Comments by "Fumble_ Brewski" (@fumble_brewski5410) on "Why most of our money isn't real" video.
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The Federal Reserve Act of 1913, which established the Federal Reserve System and authorizes it to issue Federal Reserve notes, states that “[Federal Reserve notes] shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank." However, the Act did not explicitly define what "lawful money" meant. Since some currencies that could be used by national banking associations as "lawful money reserves" were not considered legal tender, Congress amended the Federal Reserve Act in 1933 to include all U.S. coins and currency as legal tender for all purposes. The 1933 amendment extended the power of legal tender to all types of money, creating dissension on whether paper money and reserves of the Federal Reserve bank are lawful money. While some argue that Federal Reserve notes are lawful money, others tend to disagree.
Since the US Constitution states “no state shall make any thing but gold and silver coin a tender in payment of debts,” some believe that this is the definition of lawful money and, thus, any payment medium other than gold or silver is not considered lawful money. In effect, the primary meaning of lawful money is legal tender, but a broader interpretation is frequently applied in certain contexts. Because no legal definition of lawful money was ever provided, the term has led to a lot of confusion, primarily in legal aspects. For all intents and purposes, lawful money should mean legal tender but is not always the case. This has caused a lot of confusion for students of law and banking. As a practical matter, no such thing as "lawful money" exists in today's economy. All we have are bank deposits created out of thin air by the Fed and its member banks. Only keep as much money in the bank as you can afford to lose, because, surely, you will eventually lose it all, whether by hyperinflation, or by a collapse of the banking system. Qui aurum tenet, leges facit.
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