The possibility ought to concern you if you have any Federal Reserve notes in your wallet.
In World War I and World War II, it strongarmed the Fed to print Federal Reserve Notes.
Federal Reserve notes are fiat currency, Grant keeps reminding us.
That writer seems oblivious to the existential threat that aggressive inflation of the supply of Federal Reserve notes poses to their viability as a medium of exchange.
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This is so because legal tender laws allow debtors to effectively abrogate private currency debt contracts at will by offering Federal Reserve notes in lieu of what was specified.
But during the War legislation and executive orders compelled private U.S. banks to transfer their gold coin reserves to the Fed in exchange for Federal Reserve Notes convertible into gold.
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The Federal Reserve , via the largely passive issuance of currency: the issuance of Federal Reserve notes, created when the public chooses to redeem their on-demand bank-issued deposit liabilities for currency.
The paper argues that we should eliminate legal restrictions on private currency issuance to allow private firms to create money backed either by Federal Reserve notes or commodities like gold, a position I completely agree with.
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About the policy response from the Obama administration and the Federal Reserve, Huether notes that the stimulus package produced a beneficial uptick in demand, but its temporary impact has limited the proper distribution of profits that resulted.
After all, other than its yield, is cash held in the form of liquid Treasury notes all the different than cash held in the vaults of the Federal Reserve, especially when the Federal Reserve stands ready to buy those Treasury notes from any and all too-big-to-fail sellers essentially on demand, if need be?
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In 1932 Federal Reserve banks got permission to count their holdings of Treasury paper as collateral against the notes.
But Dino Kos, a former chief of markets at the Federal Reserve Bank of New York who now works for Portales Partners, a research firm, notes that the yuan does not meet one of the most basic requirements of a reserve currency: other countries cannot use it to intervene in foreign-exchange markets because it is not freely convertible.
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That liquidity crisis is why the Federal Reserve had to step in last week and act as commercial bank of last resort, agreeing to buy short term notes called commercial paper directly from companies.
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