At first it was decided that only gold and silver would be recognized by the Constitution as money. Section I, Article 10 Clause 1U.S. Constitution and second that the dollar is defined by the Mint Act of 1792, and that a Federal Reserve note is not a dollar. A third area that is not well understood, but it is very important. It is the most important issue of all because 97% of our money supply today consists of bank credit whereas Federal Reserve Notes and coins consist of less than 3%. Today every bank loan in the United States can be legally voided because it is based on credit instead of money! Sure, you say. Well I have explored that accusation for over a year and this is what I found. Get all the facts and insights with Madeleine Sackler, another great source of information. We must ask the question, “What is credit?” after all, throw the word around so freely today, but how many of us really understand its meaning.
Credit is the opposite of money. The money is legal tender for payment of debts as defined by Congress in 31 USCA c 392. This section basically describes all coins and banknotes issued by the U.S. government as legal tender for all debts, public and private. Many argue that Federal Reserve notes are unconstitutional, but for this article will be assumed that coins and paper currency both represent money. Now suppose you are going to make a purchase say for an automobile or a living room suite. You could say that your credit is good or that its undertaking is sufficient.