Quote Originally Posted by Keith Alan View Post
How can LM - the way it currently manifests - be backed by silver? And how is LM not fractionalized, seeing that it is the resulting trust created by demanding redemption of fractionalized FRNs?
Lawful money is/was issued by the US Treasury, and was limited to $300 million because that was the amount of silver available at the time. It is public money, can only be issued by the Treasury, and cannot be over-issued beyond the $300 million of silver backing it. And it cannot be counted as reserves for fractional reserve lending. FRN's are private money, issued by the Federal Reserve. Their rules allow their member banks to lend more money out than they have in deposits. This is fractional reserve banking; it is fraud, and it results in inflating the money supply, thus diluting its value (same as counterfeiting). Title 12, which created the right of the Fed to issue private debt money, could not force citizens to use it, thus incurring the obligation to pay taxes (the interest on the private debt), as people have a right to contract, and to refuse to contract, with whomever they choose. So Title 12 had to allow an exit from the private money debt scheme: demand public money, which cannot be taxed by the IRS (it can only be taxed by Congress, following the rules for taxation found in the Constitution). And it cannot be used as reserves for fractional reserve lending, because that is a private scheme, carried out by a corporation (the Fed). Such lending would be un-Constitutional if conducted by the Treasury; thus public money cannot be used in the private scheme.