Collateral and Currency: Understanding Federal Reserve Notes

This chapter explores the complexities surrounding Federal Reserve notes as the primary currency in the United States, emphasizing their need to be fully collateralized. It draws comparisons between personal loan scenarios and the Federal Reserve's management of assets and liabilities, particularly in the context of pledging collateral. The discussion also reflects on the historical ties of currency to gold and the transition to fiat money, highlighting the challenges and contradictions in the current monetary system.