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<p>[QUOTE=&quot;fatima, post: 1307963, member: 22143&quot;]You make two mistakes here.&nbsp;&nbsp; First and most important.&nbsp; The FRN is not a claim on the assets of the Federal Reserve.&nbsp; Let me repeat that.&nbsp; If you hold a FRN you do not have any claims against anything.&nbsp; The FRN is only backed by faith.&nbsp; If you try to turn it in for something, you will only be handed another FRN.&nbsp;&nbsp; The Federal Reserve has hundreds of billions in assets.&nbsp; Those assets consist of gold certificates, obligations from foreign central banks, and US Securities.&nbsp;&nbsp; A holder of a FRN has no legal claim on these assets.&nbsp;&nbsp; Hence it is not a loan.&nbsp;&nbsp; </p><p><br /></p><p>Second mistake you made is a logical fallacy argument.&nbsp;&nbsp; That is because you have concluded the FRN = a debt, and that a US Security = a debt, then FRN = US Security.&nbsp;&nbsp; This of course is an incorrect conclusion because you haven&#039;t first established a definition for debt and it ignores other defining characteristics of each.&nbsp; For example, a FRN is legal tender, a Treasury Security is not.&nbsp;&nbsp; I can take a FRN and pay my state taxes.&nbsp; I can&#039;t use a Treasury bond to do this.&nbsp;&nbsp; </p><p><br /></p><p>Therefore, your contention that Treasury Securities = $s is simply incorrect.&nbsp;&nbsp; They are not dollars, they are promissory notes.&nbsp; </p><p><br /></p><p>Furthermore, You seem to miss completely the fact that when a security is sold, the Federal Reserve then produces the equivalent number of FRNs and deposits them into the USA&#039;s account.&nbsp; At this point the debt can be used by the USA to pay bills.&nbsp; Government employees, military contractors, SS beneficiaries, etc.&nbsp; are not paid with Treasury notes, they are paid in Federal Reserve Dollars.&nbsp;&nbsp; Hence all of the dollars in circulation are Federal Reserve Dollars.&nbsp;&nbsp; There is nothing else now.[/QUOTE]</p><p><br /></p>

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