[Congressional Record (Bound Edition), Volume 145 (1999), Part 15]
[House]
[Page 21267]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                 MONEY

  Mr. METCALF. Mr. Speaker, my topic today is money. About the only 
thing most of us know about money is that we need more of it. But there 
is really a lot more that we need to know about our money system.
  For example, most people do not know that we pay rent on our money; 
yes, interest or rent on the cash we use. It costs every American about 
$100 every year indirectly to rent our cash, that is, our paper money, 
from its owners, the Federal Reserve.
  Of course, the Fed does not just spend that money. It is returned to 
the Federal Treasury. Thus, in reality, if it goes to the Treasury, it 
is a tax or rent we Americans pay to the Fed for the privilege of using 
the Fed's money, an indirect tax on our money in circulation.
  We all know that we are taxed on nearly everything, but not many 
people know that we pay a tax on our money. This tax, about $25 
billion, or $100 per person, is paid to the Fed each year by the U.S. 
Treasury to pay interest on U.S. bonds that are held by the Fed to back 
our money. What a foolish and costly system, to rent Federal Reserve 
notes for $25 billion a year, when the U.S. Treasury could issue our 
own currency, our own United States notes, without debt or bonds or any 
interest at all, just as we issue our coins.
  Our coins are minted by the United States Treasury and essentially 
spent into circulation. The Treasury makes a neat profit on them of 
over 80 percent of the face value of the coins issued. That is a lot of 
profit. A grave question is, why do we not issue our paper money the 
same way we issue coins, and gain an immense profit or seigniorage for 
our Treasury, and, of course, for the American people?
  It has been said that the U.S. Government goes further into debt 
whenever it issues currency, but makes a profit when coins are placed 
into circulation. This is truly a system that defies logic. Again, why 
do we not issue our own paper money, just as we issue our coins? There 
is no legitimate reason why we do not.
  I am pleased to present a simple and realistic way to accomplish 
this. Congress needs only to pass legislation requiring the U.S. 
Treasury to print and issue U.S. Treasury currency in the same amount 
and the same denominations as the Federal Reserve notes.
  The Treasury would issue these new U.S. notes through the banks, 
while withdrawing a like amount of Federal Reserve notes. Thus, there 
would be no change in the money supply. As these Federal Reserve notes 
are collected by the U.S. Treasury, they must be returned to the Fed to 
buy back or redeem the face value, the same face value in U.S. 
interest-bearing bonds now held by the Fed, a total of about $500 
billion. So over a couple of years, we would have real U.S. currency 
circulating, and the U.S. debt would be reduced by substantially more 
than $400 billion. It sounds too simple, does it not? There must be a 
down side. Well, it is that simple, and there is no down side.
  In fact, there is a substantial up side. The U.S. debt would be 
reduced by over $400 billion, and U.S. interest on the debt reduced 
each year by about $25 billion. Ask the chairman of the Committee on 
the Budget if it could help to reduce U.S. Treasury expenditures by $25 
billion each year. I intend to introduce legislation to carry out this 
concept.

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