[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Page 18546]
[From the U.S. Government Publishing Office, www.gpo.gov]



            REDUCING NATIONAL DEBT AND ANNUAL INTEREST RATES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington (Mr. Metcalf) is recognized for 5 minutes.
  Mr. METCALF. Madam Speaker, this Nation can reduce our national debt 
by $600 billion and reduce our annual interest payments by $30 billion 
with no harm to anyone nor to any program. That sounds too good to be 
true, but it is true.
  Most people have little knowledge of how money systems work and are 
not aware that an honest money system would result in great savings for 
the people. We really can cut the national debt by $600 billion and 
reduce our Federal interest payments by $30 billion a year. How? By 
merely issuing our own United States Treasury currency.
  It is an undisputable fact that the Federal Reserve notes, that is, 
our circulating currency today, are 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, the Federal Reserve notes. 
This unnecessary cost is about $100 per person per year in our country.
  Why are our citizens paying $100 per person each year to rent the 
Federal Reserve's paper money when the United States Treasury could 
issue the paper money exactly as 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 would realize a profit on the bills sufficient 
to reduce the national debt by $600 billion and reduce annual interest 
payments by $30 billion. Federal Reserve notes are officially 
liabilities of the Federal Reserve, and over $600 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. So it is a 
tax on our money that goes to the United States Treasury, a tax on our 
money in circulation.
  There is 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. Congress 
simply needs to pass a law requiring the Nation's Treasury to print and 
issue United States currency in the same denominations and in 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 in 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 Fed, the Federal Reserve notes in exchange for the 
$600 billion in interest-bearing bonds now held by the Fed, thus 
reducing the national debt by $600 billion.
  The Nation would thus have a circulating currency, the United States 
Treasury currency, or U.S. notes, bearing neither debt nor interest.
  The national debt would be reduced by $600 billion and annual 
interest payments reduced by over $30 billion. The easiest way we can 
save our taxpayers $30 billion each year is to issue our own U.S. 
Treasury money.

                          ____________________

                              {time}  1845