The Bankruptcy of the US Federal Government

The financial system is interesting in the United States. First, each Colony started to print its own money that was generally useable within the confines of a particular colony. That made interstate commerce very difficult. This system was used in the 1600's because England refused to allow English money to be circulated in the colonies. In 1775, the Continental Congress issued money (out of thin air) and used that money to help defeat the British and establish the United States, for a "mere" 200 million Continental dollars.

After the US became a country, the banks that started printing money, not the government. Banks became all powerful in the US and actually owned most of the assets of the country because of the power to mint and control money. In 1812-1816, 1863, 1913, 1934, and 1971, the US government interfered with the private banking systems to finance specific wars plus getting out of the Great Depression. It was not until 1913 that the US created the Federal Reserve Bank, partly in response to J. P. Morgan Bank trying preventing the US becoming insolvent. J. P. Morgan Bank was so powerful that in setting up the Federal Reserve Bank, the US Government made the majority of people directly connected to J. P. Morgan major players in the FRB. Don't leave out the Rothschild's of Europe and the Rockefellers. Had the US been declared insolvent at that time, it very likely would not have been able to participate in WWI. History would be completely different right now.

In 1944 entered into the IMF (International Monetary Fund) which began to control the monetary systems of most of the world. In fact, the US was the key player in controlling those systems. (This, of course ties all the essential world commerce and monetary systems together into one basic fabric.) We notice now that the recession/depressio n that is affecting the US right now is rippling through Asia and Europe right now. Even China is being affected by what is happening here.

Intrinsically, the only way any government has to raise revenue is through taxation, printing more money, or outright confiscation. The Stimulus Package is basically created out of thin air since the money does not currently exist. The government hopes that it will get the money back through taxation when the economy gets "better." The Federal Reserve Bank controls commerce to a great extent. It sets the Prime Rate which is the basis for all the interest rates used in the United States. Also interesting is that the government itself does not print the money, but Congress authorizes the Federal Reserve Bank (a private for-profit corporation) to print currency. Individual states could print money if they wanted to, but by law it has to be taxed, therefore making it worth only 90% of what the Federal Reserve notes are worth. This is clearly a disincentive for other currencies.

It is interesting also that the US currency used to be backed by gold reserves. However, in 1971 that was changed. Now US currency is back by a promise of the US government to honor the currency. Look at any US paper currency you have and see that.

Source: World Currency Monitor Annual: U.S. Dollar, British Pound Sterling, Canadian Dollar, Japanese Yen, French Franc, Swiss Franc, West German Deutschmar by Emanuel Frenkel (Author)