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notes. PATMAN: Nobody wants them, because the banks would rather 

have the credit as reserves."

This is the most incredible part of the Federal Reserve operation and 

one which is difficult for anyone to understand. How can any 

American citizen grasp the concept that there are people in this 

country  who  have  the  power  to  make  an  entry  in  a  ledger  that  the 

government of the United States now owes them one billion dollars, 

and to collect the principal and interest on this "loan"?

Congressman Wright Patman tells us in "The Primer of Money", p. 38 of 

going into a Federal Reserve Bank and asking to see their bonds on 

which the American people are paying interest. After being shown the 

bonds, he asked to see their cash, but they only had some ledgers and 

blank checks. Patman says,

"The cash, in truth, does not exist and has never existed. What we call 

‘cash reserves’ are simply bookkeeping credits entered upon ledgers

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of the Federal Reserve Banks. The credits are created by the Federal 

Reserve Banks and then passed along through the banking system."

Peter L. Bernstein, in A Primer On Money, Banking and Gold says:

"The trick in the Federal Reserve notes is that the Federal reserve banks 

lose no cash when they 

 

 

pay out this currency to the member banks. 

Federal Reserve notes are not redeemable in anything except what 

the Government calls ‘legal tender’--that is, money that a creditor 

must be willing to accept from a debtor in payment of sums owed him.