[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[House]
[Page 15129]
[From the U.S. Government Publishing Office, www.gpo.gov]



   THE POSSIBILITY EXISTS TO REDUCE OUR NATIONAL DEBT AND OUR ANNUAL 
                     INTEREST PAYMENTS BY BILLIONS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Washington (Mr. Metcalf) is 
recognized during morning hour debates for 5 minutes.
  Mr. METCALF. Mr. Speaker, does one believe it would be possible to 
reduce our national debt by $500 billion and to reduce our annual 
interest payments by $25 billion, with no harm to anyone, nor to any 
program? Sounds too good to be true but it is possible, and it is 
simple.
  Most people have little knowledge of how money systems work and are 
not aware that an honest money system would result in a great savings 
for the people. We really can cut the national debt by $500 billion and 
reduce our Federal interest payments by $25 billion per year. It is an 
undisputable fact that Federal Reserve notes, that is our circulating 
currency, is issued by the Federal Reserve in response to interest-
bearing debt instruments. Thus, we indirectly pay interest on our paper 
money in circulation. Actually, we pay interest on the bonds that back 
our paper money, that is, the Federal Reserve notes. This unnecessary 
cost is $100 each year to each person in our country.
  The Federal Reserve obtains these bonds from the banks at face value 
in exchange for the currency, that is the Federal Reserve notes, 
printed by the Bureau of Engraving and Printing and given to the 
Federal Reserve without cost.
  The Federal Reserve appears to pay the printing costs but in fact the 
taxpayers pay the full cost of printing our Federal Reserve currency. 
The total cost of the interest is roughly $25 billion, or about $100 
per person in the United States. Why are our citizens paying $100 per 
person to rent the Federal Reserve's money when the United States 
Treasury could issue the paper money exactly like it issues our coins? 
The coins are minted by the Treasury and essentially sent into 
circulation at face value.
  The Treasury will make a profit of $880 million this year from the 
issue of 1 billion new gold-colored dollar coins. If we use the same 
method of issue for our paper money as we do for our coins, the 
Treasury could realize a profit on the bills sufficient to reduce the 
national debt by $500 billion and reduce annual interest payments by 
$25 billion.
  Federal Reserve notes are officially liabilities of the Federal 
Reserve, and over $500 billion in U.S. bonds is held by the Federal 
Reserve as backing for these notes. The Federal Reserve collects 
interest on these bonds from the U.S. Government and then returns most 
of it to the U.S. Treasury. Thus, it is a tax on our money that goes to 
the United States Treasury, a tax on our money in circulation.
  Is there a simple and inexpensive way to convert this costly, 
illogical, convoluted system to a logical system, which pays no 
interest directly or indirectly on our money in circulation? Yes, there 
is.
  Let me present two alternatives to accomplish it. First, plan A. The 
Nation's Treasury prints and issues United States Treasury currency in 
the same denominations and the same amounts as the present Federal 
Reserve notes. Because the new U.S. currency would be issued into 
circulation through the banks to replace or exchange for the Federal 
Reserve notes, there would be no change in the money supply. The plan 
would remove the liability of the Federal Reserve by returning to the 
Federal Reserve the Federal Reserve notes in exchange for the $500 
billion in interest-bearing bonds now held by the Fed. Then because the 
liability is lifted, the Federal Reserve returns the bonds to the U.S. 
Treasury. The Nation would thus have a circulating currency of United 
States currency, United States Treasury currency, or U.S. notes, 
bearing no debt nor interest.
  The national debt would be reduced by $500 billion and annual 
interest payments reduced by over $25 billion. The easiest way we can 
save our taxpayers $25 billion.
  Possible drawbacks of plan A. Our currency circulates worldwide and 
it would be impossible to find and exchange all that currency and in 
addition the cost of printing all the new paper money would be huge. So 
we have plan B, the best solution. Congress merely must pass a law 
declaring Federal Reserve notes to be official United States Treasury 
currency, which would continue to circulate as it is now.
  The Federal Reserve, now freed from $500 billion liability, simply 
returns their U.S. Treasury bonds which back the Federal Reserve notes 
to the United States Treasury. This reduces the national debt of the 
United States by $500 billion and reduces interest payments by over $25 
billion annually.

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