Litanous Littman II: Extend Bush Tax Cuts - How $700 Billion is $7 Trillion Or More Economic Growth

This article will likely challenge your knowledge and conventional wisdom of the Federal Reserve, a system that is in place primarily for the purpose of undermining State’s Rights to create their own currency, and why this institution is regularly blamed for controlling the economy.

This is more of a technical discussion initially. All tables presented are derived for the most part from Focus On The Bank Director a continuing education publication put out by the American Bankers Association, and my copy is copyright 1984. The mechanism described here has been in place across the nation since around 1917 and remains in place today as it is the basic mechanism of the Federal Reserve System.

Have you ever considered how the way the Federal Reserve System creates currency, how its reserves effect “elasticity,” and finally how the profits are distributed according to statute.

Depositors are the key to any bank. Deposits are recorded both as an asset and an liability. An asset for them to be able to manage the funds while also a liability as the amount deposited is owed back to the depositor (thus the need for a reserve, see below).

When one makes a deposit the following mechanism is applied to use the deposit to meet the needs of those in the community who need loans. The most important element to this system is the re-deposit of the funds lent.

The following table illustrates how the funds are handled in this mechanical using a 10% reserve requirement:

[Source website disappeared, please see, first 5 pages of book Focus on the Bank Director by American Bankers Association, guide to being a Bank Director explaining monetary mechanics of the Federal Reserve System.]

As you can see above that while the deposit are being made from bank to bank they keep accumulating a reserve. This goes on until there is nothing left to lend, which, happens to be the very exact point at which the reserves equal the amount of the initial deposit:

Now for $10,000 with a 10% reserve the amount available to loan equals 0 at around bank number 100. The amount of the reserve is key to regulating the expansion effect, compare the following first 10 banks at 2% reserve to the 10% reserve:


A very small reserve amount generated, and a much larger total of expansion:


And this total, the point of the lendable amount equaling 0, occurs around bank number 491.

So understand that if you make total deposits of $50,000 a year you are generating at least $500,000 for your community, and the reserves replace your deposited amount should you need to withdraw it for any reason. Consider that at a 2% reserve rate you are generating around $2.5 million for your community.

Now the Federal Government isn’t able to claim this effect. When they have money it is treasury accounts, not on deposit, but as a separate and segregated amount that cannot be lent out as it is already appropriated for a governmental purpose.

This means that Obama and the democrats are choosing to violate the 14th Amendment to assure a particular minority, based on the idea of their income, is prejudiced against, and thus not subject to “equal protection of the law.” Enacting any extention of the Bush Tax Cuts that excludes anyone is to treat those individuals different than the rest of the people. These tax cuts, should be applied to all Americans if government is acting within its primary authority to protect the smallest minority, the individual, which the national government assumed as their duty according to the 14th Amendment.

Thus in intentionally violating Our Written Constitution the nation is subjected to our economy being denied an opportunity to growth at least $7 trillion over the next 10 years, even if the money just sits in a bank. And should the economy pick up over the next 10 years, to where the demand for our currency is so great that the reserver requirements are low, we are being denied a potential growth of $35 trillion.

I suggest the government make a schedule to assure that charity is granted to those making minimum wage+10% so they have no income tax at all, while, the remainder is scaled down to a standard tax rate of 10%, to which the government must become accustomed to running itself with such a modest amount.

Imagine if you could have another 10% of the money you earned if even only just to save it for a rainy day, or a recession. That alone would create a greater availability of credit throughout the banking system.

Please take note that banks sitting on money right now have “toxic assets” they can finally depreciate over time, but to do that, they need to have enough in the vault to justify the offset in accounting, thereafter the amount can be reinvested it in the institution. This process will likely take 5 years for them to do.

Thus you can see our illustrious Commander-In-Thief assuring the demise of America by excluding a minority of people, and their economic impact, from renewal of the Bush Tax Cuts. Any legislation proposing to renew these tax cuts for “95% of Americans” lacks the neutrality required to be legitimate right on its face.

Republicans may not want to oppose this because it is bad politically, however, sacrificing the Constitution, and continuing the current government line of reason that it’s okay to trespass on individual liberty, is not a trade-off in the best interest of our country. We The People of the United States of America, who every day want to be better off than we were the day before, than the generation before, even should that lead to us being “rich,” would like to be certain the government is not getting us comfortable with them being our silent partner to gain an ever increasing benefit to the point it is greater than our own. I mean we work for ourselves and not the government. I personally don’t mind them getting something to assure security of the individual liberty of each of us along with the the security of our nation as these go hand in hand, but, a “progressive” and escalating tax amount, to where I am penalized for being more successful, is an act to oppress the industrious.

Note that I am not for the Federal Reserve Act as it is an act of atrocity against States’ Rights. However I admire the mechanics of the Federal Reserve System and wish this had been done using each State’s currency so as to assure a truly “Federal” reserve system, instead of another act of the National Government to liquidate another of State’s Rights with their agreement to do so.

And finally to the distribution of profits of the Federal Reserve is Title 12, Section 289 (b) (1), emphasis mine:

“(b) ?1 Transfer for fiscal year 2000
(1) In general
The Federal reserve banks shall transfer from the surplus funds of such banks to
the Board of Governors of the Federal Reserve System for transfer to the Secretary
of the Treasury for deposit in the general fund of the Treasury, a total amount of
$3,752,000000 in fiscal year 2000.

Congress Amends this section of the law every year to then transfer the profits of the Federal Reserve to the United States Treasury. The above section translates that the money borrowed costs us nothing, as the interest is the profit of the system, that goes right back into the United States Treasury that borrowed it.

Thank you for reading,

Toddy Littman
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Posted by JohnLock Posted on 19 Apr : 18:17
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Registered: 08 Oct : 22:03
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Finally found my password and name - duh. Lock

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years."
— Alexis de Tocqueville

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