The Federal Reserve Bank of Atlanta has moved that the United States District Court for the Southern District of Florida dismiss my complaint against the Bank. In support of its motion, the Bank asserts that Federal reserve notes "are 'lawful money' as that term is used in Section 16 of the Federal Reserve Act" [emphasis in original]. However, Section 16 makes it very clear that Federal reserve notes are not "lawful money." The first sentence of the third paragraph of Section 16 reads, "Every Federal reserve bank shall maintain reserves in gold or lawful money of not less than thirty-five per centum against its deposits and reserves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money deposited with the Federal reserve agent." (See page 17 of the Act, which is posted at http://www.llsdc.org/attachments/files/105/FRA-LH-PL63-43.pdf).
The Bank's assertion that Federal reserve notes are "lawful money" is specious. And I wonder if that assertion is designed to mislead the court because it does not look to me like an honest mistake.
Scott K: Several years ago I asked the manager of a commercial bank if her bank would redeem federal reserve notes. She replied "No" and explained that her bank is not legally obligated to redeem federal reserve notes. Legally, she is correct, even if her bank is a stockholder and therefore one of the owners of a federal reserve bank.
The federal reserve bank stockholder lists are secret, and I wonder "Why?"
You have to make the demand at any Federal Reserve Bank or the U.S. Treasury Department in Washington DC. (USC Title 12,3,12,411)
Chris: I am very aware of the provision of 12 USC 411. However, since the federal reserve banks had stopped redeeming federal reserve notes I wanted to find out if the owners of the federal reserve banks (i.e., the commercial banks) had assumed the obligation to redeem federal reserve notes on demand in lawful money. The bank manager answered my question: "No."
They cannot redeem one legal tender with another. Redemption is the exchange of legal tender for lawful money. Legal Tender is not a psudonym for money. It is a "tender" that is a legal substitute for lawful money. Tender is a means of payment. You tender a check at the grocery store in place of lawful money. You tender a payment in notes, instead of tendering a payment in lawful money. The tendered notes are then redeemed for lawful money at the bank, or should be.
What the Fed Act and others have done in their language is try to confuse the definitions. Another example is that the Treasury now claims that Silver and Gold coins are "numismatic". They are. But they are trying to make the case that they are no longer lawful money or legal tender. They are always lawful money, even if they are "numismatic". All forms of money are "numismatic" as they are all collectible, and the numismatic value increases on legal tender when the issuing bank and system that used it goes bust! Look at the value of a Zimbabwean Trillion Note! One is worth 30+ Fed notes now, but when it was legal tender in Zimbabwe it was not worth even on red cent! Silver and Gold U.S. lawful money coins NEVER legal tender as they require no legal status to be used to tender payment. They ARE the PAYMENT!!! Only legal tender requires legal status to tender payment in lieu of lawful money.
Chris: I agree that, "What the Fed Act and others have done in their language is try to confuse the definitions." It does not make any sense to me that a one-dollar gold U.S. coin has the same legal value as a one-dollar U.S. coin made primarily of copper (and which has a melt-value of about 7 cents). But the debasement of our coinage has been authorized by Congress and it appears that they do have the legal right to debase our coinage. They should not have done it but they did! I suspect that Congress debased our coinage in order to accommodate the currency inflation that the Fed has authorized.
Congressmen debase the coinage and allow the wild issuance of federal reserve notes so that the good times will roll on and on and the Congressmen will be reelected to second, third, fourth... terms in office. And the country goes to Hell in a handbasket.