Citations
From The Zeitgeist Movement
I. Currency
A. Types of U.S. Currency
1. Greenback
a. United States Note
b. Legal Tender Act of 1862
c. Established by President Abraham Lincoln
d. Not backed by gold, bank deposits, or government reserves
2. Gold Standard Introduced
a. March 14, 1900 - 1932
b. Paper notes were backed by quantities of gold
c. Redeemed for gold until 1933
d. Silver Certificates until 1964
3. Federal Reserve Note
a. Established in 1913
b. Federal Reserve Act
c. Fractional Reserve System
i. Today’s current system
ii. Regulated by the Federal Reserve Bank
B. Government Monetary Establishments
1. Federal Reserve Bank
a. To serve as the “Central Bank” of the US.
b. Manages the nations Monetary Policy
c. Regulates all US Banking Institutions
d. Provides Financial Services
2. U.S. Treasury Department
a. Production of Coin and Currency
b. Manages U.S. Finances
II. Breakdown of Fractional Reserve System
A. What is actually created?
1. Treasury Notes
a. “Legal Tender Payable For All Debts”
b. “Fiat System” or without backing
2. Debt
a. Money is lent from the Federal Reserve
b. Government Bonds are repayment agreements
B. Bank Deposits
1. A banks “Reserves”
2. A bank must “maintain legally required reserves, equal to a prescribed percentage of its deposits.”
3. “Under current regulation, the reserve requirement against most transaction is 10%.
4. “Excessive Reserves”
a. 90% is held as excessive
b. Can be used for the bases of new loans
C. Monetary Expansion
1. “The total amount of expansion that can take place is illustrated on page 11.
Carried through to theoretical limits, the initial $10,000 of reserves
distributed within the banking system gives rise to an expansion of $90,000 in bank credit”
2. “Of course they do not really pay out loans from the money they
receive as deposits. If they did this, no additional money would
be created. What they do when they mke loans is to accept promissory
notes (loan contracts), in exchange for credits (money) to the borrowers
transaction account.”
3. Monetary Expansion Chart
D. Federal Reserve Statistical Release
1. Historical Data on Federal Funds
2. Money Supply Chart
3. Updated every business day
4. M3 No longer published
a. “M3 does not appear to convey any additional information
about economic activity…” “…and has not played a role in
the monetary policy process for many year. “
b. “The Board judged that the costs of collecting the underlying
data and publishing M3 outweigh the benefits.”
E. Interest
1. Principle must always be replayed with interest.
2. 2c: an excess above what is due or expected
3. New money much be created to cover interest
III. The Byproducts
A. Inflation
1. Monetary Expansion
a. Money Supply is increased
b. New currency steals value from existence money supply
2. Devaluation
a. No parallel increase in goods or services
b. Causes reduction in purchasing power.
B. Economic Growth?
1. Monetary Expansion
a. Inflation creates money
i. Loans are available
ii. “Cushions the loss of employment”
iii. “Diffuses Price Pressures”
b. Currency loses value
i. Currency is debased
ii. Prices go up
iii. “Weakens the global economy”
2. Monetary Contraction
a. Deflation of currency
i. Interest rates rise, discouraging new loans
ii. The exchange rate of the dollar increases
iii. Help the US in the “global economy”
b. Money becomes less available
i. Cause defaults on loans
ii. Negative impact on industry
iii. Unemployment rises
C. Merva-Fowles Study
1. University of Utah in 1990
2. 1% increase in unemployment, causes
a. 6.7% increase in Homicides;
b. 3.4 % increase in violent crimes;
c. 2.4 % increase in property crime
D. Minnesota vs. Daley
1. The First National Bank of Montgomery
2. Jerome Daly
3. “The money and credit first came into existence when they created it.
Mr. Morgan,” the bank president “admitted that no United States Law
or Statue existed which gave him the right to do this, a lawful
consideration must exist to support the note. The jury found that
there was no lawful consideration and I agree"
E. Poverty Levels
1. For 2005 we estimate that 1.4 billion people, or one quarter of the
population of the developing world, lived below our international
line of $1.25 a day in 2005 prices
2. At least 80% of humanity lives on less than $10 a day
Source Citations:
I.A.1. The Journal of Economic Education v. 25 (Fall 1994) p. 343-8
I.A.2a. History of the Treasury
http://www.ustreas.gov/education/history/events/1900-present.shtml
I.A.2. F.A.Q. about Legal Tender status b.c.d.
http://www.ustreas.gov/education/faq/currency/legal-tender.shtml
I.A.3. Basics of Monetary Policy. Federal Reserve Education Website
http://www.federalreserveeducation.org/fed101/policy/
I.B.1. Created in 1913 by the enactment of the Federal Reserve Act signed by Woodrow Wilson.
I.B.1. “The Federal Reserve System – Purposes & Functions”
a.b.c.d. Last Publication, Edition 9 on Jun 2005
http://www.federalreserve.gov/pf/pdf/pf_complete.pdf
I.B.2. Duties and Functions of the US Treasury Department
http://www.ustreas.gov/education/duties/
II. “Modern Money Mechanics - A Workbook on Bank Reserves and Deposit Expansion“
A Federal Reserve Publication; Distributed by the Federal Reserve Bank of Chicago.
This publication originally was written by Dorothy M. Nichols in May 1961
http://www.rayservers.com/images/ModernMoneyMechanics.pdf
II.B.1.2 Page 6
II.C.1 Page 11
II.C.2 Pages 6 & 7
II. D. Federal Reserve Statistics & Historical Data
http://www.federalreserve.gov/econresdata/releases/statisticsdata.htm
II.D.4 “Discontinuance of M3” Release Date: November 10, 2005, revised March 9, 2006 Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/h6/discm3.htm
II.E.2. 2
a: a charge for borrowed money generally a percentage of the amount borrowed
b: the profit in goods or money that is made on invested capital
c: an excess above what is due or expected
http://www.merriam-webster.com/dictionary/interest
III.B. See I.B.1 Citation “The Federal Reserve System – Purposes & Functions”
III.B. Inflation vs. Purchasing Power Charts and Graphs 1. 2.
US Treasury, Bureau of Public Debt; http://www.publicdebt.treas.gov/
US Department of Labor, Bureau of Labor Statistics; http://www.bls.gov/
III.C. Merva and Fowles Study, University of Utah; 1992
Results Published in the book Economic globalization as religious war
By Michael McKinley Published by Routledge, 2007 ISBN 0415332664
Pg 51,52, & 53 detail the results of these findings.
III.D. Minnesota vs. Daley 1968 Foreclosure Case; Supreme Court Per Curiam Filed Sept 5, 1969
Minnesota Supreme Court Judge John McCarthy
http://www.lawlibrary.state.mn.us/CreditRiver/1969-09-05slipopinionInreJeromeDaly.pdf
PDF of Judge’s Personal Memorandum
Has appeared in several news publications such as
“Minnesota Judge Holds Federal Reserve Act Unconstitutional” Wed, 2 Feb 2005
J.A.I.L. News Journal, Los Angeles CA
III.E.1.“The developing world is poorer than we thought, but no less successful in the fight against poverty”
Policy Research working paper; no. WPS 4703; 2008/08/01 World Bank Group
http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000158349_20080826113239
III.E.2 Global Issues; Poverty Facts and Statistics.
http://www.globalissues.org/article/26/poverty-facts-and-stats
This document was prepared for educational purposes. It is designed to provide a basic speech outline for the purpose of
1. Explaining Monetary Policy utilized by today's Banking Institutions
2. And to provide cited examples of the effects these policies have on society
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