AMERICA HAS NOTHING TO FEAR BUT FEAR ITSELF

by Dr. Edwin Vieira, Jr., Ph.D., J.D.

There is mounting concern these days about the fragility of America’s monetary and banking systems, and especially about the possibility that, as a result of foreigners’ loss of confidence in the Federal Reserve Note as a viable world-reserve currency, huge amounts of foreign holdings of "dollar"-denominated instruments of credit may suddenly pour into America’s domestic economy, to buy up hard assets with ever-depreciating paper currency. Yet there should be no cause for alarm. For America’s political and financial leaders have the legal tools to respond to any crisis in the same timely and brilliant manner with which they and their predecessors have managed this country’s financial affairs up to now.

First, Title 12, United States Code, Section 95(a) declares that,

[i]n order to provide for the safer and more effective operation of the national Banking System and the Federal Reserve System, to preserve for the people the full benefits of the currency provided for by the Congress through the national banking system and the Federal reserve system, and to relieve interstate commerce of the burdens and obstructions resulting from the receipt on an unsound or unsafe basis of deposits subject to withdrawal by check, during such emergency period as the President * * * by proclamation may prescribe, no member bank of the Federal reserve system shall transact any baking business except to such extent and subject to such regulations, limitations and restrictions as may be prescribed by the Secretary of the Treasury, with the approval of the President. Any individual, partnership, corporation, or association, or any director, officer or employee thereof, violating any of the provisions of this section * * * shall be fined not more than $10,000 or * * * be imprisoned for a term not exceeding ten years. Each day that any such violation continues shall be deemed a separate offense.

Plainly, these savage threats of prison and penury should deter, and if not prevent then quickly correct, any serious upheaval in America’s monetary and banking systems.

Second, if the foregoing powers in the Executive Branch were not sufficient, in Section 30 of the Federal Reserve Act Congress "expressly reserved" to itself "[t]he right to amend, alter, or repeal" that Act at any time, in each and every present particular and in other ways not yet imagined. So, Congress may rewrite Title 12, United States Code, Sections 411 and 412, such that —

*The Board of Governors of the Federal Reserve System may not issue Federal Reserve Notes on the collateral of "dollar"-denominated assets held by foreign individuals, corporations, or governments; or may issue Federal Reserve Notes only if those foreign assets are first exchanged for United States Treasury Notes or bonds.

*Federal Reserve Notes that foreign interests hold within or attempt to transfer into the United States through the Federal Reserve System will no longer be treated as "obligations of the United States", and will no longer be "receivable * * * for all taxes, customs, and other pubic dues"—and even may be "blocked" from all expenditure in this country—or required to be exchanged for some other currency, such as United States Treasury Notes, at a rate decidedly unfavorable to those foreign interests.

*Federal Reserve Notes held by foreign interests will no longer be redeemable in lawful money on demand at the Treasury, or will be redeemed only at some rate of exchange other than "dollar-for-dollar", such as 1 "dollar" in "lawful money" for 10, 100, 1000, or more Federal Reserve Note nominal "dollars".

Congress may also repeal that part of House Joint Resolution No. 192, of 5 June 1933, that declared Federal Reserve Notes to be legal tender.

These powers are of decisive importance, because Federal Reserve Notes are the only actual currency the banking system generates. Bank deposits are not currency, but simply the banks’ debts possibly payable to their depositors in currency if the banks remain solvent. Bank deposits are not "obligations of the United States"; are not required to be "receiv[ed] by all national and member banks and Federal reserve banks and for all taxes, customs, and other pubic dues"; are not "redeem[able] in lawful money on demand at the Treasury Department of the United States * * * or at any Federal Reserve bank"; and are not "legal tender".

Plainly, then, Congress has plenary ability at any moment to prove to avaricious foreigners the truth of John Exter’s incisive characterization, that  "Federal Reserve Notes are an I owe you nothing currency".

Of course, all these powers could be applied to common Americans, too. But every American  knows that Congress, Presidents, and Secretaries of the Treasury always put America’s national independence, security, and prosperity ahead of all domestic special interests, let alone foreign ones—and therefore would never leave common Americans holding the bag in the event of a catastrophic failure of the Federal Reserve System.

So, to sleep soundly at night, Americans need only imagine how these extensive powers would—or one should presume, will—be used by such political figures of outstanding caliber as Hilary Clinton, Rudy Giuliani, Mitt Romney, or Barrack Obama—and by the unselfish, pubic-spirited individuals they likely would appoint to the key position of Secretary of the Treasury. Or by the great statesmen who will serve in Congress during the next Administration. Americans can thank Providence that they have entrusted such learned, prudent, and patriotic individuals with all the powers they need.

So, in the spirit of that great popular philosopher, Alfred E. Newman, Americans should simply say: "What, me worry?" And then join the spirit of Franklin D. Roosevelt, one of the senior architects of today’s regime of fiat currency, in exclaiming: "We have nothing to fear but fear itself."