According to the Constitution, the United States Congress is supposed to issue money, but instead that power has been delegated to the Federal Reserve, a private corporation with some ties to the government.
The member banks of the Federal Reserve profit from this arrangement. The United States Treasury issues interest-bearing bonds which are purchased with paper bills that the Fed simply prints, and which are backed with nothing. The Federal Reserve is a private corporation with a license to create money out of thin air. It makes its profit by purchasing interest-bearing Treasury bonds. The fact that the Federal Reserve buys those treasury bonds from Goldman and Sachs instead of getting them directly from the United States Treasury makes an already scandalous situation ridiculous. This is real chutzpah.
In his book The Economic Pinch (1923), Congressman Charles Lindbergh (the father of the aviator) said this:
This is the strangest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. They know in advance when to create panics to their advantage, They also know when to stop panic. Inflation and deflation work equally well for them when they control finance. [Congressman Charles August Lindbergh, 1923]
Lindbergh was worried about the potential for profiteering from the manipulation of the currency. Political elections also can be influenced that way.
Under Adolf Hitler the German government reverted to issuing its own currency, and some people believe that this was why that government was marked for destruction. The last U.S. Note was a Series 1963 five-dollar bill that was issued concurrent with Federal Reserve Notes when Kennedy was president. And of course some people argue that this was why Kennedy was killed.
Since the Federal Reserve issues only paper, you can opt out of this scam by using only coins as money, but that would that would be very inconvenient for most transactions.
Here is a United States Note, from the last batch issued in 1963, with a Federal Reserve Note below so that you can see how it is different. Where government-issued money says “United States Note” at the top above Lincoln’s head, the Federal Reserve’s equivalent says “Federal Reserve Note,” and the red numbers and seal on the U.S. Note are replaced with similar green marks. A United States Note is redeemable for precious metal, as stated in the United States Constitution. The almost-identical Federal Reserve Note is not.
I do not agree with every criticism in this little video. In a way it does make sense to make additional money available in an economy that suffers economic stagnation and unemployment.
My criticism is that the money (preferably issued by the government, not by a “federal reserve”) should be put directly into the pockets of the people that need it. It can be done as payment for labor in some government project like the WPA or CCC. That is direct creation of jobs, as was practiced in the Third Reich, not keynesian manipulation of the money supply with the hope that at some point jobs will result. Even if the money were simply handed out, just so long as it went to people who otherwise had no money to spend, it would increase buying and cause economic growth.
I would also say that it doesn’t have to be newly printed money. If the government taxed the people that have money to put it into the pockets of those that have none, it might work just as well as creating new money. It’s a matter of enabling the society to function by putting its resources where they are needed, just as an army makes sure that each member has what he needs.