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<p>[QUOTE=&quot;funkee, post: 1608156, member: 37925&quot;]Taken from <a href="http://en.wikipedia.org/wiki/United_States_Note" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/United_States_Note" rel="nofollow">Wikipedia</a>:</p><p><br /></p><p><i><span style="color: #000000"><font face="sans-serif">The United States Note was a </font></span><a href="http://en.wikipedia.org/wiki/National_currency" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/National_currency" rel="nofollow">national currency</a><span style="color: #000000"><font face="sans-serif"> whereas </font></span><a href="http://en.wikipedia.org/wiki/Federal_Reserve_Notes" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Federal_Reserve_Notes" rel="nofollow">Federal Reserve Notes</a><span style="color: #000000"><font face="sans-serif"> are issued by the quasi-federal </font></span><a href="http://en.wikipedia.org/wiki/Federal_Reserve_System" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Federal_Reserve_System" rel="nofollow">Federal Reserve System</a><span style="color: #000000"><font face="sans-serif">.</font></span>[SUP]<a href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-26" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-26" rel="nofollow">[26]</a>[/SUP]<span style="color: #000000"><font face="sans-serif"> Both have been legal tender since the </font></span><a href="http://en.wikipedia.org/wiki/Executive_Order_6102" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Executive_Order_6102" rel="nofollow">gold recall</a><span style="color: #000000"><font face="sans-serif"> of 1933. Both have been used in circulation as money in the same way. However, the issuing authority for them came from different statutes.</font></span>[SUP]<a href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-USTfaq-24" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-USTfaq-24" rel="nofollow">[24]</a>[/SUP]<span style="color: #000000"><font face="sans-serif"> United States Notes were created as fiat currency, in that the government has never categorically guaranteed to redeem them for precious metal - even though at times, such as after the specie resumption of 1879, federal officials were authorized to do so if requested. The difference between a United States Note and a Federal Reserve Note is that a United States Note represented a &quot;bill of credit&quot; and was inserted by the Treasury directly into circulation free of interest. Federal Reserve Notes are backed by debt purchased by the Federal Reserve, and thus generate </font></span><a href="http://en.wikipedia.org/wiki/Seigniorage" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Seigniorage" rel="nofollow">seigniorage</a><span style="color: #000000"><font face="sans-serif">, or interest, for the</font></span><a href="http://en.wikipedia.org/wiki/Federal_Reserve_System" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Federal_Reserve_System" rel="nofollow">Federal Reserve System</a><span style="color: #000000"><font face="sans-serif">, which serves as a lending parent to the Treasury and the public.</font></span></i><span style="color: #000000"><font face="sans-serif"><i>As the debt purchased by the Federal Reserve System to back its notes consists primarily of Treasury and <a href="http://en.wikipedia.org/wiki/Government-sponsored_enterprise" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/Government-sponsored_enterprise" rel="nofollow">Government-sponsored enterprise</a> debt,[SUP]<a href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-27" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/United_States_Note#cite_note-27" rel="nofollow">[27]</a>[/SUP] and because the seigniorage is largely remitted back to the Treasury as &quot;interest on Federal Reserve Notes&quot;, the economics to the Treasury are comparable to issuing United States Notes. This stands in contrast to <a href="http://en.wikipedia.org/wiki/National_Bank_Note" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://en.wikipedia.org/wiki/National_Bank_Note" rel="nofollow">National Bank Notes</a> which allowed the issuing banks to privately retain the seigniorage as profit.</i></font></span>[/QUOTE]</p><p><br /></p>

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