[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Pages 19273-19274]
[From the U.S. Government Publishing Office, www.gpo.gov]



    REDUCING NATIONAL DEBT AND ANNUAL INTEREST PAYMENTS BY BILLIONS

  The SPEAKER pro tempore (Mr. Aderholt). Under a previous order of the 
House, the gentleman from Washington (Mr. Metcalf) is recognized for 5 
minutes.
  Mr. METCALF. Mr. Speaker, does anyone believe that it would be 
possible to reduce our national debt by $600 billion and reduce our 
annual interest payments by $6 billion with no harm to anyone nor to 
any program? That sounds too good to be true, does it not? But it is 
true, it is simple, and it is possible.
  Most people have little knowledge of how money systems work and are 
not aware that an honest money system would result in great savings to 
the

[[Page 19274]]

people. We really can cut our national debt by $600 billion and reduce 
our Federal interest payments by $30 billion per year.
  It is an undisputable fact that Federal Reserve notes, that is our 
circulating currency today, 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 so-called back our paper money. That is the Federal 
Reserve notes. This unnecessary cost is $100 per person each year in 
our country, an absolutely unnecessary cost, $100 per person each year.
  The Federal Reserve obtains the 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. 
The Federal Reserve appears to pay the printing costs. But, in fact, 
the taxpayers again get stuck. They pay the full cost of printing our 
Federal Reserve currency. The total cost of the interest is roughly $30 
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 today? 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 the first one 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 $600 billion and reduce annual interest payments 
by $30 billion dollars.
  In other words, 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, then it 
returns most of it to the U.S. Treasury. But the effect of this is 
there is a tax on our money, again about $100 per person, or $30 
billion a year, 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, and convoluted system to a logical system which pays no 
interest directly or indirectly on our money in circulation?
  Yes, there is. Congress must require the U.S. Treasury to issue our 
cash, our paper money.
  I have introduced a bill to require our paper money be issued just as 
we issue our coins, thus reducing the national debt by $600 billion and 
stop wasting $30 billion each year paying rent or interest on our own 
money in circulation.

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