2011/12/06

What's Wrong with Wall Street


If financial institutions wanted to play games with monopoly money of their own creation, like the inhabitants of Second Life might do with their Linden Dollars, what they did would affect only them. That includes bailouts by the Federal Reserve, which creates the fiat currency they use.

The problem is that they impose their funny money on the rest of us, so that we can't get payment for labor or debt, pay bills including taxes, or have banks accept deposits or issue payments, in anything except that funny money. The problem is legal tender statutes, and the U.S. statute making federal reserve notes legal tender everywhere in the U.S., besides being unconstitutional, is the key legislation that needs to be overturned.

Here is an interesting question for the forum: Who actually owns federal reserve notes? Not the party in possession any longer, if he ever did. Now it may be forfeited unless the possessor can prove it is "his" to at least use. But who has equitable title.

The answer is not the U.S. Treasury. Apparently it is only the Federal Reserve banks, collectively. None of the FRNs in your wallet or bank account are really yours. You are only allowed to use them in certain ways as long as you are playing the game. When the owner of the monopoly game calls the game over, he gets to take the game board and all the monopoly money home with him (except he is already at home, so that means you have to go elsewhere).

The solution is for the rest of us to abandon fiat currencies and deal only in things backed by real assets.

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