The federal reserve bank has enslaved america???

Question

Since the federal reserve bank is in control of americas money supply and since it charges interest on every dollar given to america, how can america ever get out of debt?

Answer 1

I assume you are referring to the fact the base monetary supply is collateralized by Treasury securities.

Not a big deal.

By law, the Fed has to return all excess income to the Treasury. Since 1913, the Treasury has returned about 95% of the interest it collected. That makes it almost an interest free loan. Not a bad deal for the tax payer.

Suppose the Treasury didn't pay interest on Fed-owned debt? Well, then the Federal Reserve operating expenses would have to be paid with your taxes.

Another advantage: Those $800B in T-Bills the Fed owns? It doesn't have to be paid back. By law, all money has to be collateralized so that T-bill amount will not have to be paid back (unless the base money supply shrunk for some reason)

Answer 2

I think the national debt problem is a bit more complicated than that. Don't put to much faith in your economic model.