Towards a New Gold Standard
[quote]Aaron Russo: So the Federal Reserve is actually an illegal entity functioning within the government.
Ron Paul: It is illegal. And what we have given to this so-called agency is the authority to counterfeit money.
Aaron Russo: Do you have any points of view about the Federal Reserve and how the Federal Reserve operates?
Ron Paul: They just enter something on a computer. “Oh, you need $20 billion today? Well, here’s $20 billion.” But they got that out of thin air. It came out of thin air. It goes to the Treasury, and the Treasury then pays the bills.
We have already seen how this process is inflationary. However, the relationship to the IRS is a little less clear, so let’s tease it out: Congress formerly had the power to coin money, but it delegated that power to the Federal Reserve in 1913. When The Fed creates that $20 billion out of thin air, it doesn’t give the money to the Treasury - it loans it to the Treasury. There is a huge difference.
In exchange for the loan, the Treasury gives the Fed collateral: $20 billion worth of Treasury bonds (T-bonds). But as we all know, T-bonds are not simply static collateral, T-bonds also pay interest to the holder. In this case, the holder is the Federal Reserve.
But where does the Treasury get the extra money required to pay the interest back to the Fed? The Fed didn’t create the interest - it only created enough money for the face value of the bond. If the T-bonds pay 5% interest, the Treasury needs to come up with an additional $1 billion each year to pay the interest back to the Fed! Where do they get it?
You guessed it, friends! It comes from you - the generous American Taxpayer. The IRS - also founded in 1913 - was part of a package deal. It is required in order to raise the money to pay back the interest on the money the Treasury “borrowed” from the Federal Reserve.
You didn’t know that? Now you know why Henry Ford said, “It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” And you also now know why Dr. Ron Paul is so vehemently opposed to both the Fed and the IRS.[/quote]
http://bullnotbull.com/archive/gold-standard-2.html
None of the money you send to the IRS is actually being used to run the country. Woops. Tax protesting just got a whole lot more legitimate.