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Preface
The following items appear in Money Facts, a compendium of questions and answers related to banking and currency, by the Hon. Wright Patman, chairman of the Committee on Banking and Currency, House of Representatives, U.S.A.:
Q: Does Congress supervise Federal Reserve policy-making?
A: In practice, the Federal Reserve is "independent" in its policy-making. The Federal Reserve neither requires nor seeks the approval of any branch of Government for its policies. The System itself decides what ends its policies are aimed at and then takes whatever action it sees fit to reach those ends.
Q: Where does the Federal Reserve get the money with which to create bank reserves?
A: It doesn't "get" the money, it creates it. When the Federal Reserve writes a check, it is creating money.
Q: If the government can issue bonds, why can't it issue money and save the interest?
A: A few clear-headed and firm individuals, such as Abraham Lincoln, have insisted that the government should. The late Thomas A. Edison stated the matter this way: "If our Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. It is absurd to say that our country can issue $30 million in [p. v] bonds and not $30 million in currency. Both are promises to pay: but one promise fattens the usurer and the other helps the people. ..."
Q: If the government issued more money instead of government bonds, isn't there a danger that the government would issue too much money and cause inflation?
A: No. It is no more or no less inflationary for the private banks to create $1 billion of new money than it is for the government to create $1 billion of new money. Furthermore, as an agency of the government, the Federal Reserve System decides in any case the total amount of money to be created.
Q: Do private banks perform a service in buying government bonds?
A: No, because they create money—an obligation of the government—simply to buy the bonds guaranteed by the government. . . . Their reward for buying bonds with money they create is the "subsidized" profit they enjoy.
Q: What is the burden of U.S. government bonds, held by the private banking system?
A: The burden is the heavy bond interest payments, borne by the taxpayers, that go to the private banks when the same amount could be created by an agency of the government. . . .
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In spite of the dictatorship of money, in spite of the tyranny of political patronage which can, at its will, heap tables high with good things or lay them bare, we still fortunately have in our officially democratic countries the right to speak, to write, and to associate.
—George-Henri Levesque, O.P. [p. vi]
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