[Congressional Record Volume 145, Number 116 (Thursday, September 9, 1999)]
[House]
[Page H8086]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               AMERICAN PEOPLE ARE RENTING THEIR CURRENCY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington (Mr. Metcalf) is recognized for 5 minutes.
  Mr. METCALF. Mr. Speaker, I would like to talk briefly about money. 
Everybody is interested in money. My wife asked me: If you know so much 
about money, how come we do not have very much? But I would like to 
talk about money this evening.
  Did you know that we pay rent on our money; the cash we use, we pay 
rent on it? It costs the American people $100 per person per year to 
rent our cash; that is, the paper money, from the Federal Reserve.
  Now, the Federal Reserve gets the money, it just does not spend that 
money or keep it. They return it to the Federal Treasury. That means 
that the American people are paying a tax on our money in circulation 
for the privilege of using Federal Reserve notes. In reality, this 
money is paid to the Fed by the Treasury to pay the interest on the 
U.S. bonds that back our money.
  This is a foolish system when the U.S. Treasury could issue our 
currency directly without debt and without interest as they issue our 
coins. Most people do not know that our coins are minted by the 
Treasury, essentially spent into circulation, and the U.S. Treasury 
makes a neat profit on them. But when we issue cash, we go further into 
debt. When the U.S. Government issues paper cash, they go further into 
debt because bonds are created to back the cash, and thus the debt 
increases.
  With a currency we go into debt, but it makes a profit when coins are 
placed in circulation. This is truly a system that defies logic, and we 
should issue our coins or issue our cash as we issue our coins.
  Here is a simple way to accomplish that; this is not complex, this is 
not rocket science. Congress only needs to pass legislation requiring 
the Treasury to print and issue U.S. Treasury currency in the same 
amount, in the same denominations, of the present Federal Reserve 
notes. No change in the money supply. The Treasury would issue these 
U.S. notes through the banks and at the same time withdrawing a like 
amount of Federal Reserve notes.
  As these Federal Reserve notes are collected by the U.S. Treasury, 
they must be returned to the Federal Reserve and essentially to redeem 
the over $400 billion of U.S. interest bearing U.S. Treasury bonds now 
held by the Fed. So the Fed holds the bonds. We can take the U.S. 
currency and exchange it for those bonds. Over a couple of years we 
will have U.S. currency circulating instead of Federal Reserve notes, 
and the U.S. debt would be reduced by over $400 billion.
  That sounds too simple. Well, it is simple. This is not rocket 
science. There is no appreciable down side, and I expect to discuss 
this issue a lot in the future just because somebody needs to take a 
look at how our money was issued and allow us to avoid paying that $27 
billion a year interest just to rent our currency from the Federal 
Reserve.

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