “On September 8, I requested the governors of the Federal Reserve banks to endeavor to secure the co-operation of the bankers of their territory to make some advances on the security of the assets of closed banks or to take over some of these assets, in order that the receivers of those banks may pay some dividends to their depositors in advance of what would otherwise be the case pending liquidation. Such a measure will contribute to free many business activities and to relieve many families from hardship over the forthcoming winter, and in a measure reverse the process of deflation involved in the tying up of deposits.”

      —Herbert Hoover

      October 18, 1931

  • John

    Americans own at least $10 trillion of US debt. There never has been any intention of repaying this debt. Every time a treasury bond is redeemed it is replaced with a brand new one. That $10 trillion in debt is also $10 trillion in American citizen’s assets. And those assets will be passed to our children and grandchildren. Why? Because we will all die and our children and grand children will inherit those assets. So ho is leaving $10 trillion in assets to our children a bad thing? The United Staes can never ‘runout of money”. It can always create as much fiat money as it needs. On the other hand, greece can run out of money because the euro is like being on a gold standard.

    • fuktwittertwattter

      Should we move to the EU? Is it better there?

  • Brian

    Dude. I hate the fed as much as anyone. But debt free notes issued by congress? Come awn ma’an! Inflation would be horrendously worse! How bout this: competing currencies and congress not allowed to issue a thing…

  • Steve

    Andrew Jackson, Abraham Lincoln, James Garfield, Senator Lewis T. McFadden, John F. Kennedy, Moammar Ghadafi.

  • Steve

    The upper class prints money out of thin air and then hands it out to….themselves!

  • Steve

    In the Argentina they have flea markets where the medium of exchange is not money…..but BARTER! WAKE UP! WAKE UP! WAKE UP! WAKE UP!

  • Scott Baker

    I just came upon this site.
    I am deeply involved in trying to get the country back to its constitutional roots and responsibility to “coin Money” (Art. 1, Sec. 8).
    Here is a petition to do exactly that:
    Here is a fellow monetary reformer who, like me, has written articles on the subject, but also filed a lawsuit (my petition is exhibit B), against Treasury & Geithner for several factual misstatements that prevent the full realization of seigniorage (>$52 billion, just to start): (See v. Treasury pulldown).
    I am advising him, and he me.
    The case is real. There is a court date. The gov’t is trying to dismiss it on “lack of standing” and other non-factual grounds – because the facts are against them!
    Take back the Money Power! Re-issue U.S. Notes!

  • freedom

    this idea would be great unless our trusted leaders have already squandered all our gold supply, making our u.s. notes as worthless as the current ones. i realize the fed notes are only held up by a facade of lies and deceit, but the sheeple have already been trained to accept that system. i believe the only effective means to establish a better economic future is through either a revolution resulting in a political cue or an economic breakdown in which a new system is built from the bottom up.

  • Communal Award

    Just print up your own money exclusively for your friends/family/community.
    Hitler did the same.

  • JohnBevington

    So if I understand it right, all coins are debt free money? Whereas bills are put out be the Federal Reserve.

  • Ryan Brock Campbell

    Pay the debt back? It’s fraud! We must use Glass-Steagall to separate the fraudulent debt from our legitimate debts–the majority is fraud. Let Wall st. sink into the Atlantic or the toilet which ever they’d like. They don’t do a damn think but suck our blood. Then open the Constitutional 3rd Bank of the Untied States. Upgrade our infrastructure. Get back to a machine tool/manufacturing base, pick up where J.F.K. left off with NAWAPA. Then get back into space.

  • Michal

    It is a simple idea, but very powerful and very inconvenient for banking system. Current Debt-base money system is a way to control society. It will be a solution for modern problems such as poverty, medicine shortage in developing countries, space exploration, clean energy etc. Regards from Poland ;)

  • Mary w Spaulding

    I am a single working mother and I’m in so much debt that all I do is cry about how to feed my kids and pay my bills. I am beginning to think that death is the only way out. I’m in 20,000 in debt and I really don’t know what to do. I can’t get assistance here in Kentucky because I have a job. Seems like I can’t win for loosing.

  • Karmin

    Do not forget that President Kennedy was assinated six months later after issuing the debt free notes. The program was abolished and never talked about again.

  • F-em

    Who is owed all this money?
    JUST default and be done with it.

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