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To: MSI who wrote (7645)	1/2/2003 12:01:18 AM
From: JF Quinnelly	Read Replies (2) \| Respond to of 306849

The Fed has no ability to create federal debt. The national debt is as old as Alexander Hamilton's program for creating a funded public debt out of the obligations of the Continental Congress when he was the first Treasury Secretary. If you think that the Fed has any power to create federal debt you are mistaken. That is a power entirely Congress's, just as it has always been since 1789. The answers to your questions are in basic books on banking and American monetary history. Friedman and Schwartz A Monetary History of the United States. James Grant's Money of the Mind. We use bond-backed money today because we aren't using commodity money now. No gold or silver convertibility. The Triffen dilemma keeps us from returning to it, just as it predicted we would abandon convertibility in the first place. Bond backed money is nothing new, it was the basis for all money issued by private banks during the national bank system era following the Civil War. During those years you had to worry about the value of the notes you used, a dollar issued by a small country bank would be discounted against the notes of large New York banks. The Bank Note Monitor ran a daily accounting of the value of banknotes, just like stocks. Federal Reserve Notes at least standardize money.