1. Q. I have heard that the Fed is a private corporation. Is that true?

   A. Yes, the Fed is a privately owned monopoly Corporation and not an agency of the U.S. government.

2. Q. What is "fractional reserve banking"?

   A. Fractional reserve banking is a term used to describe a system whereby an amount of money or securities called "reserves" is used as the basis to lend money. In practice, up to ten times the amount of actual held reserves may be lent. Money comes into existence as a loan.

3. Q. What are reserves?

   A. Today, reserves are mostly made up of U.S. Treasury bonds and notes. They may also be made up from common stock, or corporate bonds. Formerly, reserves also consisted of gold.

4. Q. How does the Fed get these reserves?

   A. The Fed writes a check on itself to purchase the reserves. The difference between an individual writing a check, and the Fed writing a check is this: The Fed has no money in the account when it writes the check. The check is deposited by the seller into an account. The account is credited with the amount which may then be drawn upon by the seller of the security. The Fed now owns the securities.

5. Q. Is this a check written on no funds? Is this not illegal?

   A. Not when the Fed does it.

6. Q. Could this not manipulate the stock and bond market?

   A. The potential is certainly there. Nobody knows exactly which stocks or bonds the Fed buys or has bought and sold. It has the authority to do just that. The Fed has never been audited to determine what it has done.

7. Q. Could the Fed also purchase foreign stocks and bonds?

   A. Yes. Again, nobody knows exactly what it has bought or sold, or when. By law, the Fed's dealings with foreign central banks are not subject to inquiry or oversight.

8. Q. Could there also be a lot of political clout in the Feds operations?

   A. Yes. The Fed manipulates foreign currencies. This can cause governments to rise and fall. It can also affect foreign economies to their benefit or detriment. Again, nobody knows exactly what they have done or when.

9. Q. What happens when I go to the bank to get a loan for a car or home?

   A. Basically, if your collateral is satisfactory, the bank will give you the loan. This process is quite unlike a loan between individuals. When individuals loan each other money one loses money, and the other gains money, at least temporarily. When a bank loans money, the money is newly created in the form of a checkbook deposit.

10. Q. What do you mean by "newly created"?

    A. Just that. The money did not exist before the loan, and it does after the loan is made. The money that you were lent does not come from the savings accounts of the depositors in the bank.

11. Q. Does this apply to all money?

    A. Virtually all money comes into existence through a loan of one form or another. All loans are indebtedness. Therefore all money in existence is evidence of indebtedness on the part of someone.

12. Q. Those reserves also represent debt, don't they?

    A. Yes

13. Q. Does this mean that debt based money is itself backed by debt?

    A. Yes

14. Q. This implies that if there was no debt, there would be no money. Is this true?

    A. Yes

15. Q. Has it not always been like this?

    A. No. Money in the form of bank notes were formerly only receipts for gold or silver. The notes themselves were freely convertible into gold or silver, which was the actual money. This was clearly stated on the currency itself.

16. Q. What is currency convertible into today?

    A. Nothing except other currency.

17. Q. What was the significance of gold in the monetary system?

    A. Gold no longer has any significance in the monetary system. Gold, because it was in limited supply, set a maximum on the amount of money that could be created through loans. This is because if the amount of gold available is only slowly rising, loans could only rise at the fractional reserve multiplier rate. To allow for a higher rate, silver, which is much more common, was also used as a "reserve" metal.

18. Q. How does banking relate to Free Trade?

    A. Under classical 'Free Trade', one country sold its goods in another, and accepted that countries currency in payment. When an excess of currency holdings occur (a trade imbalance), they were exchanged for gold. Gold was a mutually acceptable method of returning the original currency to the issuer. This was necessary because the paper currency is legal tender only in the issuing country. The limited amount of gold available to the loser in the exchange forced him to limit his trade imbalances.

19. Q. How does Free Trade influence banking?

    A. Before Free Trade, a bank would only create a loan in the country where it was based. There would be no point in creating a Dollar loan in Mexico, unless there was a way to get the loan repaid in Dollars instead of Pesos. Free Trade allows the sale of goods here, and the Dollars for the goods flows back to Mexico. They then are returned to the American bank that made the loan.

20. Q. What does the Fed have to do with this?

    A. The Fed establishes the rules that allow such loans to be made or not made. These rules have the force of law.

21. Q. Does this have anything to do with the declining prosperity here?

    A. Yes. As a practical matter, when a bank, or even an individual investor, made major loans to businesses here, the goods had to be made here and sold here. This created more good tax paying jobs here. Now, a company that wishes a loan must compete for it with a company in another country. From the profit and loss viewpoint, the return from the foreign loan is likely to be better.

22. Q. What would happen if we did not have Free Trade?

    A. The banks would only make loans here, if they were going to stay healthy. American industry would be restored, along with the taxpaying jobs that it creates.

23. Q. This sounds like the banking system and the Fed are operating for their benefit, or a globalist purpose, and not just for the benefit of the American people.

    A. Yes

24. Q. This sounds like something that Congress and the President should put a stop to. Why have they not?

    A. We have the best government that money, "created from thin air", can buy.

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