Tom Lawler's 100 Page Hissy Fit

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 1 of 36
FILED IN CLERK'S OFFICE

U.S.fXC.
Aliania
Mm 2 4 zett
IN T H E UNITED STATES DISTRICT COURT
F O R T H E NORTHERN DISTRICT OF GEORGM*^^^^^
ATLANTA DIVISION
^^Yfk
S E C U R I T I E S AND E X C H A N G E
COMMISSION
Plaintiff
Civil Action File
No. l:14-CV-02468-AT
vs.
Thomas J , Lawler and F R E E D O M
FOUNDATION USA L L C dba
F R E E D O M C L U B USA,
DEFENDANT'S SUPPLEMENTAL
PLEADING / DECLARATION /
MOTION TO AMEND / R E L I E F
F R O M JUDGMENT
Defendant(s),
DIVINE SPIRIT L L C ,
O R D E R PROCESSING L L C
P R O S P E R I T Y SOLUTIONS L L C , and
V I O L E T BLESSINGS L L C ,
Relief Defendant(s).
DEFENDANT'S SUPPLEMENTAL PLEADING / D E C L A R A T I O N

MOTION TO AMEND / R E L I E F F R O M JUDGMENT
In accordance with Fed. R. Civ. P. 15(d), Rule 59(e) and Rule 60, Defendant
Thomas J. Lawler, Pro
Se,
and
under duress, hereby submits this
SUPPLEMENTAL PLEADING / DECLARATION / MOTION
TO
AMEND / RELIEF FROM JUDGMENT. Defendant must be allowed to

establish grounds for the admission of additional and newly discovered
information and evidence found during ongoing research and the attached
DECLARATION (See Exhibit A) to be considered under Fed. R. Civ. P.
15(d) and likewise under Rule 60. Defendants wish to correct clear error and
prevent manifest injustice as allowable under Rule 59(e).
Defendant
employs Rule 15(d) and Rule 60 to enter new evidence that occurred to
Defendants in support of arguments and seeks Amendment of Judgment
Denying
DEFENDANT'S
MOTION
TO
RECONSIDER ORDER
DENYING MOTION TO DISMISS as well as relief from ORDER ON

MOTION FOR TRO. A party may also seek relief from a final judgment for
"any other reason that justifies relief" Rule 60(b)(6). For this, among other
reasons. Defendant Thomas J. Lawler respectfully submits the following:
SUMMARY AND B R I E F IN SUPPORT
1.
In an effort to not restate in entirety, all previous submissions to
this Court by Defendant are hereby incorporated as i f fully set forth herein.
2.
Defendant(s) proceed under great duress and have been denied
the court appointment of legal counsel and denied adequate fmancial
provision to secure legal counsel in order to provide for and present a proper
defense. Defendant(s) have been denied due process.
3.
Aside from Defendants' denial of due process, Defendant
maintains that Plaintiff has offered NO real valid basis or evidence, as it

relates to a "Private Club" or otherwise to bring said allegations against a
Private Club or its Founder, Members, Agents, et al. This question was
asked by the Court to the Plaintiff in a previous telephone hearing and
Plaintiff responded to the negative. Plaintiff should be compelled to support
this important point under the law.
4.
Plaintiff is not a Private Club Member and thus is sorely
deficient in facts that only Private Club Members possess via ongoing
members' only conferences, Q & A and active participation in their own
studies. Plaintiff has not studied specific topics in question nor disproved
such theories, processes, and information. It is easy to discredit that which
one does not understand. There is no basis for the allegations of FRAUD.
There are hundreds of other 3''^ party resources to support Defendant's basis
of information and administrative process and the long standing legal
process of the Notarial Protest. One need not be a Private Club Member to
study the many independent resources available but certainly must be a
participating Private Club Member to know and understand all of the facts,
which Plaintiff does not.
5.
Plaintiff is not an injured party.
6.
Benefits/services/programs,
including
the
Administrative
Remedy, are not marketed or available to the general public. Private Club
Membership may be extended through invitation.
7.
Plaintiff has
engaged in egregious, reckless
actions by
knowingly and intentionally ignoring, omitting and bastardizing substantial

truth and facts thereby bringing great harm upon the very people they state
they purport to be protecting by and through the ongoing TEMPORARY
RESTRAINING ORDER, ASSET FREEZE, AND OTHER EQUITABLE
RELIEF, as well as asserting their own spin of language and untruths in
order to proffer false and void allegations, among other things.
8.
Defendants maintain that the Plaintiff has not established a
prima facie case but rather eloquently influenced the Court with their own
"spin" and language, with no proof to the contrary of Mr. Lawler's

testimony, complaining fraud and accusations of "scienter" where they lack
understanding and knowledge. Plaintiff has in fact not proven "fraud" or the
intent and clearly has disproved their own accusations that Mr. Lawler acted
with a great deal of "scienter". By Mr. Lawler's testimony alone, one can
see his willingness to share whatever supportive facts and information he has
leamed over the years. Most of which may be researched and confirmed
through many independent resources. It is indeed difficult to gain enough
knowledge and understanding of the facts in one conversation, in one day
through one resource alone.
9.
Plaintiff has infringed upon Defendant's First Amendment
rights.
PARTIES
10.
Plaintiff: SECURITIES AND EXCHANGE COMMISSION
("COMMISSION" OR "SEC"),
11.
Defendant(s):
Thomas John Lawler, Defendant, Pro Se,
domiciled in the State of Georgia, FREEDOM FOUNDATION USA LLC

dba FREEDOM CLUB USA ("THE CLUB"), registered in the state of
Nevada, VIOLET BLESSINGS LLC, ORDER PROCESSING LLC and

DIVINE SPIRIT LLC, each registered in the state of Missouri.
JUDICIAL NOTICE
7.
Defendant(s) claim all rights at all times and waive none of
them at any time for any cause or reason.

8.
Defendant(s) claim substantial Due Process rights to have
Findings of Facts and Conclusions of Law published with any order of this
court.
9.
Thomas Lawler, Defendant, Pro Se, who is unschooled in law,
asks the court to take Judicial Notice of the enunciation of principles as

stated in Haines v. Kerner. 404 U.S. 519, wherein the court has directed that
those who are unschooled in law making pleadings and/or complaints shall
have the court look to the substance of the pleadings rather than the form.
10.
Plaintiff(s) reserve the right to supplement and/or amend as
needed.
JURISDICTION AND VENUE
11.
Defendant continues to challenge jurisdiction and venue.
Plaintiff has placed an incorrect emphasis on an unassociated jurisdiction.
Change of jurisdiction has previously been established and ignored. Parties

await Order from The Common Law International World Court for removal
of this matter.
F A C T AND L E G A L BASIS
12.
Defendants' have been denied Due Process. Defendant Lawler
comes before the Court, under duress, Pro Se, due to the fact that this Court
has DENIED him a court appointed attomey and additionally ordered a
TEMPORARY RESTRAINING ORDER, still in force as of this date,
disallowing enough Uquidity of ftinds to secure proper legal representation,
that which far exceeds what this Court has allowed as available. Since all
other named Defendants are non-living entities, cannot speak for themselves
and can only be represented by Court recognized legal counsel, they too
have been denied proper legal counsel by the unjust restraint and freeze of
available fiinds. There is no valid fact entered to support the severity of
order of action.
13.
Mr. Lawler did not appear in person at the scheduled hearing on
August 8, 2014 due to the restraint and deprivation of legal counsel so as not
to fiirther incriminate himself, not being schooled in law, procedure or
technicality. He continued his unsuccessful effort to secure legal counsel. He

did, however, appear via telephone, was in fact patched through to the
proceeding, via telephone. The quality of the call was poor and was
terminated by an act of God in short order due to a thunderstorm and power
outage. Mr. Lawler called the court and explained the situation as power
retumed to the presiding Judges aide, Amy.
No acknowledgment,
reschedule or retum call was provided by the court. For the record, Mr.
Lawler did not simply "skip the hearing" as was stated in PLAINTIFF'S
RESPONSE TO DEFENDANTS' MOTION TO RECONSIDER ORDER
DENYING DEFENDANTS' MOTION TO DISMISS. Another non trath
which seems to be rampant throughout Plaintiffs pleadings.
14.
A l l Defendants have been denied the right and ability to
provide for, much less present, a proper legal defense. Hence, Thomas J.
Lawler presents Pro Se.
15.
Attached is a supplemental DECLARATION OF TRUTH,
submitted by Thomas Lawler. (See Exhibit A)

16.
Defendant submits supplemental information, fact and law in
support under Fed R. Civ. P. Rule 15. As taught and pubHshed, by Georgia
Perimeter College, accredited by the Southem Association of Colleges and

Schools Commission on Colleges, the first paragraph of Article I : Bill of
Rights,
rhttp://facstaffgpc.edu/~wbroadwe/State&Local%20Ch.%202.r)df),:
"Article I: Bill of Rights of The Georgia
Constitution guarantees no Georgian will he
deprived of Life, Liberty, or Property
without Due Process of law. This basically
means, a citizen must:
- be notified of intended govt, action,
- have a right to a hearing,
- be able to dispute the state's action,
- call witnesses and present evidence, and
- have the benefit of legal counsel."
(emphasis added)
Defendant(s) in this matter have been intentionally deprived of the benefit of
legal counsel.
17.
During an event hosted Oct. 30, 2009, by the UNC Center on
Poverty, Work and Opportunity in Chapel Hill, N . C , Associate Justice

Patricia Timmons-Goodson noted that the United States is one of the few
Westem democracies that do not guarantee the right to counsel in civil cases.
That should not be acceptable for a country that has "assumed the mantle of
equality," said Gene R. Nichol, past Dean of UNC's law school. "You can
call it justice because someone in a robe decides the case," said George
Hansen, the executive director of Legal A i d of North Carolina, "but really,
there's no adversarial process taking place." It would not be difficult to
establish a prima facie case when no adversarial process takes place", as was
the case in this matter. Defendant looks to the Court to reconsider whether or
not a prima facie case is indeed established. Defendant is not repackaging or
rearguing points but rather should be heard and considered, since they were
not, when deciding whether or not the Plaintiff did in fact establish a prima
facie case. Defendant asserts it was not.
18.
Plaintiff offers NO valid basis or evidence to estabhsh this
cause of action much less continue their effort to support their void
allegations, as they relate to a "Private Club" or otherwise in order for the
Court to proceed against a Private Club or its Founder, Members, Agents, et
al. When asked by Judge Totenberg during the emergency phone hearing, i f
he had any experience or case law as it relates to a "CLUB", counsel for
Plaintiff, Pat Huddleston, I I responded to the negative. Plaintiff should be
compelled to support this important point under the law.
19.
A l l Club benefits/services/programs,
none of which
are
"investments", are offered ONLY to Club Members who have chosen their
own path of education. Club benefits/services/programs are NOT offered or
open to the general public. Plaintiffs allegations of "Unregistered
Securities" are void of any valid, legal basis.
20.
Defendant argues and clearly disproves the securities allegation.
The supplemental information, facts and law must not be ignored.

21.
"Howey Test". Justice Murphy formulated one of the U.S.
Supreme Court's earliest tests to determine whether an instrument qualifies

as an "investment contract" for the purposes of the Securities Act (which
later came to be referred to as the Howey test): The "Howey Test" clearly
proves that the contracts in question do not meet at least 3 of the 4 prongs of
the test: Plaintiff offers NO valid basis or evidence to establish this cause of
action much less continue their effort to support their void allegations, as
they relates to the actual noted cause of "Securities Fraud" and the
allegation, specifically "COUNT I - UNREGISTERED OFFERING OF
SECURITIES. Plaintiffs allegation is void of any vaHd findings of material
fact and fails the very test that their allegation is based upon. No registration
statement need be filed or in effect as there was and is no offering of

securities.
22.
Since the definitions of "Investment" and "Security" are so
broad, the authorities utilize these phrases/law as a catch-all whenever

convenient, as well as the widely used "Howey Test". In this matter, there is
1) no investment money (Club Members pay for administrative services
provided), 2) due to an expectation of profits (there are none expected or
promised, member must acknowledge in writing that services are provided
as "best efforts"), 3) there is a common enterprise obligated to cure the
judgments processed (which is the United States Department of Treasury
and NOT the Defendant(s) and 4) does NOT depend solely on the efforts of
a third party (but does depend on individual education, documentation,
information and the accuracy thereof and calculations of what they deem is
correct, provided by each individual who wish to engage the administrative
services and process, with no promise of outcome, along with The United
States Department of Treasury and what they deem is just and proper in each
individual instance).
12
23.
To draw a parallel, i f one engages a resume service/recruiter,
for example, who touts that their service is superior, that they have expertise,
information or connections where others do not (choosing to keep that
confidential and proprietary) and would help one to obtain the monetary
salary level or result they desire - would that service provider/contract also
then be guilty of selling a security? Would it also be deemed fraudulent
and/or deceptive i f that individual did not obtain desired results? One did
spend money, for an organization's or individual's services, wishing to
achieve a certain monetary results derived from the efforts of the service
provider. This, a parallel drawn demonstrating the broad application or
misapplication that can occur. This parallel can apply to most any service
organization or service provider i f one wishes to enhance the circumstance
to fit their need.
24.
Plaintiff also uses the term "ill-gotten gains" to describe monies
paid, categorizing all as such, and calls for the "disgorgemenf of same
alleging that all Defendants and Relief Defendants have been unjustly
enriched. Perhaps the cost of doing business and related expenses have been
overlooked by the Plaintiff
13
25.
To demonstrate the gross misappHcation of law used in the
Plaintiffs effort to support their position, In re: SEC v. ETS Payphones,

Inc., 408 F.3d 727, which is referenced on Page 10 of PLAINTIFF
SECURITIES AND EXCHANGE COMMISSION'S MEMORANDUM I N
SUPPORT
OF
ITS
APPLICATION
FOR
TEMPORARY
RESTRAINING ORDER, ASSET FREEZE, AND OTHER EQUITABLE

RELIEF, on appeal by petition of THE SECURITIES AND EXCHANGE
COMMISSION, from the UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF GEORGIA, and in the event that there
was merit in the Plaintiff SEC not lending credibility to the decision of the
UNITED
STATES
DISTRICT
COURT
FOR
THE
NORTHERN
DISTRICT OF GEORGIA, we can fmd no comparison or application of

circumstance or law and in fact is void of any practical application in this
matter.
"First, if the seller's purpose is to raise
money for the general use of a business or to
finance substantial investments and the buyer is
interested primarily in the profit the note is
expected to generate, the instrument is likely to be
a 'security.'" 494 U.S at 66. Here, "ETS's
investors" bought phones "for the purpose of
14
earning a return on the purchase price"(Op. 7),

not to use the phones, and ETS raised the money to
use in operating the business. "
"Second, it is sufficient for the required
"common trading" element if the interests are
"offered and sold to a broad segment of the
public," as were the ETS units. 494 U.S at 68. "
"Third, because Edwards promoted them as
"investments,"
the ETS units
meet
the
"fundamental essence of a 'security.'" Id at 6869."
26.
First, in this matter, funds were not generated or used to fmance
investments but were generated were used to pay for services provided.
Secondly, the Club offers and sells nothing to the general public with the
exception of Private Club Memberships. Benefits/Services/Programs are
available only to Private Club Members. Third, the Club does NOT promote
"investments" or "securities".
27.
Plaintiffs allegations of "Unregistered Securities" are void of
any valid, legal basis.

28.
Furthermore, Plaintiff is attempting to conduct a mere witch
hunt with total disregard of true fact or lack of education or both. With
specific regard to the "Administrative Remedy" ("A/R"), the process by
which these void allegations are based, the facts are indisputable that
15
administrative services are provided to effect a long standing, legal process

called "Notarial Protesf. NOTARIAL PROTEST, as defined in BLACK'S
LAW DICTIONARY FIRST EDITION:
"PROTEST. 2. A notarial act, being a
formal statement in writing made by a
notary under his seal of office, at the request
of the holder of a bill or note, in which such
bill or note is described, and it is declared
that the same was on a certain day
presented for payment, (or acceptance, as
the case may be,) and that such payment or
acceptance was refused, and stating the
reasons, if any, given for such refusal,
whereupon the notary protests against all
parties to such instrument, and declares that
they will be held responsible for all loss or
damage arising from its dishonor. "
29.
One must be a Club Member to engage in this process and
utilize these administrative services. A Club Member may engage this

process and utilize these administrative services as well as a number of other
Club benefits/services/programs, at their will, (subsequent to their own
research and conclusions), which is a part of their Membership Contract, and
in accordance with the rules and specific details of each level of service. One
cannot question that there is most certainly a strict intent of understanding
and meeting of the minds after reviewing agreements. A l l administrative
16
services are provided to Members on a best effort basis. There is NO

promise of outcome, resuh, for services performed. There is no promise for
payment of benefit derived from any benefit/service/program. Payment is for
the administration of the service provided. Further, it is not a requirement as
a Private Club Member to participate in any one of the many programs.
Participation is solely by choice, subsequent to one's own research,
education, decision and ultimately information and calculation that they
themselves provide. Ignoring these facts would be the Plaintiffs own
admission to knowingly, intentionally and/or recklessly omitting and/or
disregarding truth and fact.
30.
The fact remains that there was no valid basis and is still no
valid basis for Plaintiffs allegations.
There are not sufficient facts to
support
"securities"
allegations
that
there
are
involved.
Plaintiff
SECURITIES AND EXCHANGE COMMISSION has no legal basis and

allegations are void of legal standing or merit and truth and should not be
accepted as such. There are no proven violations of the Securities Act of
1933 and in fact are disproven in Paragraphs 2 1 - 2 3 herein. While, "on a
motion to dismiss, a complaint is viewed in the light most favorable to the
17
plaintiff," anything can be well-pleaded, but the facts of the matter must be
true. The SEC has not proven a prima facie case of violations of the
antifraud provisions of federal securities laws and therefore should not be
given the forum to continue a void COMPLAINT and RESTRAINING
ORDER, ASSET FREEZE, AND OTHER EQUITABLE RELIEF. They
have proven nothing more than a Private Club, offering and providing
educational and administrative services/programs/benefits and Private Club
Members engaging in same as they so choose, subsequent to their own
research, and whose participation plays a role in the very outcome of each of
the various services/programs in which they engage.
31.
Plaintiff inappropriately and untruthfully uses and assert their
own language, such as "investment" and "promise", among other phrases,

that are not used, not referred to, not mentioned, insinuated or otherwise
intended by anyone other than themselves. The Club does not advocate,
allow
or perpetuate such
language.
In fact. Club contracts
and
documentation clearly absolve themselves of same. I f Defendants became

aware of individuals engaging in untruthful language as such, that would
provide grounds for Membership termination from the Club. (See EXHIBIT
B).
32.
The facts are clear. There is no investment, unregistered or
otherwise, no security, as proven by the Howey Test, and there is no fraud.

Therefore, any reference of law to support the void allegation of
"unregistered securities" is moot. What there is, is a Private Club, Private
Club / Membership and Contracts, information and education from credible
3'"'^ parties so that Members may do their own research, draw their own
conclusions and participate in whichever of the many benefits/services
offered by the Club to Club Members Only. Funds secured by Membership
fees and product/service fees are utilized, as any organization would - to
support the Club and provide for the many services/products/benefits
offered, to provide for usual and customary business expenses and overhead
in order to continue offering same to existing and new Members and to
perpetuate organization growth. Plaintiff is not a Club Member.
33.
Regarding COUNT I I - FRAUD and COUNT I I I - FRAUD,
which appears to be standard charges and often times regurgitated in matters

of the like, Defendant(s) have been paid for services performed, researched
19
and provided education and information and 3'"' party materials for Club
Members to do their own research and draw their own conclusions.
Defendant(s) have made no known untrue statements of fact nor leamed
omissions during the course of providing information and resources. The
Club may stand accused only of "leading" and not "misleading" Private
Club Members to do their own research, due diligence and form their own
conclusions based on many other resources. Members continue to provide
additional resources for the benefit of other fellow Club Members. Much of
the information and education offered by the Club was and is in fact
contributed by Club Members. We are a Club of Club Members and not
"investors" as is referred to and misstated throughout Plaintiff documents
and Court Orders.
34.
Defendant(s) have not engaged in transactions, practices and
courses of business of fraud and deceit. Defendants have openly engaged in

processes of researched tmths
and
fact. The use
of means or
instmmentalities of interstate commerce ... directly and indirectly, is

admitted as there was no fraud or deception or any reason to hide as one
might do i f in fact there were something unlawful to hide.
20
35.
In the case of a complaint, involving one who can only be a
Club Member (the Plaintiff is not a Club Member nor injured party), in the
event of a dispute, all Club contracts clearly define Arbitration and United
States Arbitration and Mediation Rules of Arbitration as the only remedy.
The Commission is neither a Private Club Member nor an injured party. As
a matter of fact, to date, there have been no known complaints brought forth
by any Club Member. Not one individual to date has exercised that option or
claimed injury.
36.
In
Paragraph
4.
of
Plaintiffs
APPLICATION
FOR
TEMPORARY RESTRAINING ORDER, ASSET FREEZE, AND OTHER

EQUITABLE RELIEF, Plaintiff refers to certain information as "spinning a
tale", in Paragraph 5., Plaintiff refers to certain information shared by
Defendant as a "fantastical story" and in Paragraph 12, there is reference to
"the scam". Further, in Plaintiffs COMPLAINT FOR INJUNCTIVE AND
OTHER RELIEF, Page 5., under FACTS, A. refers to "The Investment
Scheme. Paragraphs 19 - 21, fiirther poorly attempts to define bits and
pieces of information and education; none of which has been proven as
factual or true by Plaintiff. Plaintiff presents no factual evidence disproving
21
or to the contrary nor enjoins in the suppression the millions of publications,

websites, organizations, individuals, etc., sharing and pubUshing the same
and/or closely related information.
37.
There is much evidence to demonstrate the validity of facts as
leamed, known and believed trae by Mr. Lawler in his testimony. It would
be impossible to prove herein all information and facts in what has taken
years of study. Defendants supplement with evidence of trath and fact to
support their "fantastical story". One cannot dispute these facts. Defendant
offers more than adequate trath and fact to disprove fraud.
38. Modern Money Mechanics, A workbook on Bank Reserves and
Deposit Expansion, published by the Federal Reserve Bank of Chicago, is a
well known publication that describes how the banks create all money from
the "borrowers" signature on a promissory note (not from the bank's assets
or from its depositors). It is called "fractional banking". As stated in Modem
Money Mechanics:
"Of course, they (the banks) do not really pay out
loans from the money they receive as deposits. If
they did this, no additional money would be
created. What they do when they make loans is to
accept promissory notes (loan contracts) in
22
exchange for credits (money) to the borrower's

transition accounts.
39.
As an example, a deposit of a promissory note in the amount of
10 thousand dollars ($10,000) creates an expansion to 100 thousand dollars

($100,000), at a 10 percent reserve requirement. The "borrowers" signature
gave undisclosed permission for the bank to create the loan value ($10,000)
on its books as an asset without spending a dime. These funds were then
deposited by the seller (home owner, car dealer, school, etc.) to their bank
for further loans repeating the process over and over with each new bank
holding back the 10 percent reserve requirement (or prevailing Federal
Reserve rate) additively totaling $100,000 from the original $10,000 loan.
The "borrowers" signature just created 100 thousand dollars that was
fractionalized by the bank's conversion of your signature and promissory
note. 9 times any deposit can be created out of thin air. The bank not only
loaned back to you from the very deposit you made but also, got paid
multiple times through a credit from the Federal Reserve to the banks
reserve account and through pooling and securitization and the selling of the
asset backed security, as just two examples. The conversion continues to
perpetuate each time the "borrower" makes payment on an already paid
23
account. As a matter of fact, this is not the Defendant's rule, spin or process,
but that of the Federal Reserve's Modem Money Mechanics. (Refer to
Exhibit C, Modem Money Mechanics, pages 7 - 1 1 ) .
40.
Further, damages for "borrowers" who have paid again on a
paid "loan", is the fraud and basis for the Administrative Remedy, the
Notarial Protest.
41.
Defendant also offers a copy of two of several communications
to the United States Treasury and President Barack Obama as preparation for
processing the administrative services performed. Great care was taken
"not" to bring harm to any banks or the US Treasury with payment of the
AR claims. These claim payments will cost neither the banks, taxpayers nor
the US Treasury even one dime with our proprietary process nor create any
new debt.
This demonstrates the tmth, intent and integrity of the
Administrative Remedy. Further support is provided of the veracity of

Defendant's communications to members and prospective members by "The
National Economic Security and Reformation Act" compiled by Nancy
Detweiler, M . Ed, M . Div. This research thoroughly validates the fraudulent
banking practices, the illegal IRS, the unlawful Federal Reserve and more.
24
This is not a "story" or a "spin" but is the pathway for remedy. (See Exhibits
D&E)
42.
Bank statements clearly show all funds deposits and all
expenditures. Mr. Lawler has never taken a salary or commission from club
proceeds in the life of the club. He has an agreement to borrow on occasion
at a 5 percent annualized rate for personal use which has averaged from
$5,000 to $10,000 per year. Mrs. Lawler has a similar agreement and has
borrowed approximately $5,000 or less per year for the 10 years of her
related work. There are no lavish vehicles, no fancy home or lavish
vacations. The Lawler's have occupied their single residence for 29 years
with 2 vehicles of 95,000 and 160,000 miles respectively. Funds received by
the Club were used to support the organization, usual and customary
expenses and overhead, and the multiple benefits/services/programs, serving
Club Members. There are no hidden funds, no personal luxuries. Bank
statements and funds activity has been excruciatingly reviewed, transfers of
funds reasonably explained with no evidence of misuse of Club funds or
hidden funds that the Plaintiff seems to have convinced the Court, despite
reviewing bank statements to the contrary. Yet the Plaintiff continues to
25
muster some believability for Court consideration and continuation of an

unjust cause void of any real fact to support their position, inflicting ongoing
harm and hardship on the Defendant(s). Absent any real, factual evidence to
support these allegations, this is, in fact, "spinning a tale" and a "fantastical
story", to quote the Plaintiff.
43. Evidence in support of the "emergency" actions taken against
the Defendants and Relief Defendants, were derived from a one sided story,
presented in a most enticing manner, including language and enhancements
far beyond that of the truth. The evidence offered by the Plaintiff included a
DECLARATION OF MATTHEW MCNAMARA and a DECLARATION
OF KARAZ S. ZAKI, Attachments 1 and 2, respectively.
44.
The DECLARATION OF MATTHEW MCNAMARA refers to
sworn testimony of both Thomas and Diane Lawler, both of whose

testimony was taken while under great duress, being grilled by multiple
parties and without the benefit of legal counsel. The DECLARATION
regurgitates and highlights certain chosen excerpts and establishes that there
is no securities registration. Questions seemed to escalate into a financial
and taxation witch hunt, revealing reasonably explained supported staff and
26
business expenditures and focusing heavily on minor personal expenditures,

no salary noted, or any real unusual activity noted. Defendant Thomas
Lawler's testimony reveals cooperation and explanation, under great duress,
revealing years of research, and great belief in same and contact with the
"Treasury" with reference to the "ARs". Private Members, of which Mr.
McNamara is not, who engage administrative services, understand their own
obligation to do their own due diligence and proceed and that at no time are
promised any outcome. They are afforded administrative services for a fee.
A l l information, charts, figures, etc. is based on information that individuals
submit according to their calculations and is what is passed along to the
Treasury for consideration and payment.
45. The DECLARATION OF KARAZ S. ZAKI, CPA, employed
by the "Commission", reveals a cursory review of ten bank accounts,
identifying authority signatories, deposits and transfers, and a few specific
focal transactions, including a few personal transfers, not including any
salary paid to Mr. Lawler, since there was none. Just a vanilla summary of
sums, dates and select transactions. A l l of which were questioned and
explained under oath by Mr. Lawler. The DECLARATION of KARAZ S.
27
ZAKI is merely one of accounting. Again, provides no legal basis in support

of Plaintiffs allegations Accounts were thoroughly reviewed during
Defendant's grilling and testimony.
46. Clearly there were and are no grounds for restraint of funds,
asset
freeze
or
any
other
equitable
relief
The TEMPORARY
RESTRAINING ORDER, which was founded on mere supposition and void

of any wrongdoing or factual evidence to support such extraordinary
measures much less the allegations proffered by the Plaintiff, remains in
effect to date and should immediately be lifted.
47. Plaintiff and this Court have sorely infringed upon Defendant(s)
First Amendment rights by ordering suppression of certain information and
statements, orally or in writing, statements of which have not been rebutted,
have not been proven as not facttial supported by any material fact to the
contrary and thus stands as material fact. Certain statements and information
that have been researched and made public for years and can be found in
many resources, publications and other websites. Yet the Defendants are
suppressed and denied their First Amendment rights to speak on these
matters. Are all those who have done their due diligence and communicate,
28
either written or verbally on these same matters to be suppressed as well?

Are they all deemed fraudulent?
48. One can easily search the intemet and YouTube videos where
thousands of resources may be found and explored, specific to the very
information that we are being unduly restrained from sharing and in large
part what these void "Fraud" charges are based upon. A l l , including
Defendants' information, is provided for and is intended as information and
education only, for those who choose to do their own research.
49. In the landmark case of Reno v. American Civil Liberties
Union, 521 ILS. 844 the Supreme Court found, in summary, that the
Intemet was a "protected" form of communication in roughly the same way
that a book was. It had the added benefit of additional protection, since it
was an on-demand method of communication.
50. We are a Club that offers a great deal of information on many
different topics, we implore those who are uneducated to do their own due
diligence and findings of fact in order to draw their own conclusions.
However, suppression and denial of First Amendment rights is no doubt a
serious matter.
29
SUMMARY
51. Defendants have offered more than adequate argument and

credible grounds to amend judgment and for relief The Commission has no
real interest in this matter and has not established good cause to continue.
The allegations are void and without merit and standing and thus, as a matter
of law, must be reconsidered and dismissed. Plaintiff simply cannot be
allowed to holler Fraud as a remedy for lack of education or understanding.
Fraud has not been proven. It is clear that the Plaintiff moved this Court on
assumption, without adequate findings of fact and in a most expedited
manner, in concert with the deprivation of the Defendant(s) to secure and
provide adequate legal defense. The ability for the Defendant(s) to secure
legal counsel at all has been denied and fiirther railroaded. The Court based
its decision on a one sided, skewed story, unethical spin, contrived language
and assumption, presented by the Plaintiff to fit their need. The story spun
and the continuance of an action void of substantial evidence in support is a
travesty.
52. In a trial last November, 2013, Judge Duffey, in THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
30
GEORGIA ATLANTA DIVISION, rejected insider trading charges of a

defendant who had a longtime friendship with a chief executive. In S.E.C. v.
Schvacho, on January 7, 2014, the Court found for the Defendant because
the SEC did not meet the burden of proof
53. While the natures of the matters clearly differ, the law does
not. The SEC failed to meet the burden of proof in this matter.
54. It is a known fact that the Commission did not enjoy a winning
year in 2014, with several notable losses taking center stage and would look
to put a winning feather in their cap. In one article published by Law360,
New York on June 09, 2014, Thomas Gorman, former SEC trial counsel is
quoted saying, " I f you don't have the facts, you don't have the facts".
55. In
consideration
of the
overwhelming argument
and
supplemental Pleading showing that the Plaintiff was unable to prove their
claims and did not meet the burden of proof to establish a prima facie case,
but was nothing more than a preponderance of one sided twisted bits of
information spun into a palatable presentation to suit their needs, and as a
matter of law, this action should be dismissed and the Plaintiff sanctioned
for misuse of law and deceptive practices, at the very least.
31
56. As a final note, the Defendant(s) may never recover from the
harm inflicted by this action.
PTj A V F R F O R R E L I E F
Defendant(s) seek the following relief:

12.
Relief of Judgment by way of an Order lifting aU restraints and
releasing in its entirety, all pending

matter,
including
ORDER
Orders against Defendants in this
TO
SHOW
CAUSE,
TEMPORARY
RESTRAINING ORDER, ORDER FREEZING ASSETS AND FOR A N

ACCOUNTING,
ORDER
PROHIBITING
DESTRUCTION
OF
DOCUMENTS, AND ORDER EXPEDITING DISCOVERY. The Club is

an operation of about 10,000 private memberships encompassing about
20,000 people. Club Members, none of which are complaining parties, are
being unduly harmed alongside the Defendants and Rehef Defendants.
13.
Amendment of judgment DENYING Defendants' Motion To
Reconsider Order DENYING Defendants' Motion to Dismiss and an order

GRANTING dismissal with prejudice.
14.
Court fees and any and all costs of this action against the
Defendants; and.
32
15.
Any other relief the court deems just and proper.
Dated this 2V' day of October, 2014.
/s/ Thomas J. Lawler

Thomas J. Lawler
5077 Tanaga Court
Stone Mountain, GA 30087
33
C E R T I F I C A T E OF COMPLIANCE
In accordance with Local Rule 7.1D and 5.1C, I hereby certify that the
foregoing has been prepared using Times New Roman 14 point font.
This
ay of October, 2014.
/s/ Thomas J. Lawler

Thomas J. Lawler
5077 Tanaga Court
Stone Mountain, GA 30087
34
C E R T I F I C A T E OF S E R V I C E
I hereby certify that on November 2V\ 2014, I mailed the foregoing

document with the Clerk of this Court and served the same, via U.S. Postal
Service on the following:
PAT HUDDLESTON, H, SR. T R I A L COUNSEL

U.S. S E C U R I T I E S AND E X C H A N G E COMMISSION
950 East Paces Ferry, N.E., Suite 900
Atlanta, GA 30326-1382
M A T T H E W McNAMARA
ICARAZ Z A K I
GREGORY SMOLER
MADISON GRAHAM LOOMIS
Regional Trial Counsel
F R E E D O M FOUNDATION USA L L C
Dba F R E E D O M C L U B USA
Registered Agent
Laughlin Associates, Inc.
9120 Double Diamond Parkway
Reno, NV 89521
35
DIVINE SPIRIT L L C
Registered Agent
Incorp Services
2847 S. Ingram Mill Road, Suite AlOO
Springfield, MO 65804-4006
O R D E R PROCESSING L L C
Registered Agent
Incorp. Services, Inc.
2000 Riveredge Parkway, NW, Suite 885
Atlanta, GA 30328
P R O S P E R I T Y SOLUTIONS L L C
Registered Agent
Judith Harris
950 Herrington Road, C-197
Lawrenceville, GA 30044
V I O L E T BLESSINGS L L C
c/o Diane Lawler
5077 Tanaga Court
Stone Mountain GA 30087
Case 1:14-cv-02468-AT Document 32-1 Filed 11/24/14 Page 1 of 74
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
SECURITIES AND EXCHANGE

COMMISSION
Plaintiff
Civil Action File
No. l:14-CV-02#8-AT
vs.
Thomas J . Lawler and FREEDOM
FOUNDATION USA L L C dba
FREEDOM CLUB USA,
Defendant(s),
DIVINE SPIRIT L L C ,
ORDER PROCESSING L L C
PROSPERITY SOLUTIONS L L C , and
V I O L E T BLESSINGS L L C ,
Relief Defendant(s).
DECLARATION OF Thomas Lawler

I , Thomas J. Lawler, in accordance with 28 U.S.C. 1746, do hereby
declare as follows:
1. My name is Thomas J. Lawler.
2. I am over 18 years of age and legally competent to make thi^

Declaration.
3. I am the Founder of Freedom Foundation USA LLC dba FreMom
Club USA and the Manager of Divine Spirit LLC and Order |
Processing LLC.
4. I have not knowingly or intentionally misguided or misquote^ any
researched fact.
5. I have always been open and cooperative in sharing information and
answering all questions to the best of my knowledge and belief.
6. I have provided live Q & A on weekly conference calls for Ivlembers
and prospective Members to receive M l disclosure and ask ^ y
questions of their choosing,
7. I believe that I have always acted in the best interest of the
Membership and all disbursed funds have been spent to furtlier the
objectives of the members and Membership.
8. In Ught of this SEC situation, we have had to suspend commjinication
with the Treasury and delay forward progress toward Member
settlements.
9. To date, there has been no payment forthcoming from the Treasury
10.1 have always advocated that Private Club Members and prdspective
,rd
Members do their own due diligence and have provided man|y 3

party resources for their research.
tial study
11 .The Member must verify that they have completed a substan|;
and proven understanding of the basis of the Administrative flemedy,
related history and full information before providing data an^
engaging services.
12.Members are clearly advised and must agree at multiple stagbs
(Member Agreement, at order placement and on intro and mijmber
conference calls), that there is no promised outcome and all êrvices
are provided on a best efforts basis.
13.Industry and case law research is the foundation for the calci^lation of
settlement which ultimately will be settled by the United Stales
Treasury.
14.Based on the administrative package submitted to the Treast^, I am
confident that settlement calculations provided by individual^ are just
and will be acceptable by the Treasury.
15.1 am confident in these statements based upon a proprietary process
whereby it will cost neither the Treasury nor the Tax Payer aîything
and add zero to any debt.
16.1 have spent U years and tens of thousands or hours researct^g

sources from credible authors, lecturers, articles, papers and jreatises.
Sources include but are not limited to:
a. G. Edward Griffin (The Creature from Jekyll Island)
b. Nancy Detweiler, M.Ed., M.Div. (History of NESAR^)
c. Dr. Harvey F. Bernard (Draining the Swamp)
d. Eric Madsen, Trustee (Team Law)
e. Black's Law (Multiple Editions)
f. Bill Benson (The Law That Never Was)
g. Rep. James Traficant, Jr. (Ohio) gune 1933 Bankruptcy of the
United States, HJR 192, 73"* Congress)
h. Paul Andrew Mitchell, B.A., M.S. (14* & 16* Amendment
Fraud)
i. Louis McFadden, Chairman of the House Banking a n i
Currency Committee in the 1930s
j . Congressman Charles A. Lindberg, Sr. (Money Trust
Investigation)
k. Board of Governors (The Federal Reserve Act)
1. Sam Bouman (Real Freedom)
m. Russell L. Munk, Assistant General Council, Department of

Treasury (Federal Reserve Notes are not dollars)
n. And hundreds more
I declare under penalty of perjury that the foregoing is true and cortecttothe
i
best of my knowledge and belief
SIGNED this 21'^ day of November, 2014.
Thomas J. La\vler
Freedom Club USA

Early Bronze Membership Agreement
4002 Hwy 78, Suite 530-321, SnellviUe, GA 30039
This Independent Contractor Agreement (the "Agreement") is made and entered between an independent
contractor, hereafter referred to as "Member", and Freedom Foundation USA, LLC (FFUSA) dba Freedom Club
USA (FCUSA), a Nevada Limited Liability Company with a primary office located 2533 N. Carson St., Carson
City, Nevada, 89706 with primary mailing office at 4002 Hwy 78, Suite 530-321, Snellville, 30039, hereafter
referred to as "FCUSA" or "Company". Upon acceptance by both parties, this agreement replaces any existing
Ambassador, Referrer or Consultant Independent Contractor agreement between the parties for all future
business. FFUSA and FCUSA are synonymous throughout this agreement.
FCUSA, upon verification and deposit of member funds thru the online order form and at the sole discretion of
FCUSA, will activate such Member into Freedom Club USA Early Bronze Program.
Member dues are as follows:
Membership dues are $300 annually or $1000 lifetime. The annual membership includes the member, spouse
and their children living with them up through college age at time of membership acceptance by FCUSA. No
renewal fees are due for annual memberships until "interim or Administrative Remedy (AR) funding" takes place.
Upon funding, each individual within the family will continue their membership but convert to an individual
lifetime membership and unique member number upon submission of their first Administrative Remedy (AR)
from which $1,000 will be deducted one time and automatically renew annually thereafter with no further
membership payments due.
Club benefits:
Your membership in Freedom Club USA is a non-voting membership and is limited to use of club
benefits. No ownership, other duties or obligations apply to your membership other than stated herein.
Member has full access to all club education programs and all future programs at the posted fees.
Member has access to these programs for the length of their membership beginning from the date of
acceptance by FCUSA of this agreement.
Member may extend their membership for each additional year or for life at the then current
membership fee upon club approval.
Membership applies to an individual only (each spouse or child of legal age must acquire their own
membership).
Current and upcoming programs include but are not limited to education regarding: mortgages, credit
cards, student loans, car loans, IRS, CRA, prosperity training, wellness programs and health products or
as added, removed or adjusted at the discretion of FCUSA.
Members are required to complete FCUSA Study Guides to receive backend payment.
All programs are the member's processes until assigned to FCUSA for processing and payment, and are offered
on a best effort basis with no guarantee expressed or implied on any program, current or future. Once
assigned to FCUSA, they are held and controlled by FCUSA for the life of the process. Member payments for all
educational processes are payable to "Freedom Foundation USA" via money order or cashier's check.
Membership Agreement is accepted only after review of your "Membership Application" by FCUSA and email
confirmation.
Membership dues and program costs are not refundable or transferable. Upon funding of your first AR or
commissions, a lifetime membership fee, QE and Coaching will be assessed and deducted from your account.
Costs:
Annual membership: $300
Page 1 of 9
last update 3/14/13
Lifetime membersiiip: $1000 one time

Financial Access Service: $300 one time
Full Pay Programs: $2700 each
Booster 1: $1000
Booster 2: $1000
B Programs: $1200 each
QE: $795
Coaching: $495
Page 2 of9
last update 3/14/13
I. RULES OF DISBURSEMENT
1.
Early Bronze members may purchase Administrative Remedy (AR) educational programs as desired
with the cost of the remedy credited back to the member during their backend payout.
2. Special Early Bronze Payouts: Should the Early Bronze member submit one or more ARs
and pay in 7 days (US) or 14 days (International) prior to Full Bronze Membership web
announcement, the member will lock in the EARLY BRONZE higher rates on ail their AR
submissions for the life of their membership. Submission of an AR during this phase will
also complete sooner and will likely accelerate the funding payout. Should the Early Bronze
member not submit an AR prior to Full Bronze Membership web announcement, their ARs will
default to the normal "Payout" amounts below. The member may choose a "B" program on
their first AR submission only to lock in Early Bronze rates with the exception their "B" program
will pay out as indicated below.
> .A."* \
Credit C a r d s , Auto and

Student L o a n s
|i j Nil! fif
Programs
Pnyout
Early Bronze
Booster 1
Early Bronze
Booster 2
Early Bronze
B Program
Payout
S
S
S
S
S
2.700 Programs
250.000 Payout
Early Bronze
1,000 Booster 1
Early Bronze
1.000 Booster 2
Early Bronze
1.200 B Program
Payout
S
S
S
$
S
2.700 Iprograms
250.000 jPayout
Early Bronze
1,000 Booster 1
Early Bronze
1,000 Booster 2
Early Bronze
1.200 B Program
IPayout
$
$
$
$
$
$
$
$
$
2,700
100,000
150,000
1,000
250,000
1,000
350,000
1,200
50,000
3. When FCUSA receives the proceeds from funding source, FCUSA will disburse monetary
funds due Member within 10 business days of receipt.
Once FCUSA has received your payment and approved your membership, you are entitled to use all
club benefits. Some club benefits (QE and Coaching require an additional fee but will be deducted
from your first AR payout). The membership payment date shall be the date upon which your
membership will begin and from which all club renewals will be calculated. Please contact your
ambassador should you have questions about the program or visit www.freedomclubusa.com.
CONTRACTURAL SHARING: FCUSA does not condone contractual sharing of member's backend
distributions with any referring parties. Should the member have contracted with any source (written
or verbal) prior to or after signing of this agreement for purposes of sharing backend proceeds from
the sale, trading or other benefit from your AR from the FCUSA program:
your agreement with FCUSA will be null and void
all monies paid for educational programs, dues or services will not be refunded to member
all work on your educational program will cease.
no further disbursements will be made to member.
All third parties involved in the contractual sharing will be excluded from FCUSA membership and
processes and if already involved in a process, no payout or refund will be issued to the third
parties.
Pages of9
last update 3/14/13
By accepting your membership with FCUSA, you are acknowledging all these terms and conditions.
[[. NON-DISCLOSURE/NON-COMPETE
Recitals
A. "FCUSA" wishes to provide "Member" certain educational information pertaining to debt
resolution/equalization including, but not limited to: mortgages, credit card, car loans, student
loans, IRS and other programs plus all variations of these. This includes all communication of
information between the parities in any form whatsoever, including oral, written and machinereadable form, pertaining to the above.
B. "FCUSA" is providing this educational information to "Member" for the purpose of providing asset
reclamation and asset protection information, which is to be confidential and regards said
information to be as a trade secret. FCUSA desires to protect those parts from unauthorized
disclosure or use (such confidential trade secret parts being hereafter collectively referred to as
"Information").
C. "FCUSA is willing to disclose "Information" to "Member" on the terms and conditions set forth
herein.
D. "Member" agrees not to compete with "FCUSA" or disclose "Information" per the terms and
condition set forth herein.
E. Should "Member" wish to contract as an Ambassador with FCUSA; the "Member" can apply
online.
111. AGREEMENTS
Therefore, "FCUSA" and "Member" agree as follows:
1.
"Member" shall:
a. (1) Not disclose "Information" of "FCUSA" to any other person and (2) use the
same degree of care to maintain the "Information" confidential as "Member"
would use in maintaining Members own confidential Information, but always at
least to a reasonable degree of care;
b. Use the "Information" only for the above purpose;
c. Not compete with "FCUSA" by utilizing "FCUSA" educational processes for their
own use or to sell such educational processes to any third party without the
express written permission of "FCUSA";
d. Upon any termination, within fifteen (15) days following request of "FCUSA",
return to "FCUSA" all documentation, copies, notes, diagrams, computer
storage media and other materials containing any portion of the "Information",
or confirm to Owning Party, in writing, the destruction of such materials;
e. Not allow any "non members" to 3 way or take part in "member's only" calls or
information nor divulge "Member" only login or passkeys to non members.
2. Disclosure. This agreement imposes no obligation on "Member" with respect to any portion
of the "Information" received from "FCUSA" which (a) is or becomes generally known or
publicly available other than by unauthorized disclosure, (b) is independently developed by
"Member" or (c) is disclosed by "FCUSA" to a third party without a duty of confidentiality on
the third party.
Page 4 of 9
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3. Confidentiality. "CONFIDENTIAL" includes, but is not limited to all written and verbal
communication provided to "Member" by any means.
4. Property. The "Information" shall remain the sole property of "FCUSA". "FCUSA" makes
no representation with respect to, and does not warrant any "Information" provided under this
agreement, but shall furnish such in good faith. Without restriction the generality of the
forgoing, "FCUSA" makes no representations or warranties, whether written or oral, statutory,
express or implied with respect to the "Information" which may be provided hereunder,
including without limitation, any warranty of merchantability or of fitness for a particular
purpose. "FCUSA" shall not be liable for any special, incidental or consequential damages of
any nature whatsoever resulting from a receipt or use of the "Information" by the "Member".
5. Breach. In the event of a member breach or threatened breach or intended breach of
this Agreement by "Member", "FCUSA" may proceed with termination of the membership as
outlined in Breach and Termination below.
6. License. "Member" will not export, directly or indirectly, any technical data acquired from
"FCUSA" or any product utilizing any such data to any country for which the U.S. Government
or any agency thereof at the time of export requires an export license or other governmental
approval, without first obtaining such license or approval from "FCUSA".
7. Rights. The Rights and obligations of the parties under this Agreement may not be sold,
assigned or othenwise transferred. By signing this document with my electronic signature I,
the Assignor "Member", without recourse, irrevocably assign to Freedom Foundation USA,
LLC, the assignee, its successors and assigns, all Administrative Remedies (AR) they
process on my behalf together with the property descriptions and properly secured, and also
all the rights including rights of holder in due course, title and interest of the Assignor of and
to the assets described in the AR.
8. Privacy: IVlember agrees to not d i s c l o s e to any parties outside of their direct family,
F C U S A and essential financial parties regarding any amount or percentage a member
h a s received a s a result of any educational p r o c e s s offered by F C U S A .
9. Inouiries. Member agrees to respond to any inquiries from law enforcement or legal
authorities or courts that vou are under a non-disclosure contract and cannot divulge any
details of this agreement or with whom it is made. Any violation of these non-disclosure
rules c a n mean reduction of any of member's back-end payouts to a minimum of 10%
at the discretion of F C U S A .
Pages of9
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10. Entrapment. Member agrees to disclose in writing to FCUSA headquarters that if true, the
member is an agent for Federal, State, or Local agencies being officially or unofficially on a
mission of entrapment or for any investigative purposes immediately upon or before entering
into this agreement.
1 1 . Relationship of Parties. Contractor is an independent contractor of the Company.
Nothing in this Agreement shall be construed as creating an employer-employee relationship,
as a guarantee of future employment or engagement, or as a limitation upon either party's
sole discretion to terminate this Agreement at any time without cause. Contractor further,
agrees that, if the Contractor determines that he/she is a "taxpayer," or is a party made
"liable," then the Contractor shall be responsible for all of Contractor's federal and state taxes,
withholding, social security, insurance, and other benefits.
12. Free Will. Member is participating in this educational process and any subsequent
educational process, solely on their own behalf and of their own free will.
13. Indemnification. The Member agrees to indemnify and hold harmless FCUSA, Freedom
Club USA, FFUSA, Freedom Foundation USA, LLC and their officers, directors, employees,
consultants, referrers, ambassadors representatives, members and agents from any and all
claims, damages, failure to perform, breach of contract, or any other potential liability
regarding the benefits and services as offered by F C U S A . " . "FCUSA" agrees to operate in
good faith and put forth a best effort to monetize the administrative remedy / A R judgments.
All processes/programs and/or services are provided to member on a best efforts basis.
FCUSA reserves the right to amend this agreement from time-to-time with any new
provisions binding to both parties as is necessary to memorialize accurately this agreement
between Member and FCUSA and accurately depict the agreement between FCUSA and
member and to maximize the administrative remedies- payouts of the Member and FCUSA.
"Member" hereby agrees, warrants and attests that they will provide true and accurate
information, at all times, to the best of their knowledge, and will at no time knowingly and/or
willfully misrepresent, or provide false, misleading, or inaccurate information.
"Member" agrees that they are solely responsible for the validity and accuracy of any and all
information provided to "FCUSA" Freedom Club USA and/or "FFUSA" Freedom Foundation
USA, LLC, e t a l .
14. Death or Permanent Incapacity of "Member" / "Member Successor".
"Successor" is defined as any one natural person claiming a lawful interest in "FCUSA"
benefits of a deceased or permanently incapacitated "FCUSA Member".
"Permanent Incapacity" is defined as the inability to act on one's own behalf, including but not
limited to permanent confusion, permanent lack of consciousness or other disability rendering
individual permanently void of capacity to act and/or make decisions with no reasonable
expectation of meaningful recovery. Must be confirmed in writing by a competent Medical
Doctor.
"Interest" is defined as access/ownership/control of existing benefits of deceased Club
Member as detailed in "FCUSA" agreements and documentation.
Page 6 of 9
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"Benefits" are defined as any existing programs/processes/administrative

remedies/accounts/membership/written, verbal & recorded information reserved for members
only, in which deceased or permanently incapacitated Member was a participant and other
benefits as m a y be available to Club Members.
In the event of "Member's" death or permanent incapacity, "Member's" designated
"Successor" may step forth. "FCUSA" will only recognize designated "Successor" as set forth
in "Member's" most current, existing Letter of Wishes on file with "FCUSA". A t the time of
presentment, "Successor" must provide all information and documentation required as
outlined in FCUSA SUCCESSOR INSTRUCTIONS IN T H E CASE OF DEATH OR
PERMANENT INCAPACITY OF FCUSA MEMBER.
"Successor" must become a "Member" of "FCUSA" and remain a "Member" in good standing.
"Successor" will be bound by the same agreements and limitations, including but not limited
to, non-disclosure and code of ethics of "FCUSA" Membership. Should my "Successor"
choose not to accept my Letter of Wishes and "FCUSA" agreements, with all benefits and
responsibilities, the proceeds and control of my membership and all related benefits and
assets will default to "FCUSA" for their discretionary use.
"Successor" must contact "FCUSA" within 90 days of death or permanent incapacitation of
"FCUSA Member" after which time the proceeds and control of "Member's" membership and
all related benefits and assets will default to "FCUSA" for their discretionary use.
15. Breach Defined. Should Contractor act or cause any action(s) against Company, legal or
other, or speak, write, email, post articles, fonward articles of any content or performs an
action or causes an action to occur that disparages, defames, brings harm, injures, discredits
or dishonors Company, these actions will be construed as a Breach of this agreement by
Contractor.
16. Remedy for Breach. The parties hereto agree that, in the event of breach or threatened
breach of any covenants of Contractor, the damage or imminent damage to the value and the
goodwill of the Company's business shall be inestimable, and that therefore any remedy at
law or in damages shall be inadequate. Accordingly, the parties hereto agree that the
Company shall be entitled to injunctive relief against Contractor in the event of any breach or
threatened breach of any of such provisions by Contractor, in addition to any other relief
(including damages) available to the Company under this Agreement or under law.
Additionally, upon such breach by Contractor, the Company may exercise its right to
terminate such Contractor with no further compensation for commissions and no payments
for any administrative remedies submitted or to be submitted and will provide no refunds to
Contractor.
17. Termination. Either party may terminate this agreement without cause. FCUSA may
terminate a n y membership do to any violations of this agreement including a breach of or
threatened breach of this contract.
Termination without cause: Should Contractor elect to end their Member status, they will be
paid for all commissions and submitted paid programs up to their resignation date.
Page 7 of 9
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Termination with cause: Should Contractor be removed due to breach, all unpaid
commissions will be forfeited to Company. All educational processes submitted or in process
will be forfeited to Company. No refunds will be provided to Contractor for any fees paid to
Company.
Notifications of termination may be sent via Email, US Mail or fax to the last known address
of the other party.
All items in this agreement regarding NON-DISCLUSURE/NON-COMPETE, disputes and
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A Workbook oh Bank Reserves and Deposit Expansion
Federal Reserve Bank of Chicago
Modern Money Mechanics

The purpose of this booklet is to describe the basic
process ofmoney creation in a "pactional reserve" banking system. The approach taken illustrates the changes
in bank balance sheets that occur when deposits in banks
change as a result ofmonetary action by the Federal
Reserve System the central bank of the United States.
The relationships shown are based on simplifying
assumptions. For the sake ofsimplicity, the relationships
are shown as if they were mechanical, but they are not,
as is described later in the booklet. Thus, they should not
be interpreted to imply a close and predictable relationship between a specific central bank transaction and
the quantity of money.
The introductory pages contain a brief general
description of the characteristics ofmoney and how the
U.S. money system works. The illustrations in thefollomng two sections describe two processes: first, how
bank deposits expand or contraci in response to changes
in the amount of reserves supplied by the central bank;
and second, how those reserves are affected by both
Federal Reserve actions and otherfactors. A final section deals wifh some of the elements that modify, at least
in the short run, the simple mechanical relationship
between bank reserves and deposit money.
Money is such a routine part of everyday living that

its existence and acceptance ordinarily are taken for granted. A user may sense that money must come into being
either automatically as a result of economic activity or as
an outgrowth of some govemment operation. But just how
this happens all too often remains a mystery.
What Is Money?
If money is viewed simply as a tool used to fecilitate
transactions, only those mediafliatare readily accepted in
exchange for goods, services, and other assets need to be
considered. Manytilingsfromstones to baseball cards
have servedtiiismonetary function through the ages.
Today, in the United States, money used intitmsactionsis
mainly oftiireekinds currency (paper money and coins
intiiepockets and purses of the public); demand deposits
(non-interest-bearing checking accounts in banks); and
other checkable deposits, such as negotiable order of
witiidrawal (NOW) accounts, at all depository institutions,
including commercial and savings banks, savings and loan
associations, and credit unions. Travelers checks also are
included intiiedefinition of b-ansactions money. Since $1
in currency and $1 in checkable deposits are freely convertible into each other and botii can be used directiy for
expenditures, they are money in equal degree. However,
onlytiiecash and balances held bytiienonbank public are
counted intiiemoney supply. Deposits oftiieU.S. Treasury, depository institutions, foreign banks and official
institutions, as well as vault cash in depository institutions
are excluded.
This transactions concept of money is the one designated as M l in the Federal Reserve's money stock statistics. Broader concepts of money (M2 and M3) include Ml
as well as certain otiierfinancialassets (such as savings
andtimedeposits at depository institutions and shares in
money market mutual funds) which are relatively liquid
but believed to represent principally investments to tiieir
holders ratiier than media of exchange. While funds can
be shiftedfeirlyeasily between transaction balances and
these other liquid assets,titiemoney-creation process takes
place principdly through transaction accounts. In tiie
remainder of this booklet, "money" means Ml.
The distiibution between the currency and deposit
components of money depends largely ontiiepreferences
oftiiepublic. When a depositor cashes a check or makes
a cash witiidrawal through an automatic teller machine, he
or she reduces flie amount of deposits and increases tiie
amount of currency held bytiiepublic. Conversely, when
people have more currency than is needed, some is retumed to banks in exchange for deposits.
While currency is used for a great variety of small
transactions, most of the dollar amount of money payments in our economy are made by check or by eledronic
Modem Money Mechanics
transfer between deposit accounts. Moreover, currency

is a relatively small part oftiiemoney stock. About 69
percent, or $623 billion, oftiie$898 billion total money
stock in December 1991, was in the form of tiansaction
deposits, of which $290 billion were demand and $333
billion were other checkable deposits.
What Makes Money Valuable?
IntiieUnited States neitiier paper currency nor
deposits have value as commodities. hitrinsicaBy, a dollar
bill is just a piece of paper, deposits merely book entiles.
Coins do have some intiinsic value as metal, but generally
fer less thantiieirfecevalue.
What, then, makestiieseinstilmentschecks,
paper money, and coins acceptable atfecevalue in
payment of att debts and for otiier monetary uses? Mdnly,
it is the confidence people have that they will be able to
exchange such money for otherfinancialassets and for
real goods and services whenever they choose to do so.
Money, like anything else, derives its valuefi-omits
scarcity in relation to its usefulness. Commodities or services are more or less valuable because there are more or
less of them relative totiieamounts people want Money's
usefiilness is its unique ability to command other goods
and services and to permit a holder to be constantly ready
to do so. How much money is demanded depends on
severalfectors,such as the total volume of h:ansactions
in the economy at any giventime,tiiepayments habits of
the society, the amount of money that individuals and
businesses want to keep on hand to take care of unexpectedti^sactions,andtiieforegone earnings of holding
financial assets in the form of money rathertiiansome
otiier asset
Conti-ol of the quantity of money is essential if its
value is to be kept stable. Money's real value can be measured only in terms of what it will buy. Therefore, its value
varies inversely withfliegeneral level of prices. Assuming
a constant rate of use, if the volume of money grows more
rapidly thantiierate at whichtiieoutput of real goods and
services increases, prices will rise. This will happen because there will be more money than there will be goods
and services to spend it on at prevailing prices. But if, on
the otiier hand, growtii in the supply of money does not
keep pace wtii tiie economy's current production, then
prices willfell,the nation's labor force,factories,and otiier
productionfacilitieswill not befiillyemployed, or botii.
Just how large the stock of money needs to be in
order to handle theti^sactionsof the economy without
exerting undue influence ontiieprice level depends on
how intensively money is being used. Every transaction
deposit balance and every dollar bill is a part of somebody's spendable funds at any giventime,ready to move
to other owners asti^sactionstake place. Some holders
spend money quickly aftertiieyget it makingtiiesefimds
available for other uses. Otiiers, however, hold money for
longer periods. Obviously, when some money remains
idle, a larger total is needed to accomplish any given
volume of transactions.
Who Creates Money?

Changes intiiequantity of money may originate wth
actions oftiieFederal Reserve System (tiie centi^ bank),
depository institutions (principally commercial banks), or
tiie public. The major control, however, rests witii the
cenh^ bank.
The actual process of money creation takes place
primarily in banks.' ./^ noted earlier, checkable liabiEties
of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency
and checks and whentiieproceeds of loans made by tiie
banks are credited to borrowers' accounts.
Inflieabsence of legal reserve requirements, banks
can buUd up deposits by increasing loans and inveshnents
so long astiieykeep enough currency on hand to redeem
whatever amounts the holders of deposits want to convert
into currency. This unique athibute of the banking business was discovered many centimes ago.
It started with goldsmitiis. As early bankers, they
initially provided safekeepmg services, making a profit fi-om
vault storage fees for gold and coins deposited vrifli fliem.
People would redeemtiieir"deposit receipts" whenever
tiiey needed gold or coins to purchase sometiiing, and
physically take the gold or coins to the seller who, in tum,
would deposit them for safekeeping, often wtii the same
banker. Everyone soon found that it was a lot easier simply
to use the deposit receipts directiy as a means of payment
These receipts, which became known as notes, were acceptable as money since whoever held them could go to
tiie banker and exchangetiiemfor metallic money.
Then, bankers discovered that they could make loans
merely by ^ving tiieir promises to pay, or bank notes, to
borrowers. Inti:usway, banks began to create money.
More notes could be issued than the gold and coin on hand
because only a portion of the notes outstanding would be
presented for payment at any one time. Enough metallic
money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment
Transaction deposits aretiiemodem counterpart of
bank notes. It was a small stepfi-omprinting notes to making book entries crediting deposits of borrowers, which the
borrowers in tum could "spend" by writing checks, fliereby
"printing"tiieirown money.
1 In order to describe the money-creation process as simply as possible, the

term "bank" used in this booldet should be understood to encompass all
depository institutions. Since the Depository Institutions Deregulation and
Monetary Control Act of 1980, all depository institutions have been permitted to offer interest-bearing transaction accounts to certain customers.
Transaction accounts Cuiterest-bearing as well as demand deposits on
which payment of interest is still legally prohibited) at all depository
institutions are subject to the reserve requirements set by the Federal
Reserve. Thus aU such institutions, not just commercial banks, have the
potential for creating money.
Introduction
What limits the Amount of Money Banks

Can Create?
If deposit money can be created so easily, what is to
prevent banks from making too much more than sufficient to keep the nation's productive resourcesfiillyemployed wifliout price mflation? like its predecessor, the
modem bank must keep available, to make payment on
demand, a considerable amount of currency and funds on
deposit wifhfliecentral bank. The bank must be prepared
to convert deposit money into currency forfliosedepositors who request currency. It must make remittance on
checks written by depositors and presented for payment
by oflier banks (setfle adverse clearings). Fmally, it must
maintain legally required reserves, inflieform of vault cash
and/or balances at its Federal Reserve Bank, equal to a
prescribed percentage of its deposits.
The public's demand for currency varies greatly, but
generally follows a seasonal pattern that is quite predictable. The effects on bankfimdsof these variations in flie
amount of currency held by the public usually are offset by
the central bank, which replacestiiereserves absorbed by
currency withdrawalsfi-ombanks. Oust howtiiisis done
wifl be ejqjlained later.) For all banks taken togetiier, tiiere
is no net drain offimdstiu-oughclearings. A check drawn
on one bank normally will be deposited to the credit of
anotiier account, if not intiiesame bank, then in some
other bank.
These operating needs influence the minimum
amount of reserves an individual bank will hold voluntarily.
However, as long as this minimum amount is less than
what is legally required, operating needs are of relatively
minor importance as a restraint on aggregate deposit expansion in the banking system. Such expansion cannot
continue beyond the point where the amount of reserves
tiiat all banks have is just sufficient to satisfy^ legal requirements under our "fractional reserve" system. For example,
if reserves of 20 percent were required, deposits could
expand only untilflieywerefivetimesas large as reserves.
Reserves of $10 million could support deposits of $50 million. The lower the percentage requirement,tiiegreater
tiie deposit expansion that can be supported by each additional reserve dollar. Thus, the legal reserveratiotogetiier
with the dollar amount of bank reserves are the factors that
set the upper limit to money creation.
What Are Bank Reserves?
Currency held m bank vaults may be counted as
legal reserves as well as deposits (reserve balances) at tiie
Federal Reserve Banks. Both are equally acceptable in
satisfaction of reserve requirements. A bank can always
obtain reserve balances by sending currency to its Reserve
Bank and can obtain currency by drawing on its reserve
balance. Because eitiier can be used to support a much
larger volume of deposit liabilities of banks, currency in
circulation and reserve balances together are often referred to as "high-powered money" ortiie"monetary base."
Reserve balances and vault cash in banks, however, are not
counted as part of the money stock held by the public.
For individual banks, reserve accounts also serve as

working balances.^ Banks may increase the balances in
tiieir reserve accounts by depositing checks and proceeds
fi-om electi-onic funds h^sfers as well as currency. Or
they may draw downtiiesebalances by writing checks on
tiiem or by autiiorizing a debit totiiemin payment for
currency, customers' checks, or other funds transfers.
Altiiough reserve accounts are used as working
balances, each bank must maintain, ontiieaverage for the
relevant reserve maintenance period, reserve balances at
tiie Reserve Bank and vault cash which togetiier are equal
to its required reserves, as determined by the amount of
its deposits in the reserve computation period.
Where Do Bank Reserves Come From?
Increases or decreases in bank reserves can result
fi-om a number offactorsdiscussed later in this booklet
From the standpoint of money creation, however, the
essential point is thatttiereserves of banks are, for tiie
most part, liabilities oftiieFederal Reserve Banks, and net
changes intiiemare largely determined by actions of ttie
Federal Reserve System. Thus,ttieFederal Reserve,
through its ability to vary bothtiietotal volume of reserves
andttierequiredratioof reserves to deposit liabilities,
influences banks' decisions witii respect totiieirassets and
deposits. One of the major responsibilities oftiieFederal
Reserve System is to providetiiebital amount of reserves
consistent witiittiemonetary needs of the economy at
reasonably stable prices. Such actions take into consideration, of course, any changes in the pace at which money
is being used and changes in the pubUc's demands for
cash balances.
The reader should be mindfiilttiatdeposits and
reserves tend to expand simultaneously and that the Federal Reserve's conh-ol often is exerted through the marketplace as individual banksfindit either cheaper or more
expensive to obtaintiieirrequired reserves, depending on
the willingness of the Fed to support the currentrateof
credit and deposit expansion.
While an indivddual bank can obtain reserves by
biddingttiemawayfi-omother banks,tiiiscannot be done
bytiiebanking system as a whole. Except for reserves
borrowed temporarilyfi-omthe Federal Reserve's discount
window, as is shown later, the supply of reserves in tiie
banking system is controlled by the Federal Reserve.
Moreover, a given increase m bank reserves is not
necessarily accompanied by an expansion in money equal
to thetiieoreticalpotential based ontiierequiredratioof
reserves to deposits. What happens to the quantity of
^Part of an individual bank's reserve account may represent its reserve

balance used to meet its reserve requirements while another part may be
its required clearing balance on which earnings credits are generated to
pay for Federal Reserve Bank services.
money will vary, depending upon the reactions of the

banks and the public. A number of slippages may occur.
What amount of reserves will be drained mto the public's
currency holdings? To what extent willflieincrease in
total reserves remain unused as excess reserves? How
much will be absorbed by deposits or other liabilities not
defined as money but against which banks might also have
to hold reserves? How sensitive are the banks to policy
actions oftiiecentral bank? The significance of tiiese
questions will be discussed later in this booklet The answers mdicate why changes in the money supply may be
different than expected or may respond to policy action
only after considerable time has elapsed.
In the succeeding pages, the effects of various transactions on the quantity of money are described and illus^
tinted. The basic working tool is the T " account which
provides a simple means of hîcing, step by step,ttieeffects
oftiiesetransactions on both the asset and liability sides of
bank balance sheets. Changes in asset items are entered
ontiieleft half oftiieT ' and changes in liabilities on tiie
right half. For any one transaction, of course, there must
be at least two entries in order to maintain the equality of
assets and liabilities.
Bank DepositsHow They Expand or Contract

Let us assume that expansion in the money stock is
desired by the Federal Reserve to achieve its policy objectives. One way the central bank can initiate such an expansion is through purchases of securities in the open market
Payment for the securities adds to bank reserves. Such
purchases (and sales) are called "open market operations."
How do open market purchases add to bank reserves
and deposits? Suppose the Federal Reserve System,
through its trading desk at the Federal Reserve Bank of
New York, buys $10,000 of Treasury bills from a dealer in
U.S. govemment securities.' In today's world of computerizedfinancialtransactions, the Federal Reserve Bank
pays for the securities with an "electronic" check drawn
on itselt^ Via its "Fedwire" transfer network, the Federal
Reserve notifiesfliedealer's designated bank (Bank
that payment for tiie securities should be credited to (deposited in)tiiedealer's account at Bank A. At the same
time, Bank A's reserve account attiieFederal Reserve
is credited for the amount of the securities purchase.
The Federal Reserve System has added $10,000 of securities to its assets, which it has paid for, in effect by creating
a liability on itself in the form of bank reserve balances.
These reserves on Bank A's books are matched by
$10,000 offliedealer's depositstiiatdid not east before.
See illustration 1.
How the Multiple Expansion Process Works
Iftiiieprocess ended here, there would be no "multiple" expansion, i.e., deposits and bank reserves would
have changed by the same amount However, banks are
required to maintain reserves equal to only afimctionof
their deposits. Reserves in excess oftiiisamount may be
used to increase earning assets loans and investments.
Unused or excess reserves earn no interest Under current
regulations, the reserve requirement against most bmisaction accounts is 10 percenf* Assuming, for simpUcity, a
uniform 10 percent reserve requirement against all transaction deposits, and further assuming that all banks attempt
to remainfiillyinvested, we can nowti^cethe process of
ejqiansion in deposits which can take place on the basis of
tiie additional reserves provided bytiieFederal Reserve
System's purchase of U.S. govemment securities.
The expansion process may or may not begin with
Bank A, depending on what the dealer does with the money received from the sale of securities. Iftiiedealer immediately writes checks for $10,000 and all oftiiemare
deposited in oflier banks. Bank A loses bofli deposits and
reserves and shows no net change as a result of the System's open market purchase. However, other banks have
received tiiem. Most likely, a part of the initial deposit will
remain with Bank A, and a part will be shifted to otiier
banks as the dealer's checks clear.
It does not really matter where tiiis money is at any

giventime.The important fact istiiatthese deposits do not
disappear. They are in some deposit accounts at all times.
All banks together have $10,000 of deposits and reserves
tiiat they did not have before. However, they are not
Inquired to keep $10,000 of reserves againsttiie$10,000
of deposits. All they need to retain, under a 10 percent
reserverequirementis $1,000. The remaining $9,000 is
"excess reserves." This amount can be loaned or invested.
See illustration 2.
If business is active,tiiebanks witii excess reserves
probably will have opportunities to loan the $9,000. Of
course, they do not really pay out loans fromfliemoney
tiiey receive as deposits. Iftiieydid this, no additional
money would be created. What they do whentiieymake
loans is to accept promissory notes in exchange for credits
to the borrowers' hnnsaction accounts. Loans (assets)
and deposits (Uabilities) bothriseby $9,000. Reserves are
unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the
banking system. See illustration 3.
'Dollar amounts used in the various illustrations do not necessarily bear

any resemblance to actual transactions. For example, open market operations typically are conducted with many dealers and in amounts totaling
several billion dollars.
Îndeed, many transactions today are accomplished through an electroiuc
transfer of funds between accounts rather than through issuance of a paper
check. Apart from the timing of posting, the accounting entries are the
same whether a transfer is made with a paper check or electronically. The
term "check," therefore, is used for" boUi types of transfers.
'For each bank, the reserve requirement is 3 percent on a specified base
amount of transaction accounts and 10 percent on the amount above tliis
base. Initially, the Monetary Control Act set this base amountcalled the
"low reserve tranche" at $25 million, and provided for it to change
annually in line with the growth in transaction deposits nationally. The low
reserve tranche was $41.1 million in 1991 and $42.2 million in 1992. The
Gam-St Germain Act of 1982 further modified these requirements by
exempting thefirst$2 million of reservable liabilities from reserve requirements. Like the low reserve b^che, the exempt level is adjusted each year
to reflect growth in reservable liabilities. The exempt level was $3.4 million
in 1991 and $3.6 million in 1992.
Deposit Expansion
When the Federal Reserve Bank purchases govemment securities, bank reserves increase. This happens
because the seller of the securities receives payment through a credit to a designated deposit account
at a bank (Bank A) which the Federal Reserve effects by crediting the reserve account of Bank A
F E D E R A L RESERVE
BANK
Assets
U.S. govemment
securities
+ 10,000
Liabilities
Assets
Liabilities
Reserves with
Reserve accounts:
Bank A
+10,000-4- F.R. Banks
+ 10,000
Customer
deposit
+ 10,000
The customer deposit at Bank A likely will be transferred, in part, to other banks and quickly loses its identity amid the huge
interbankflowof deposits.
As a result, all banks taken together now have

"excess" reserves on which deposit expansion
can take place.
Total reserves gained from new deposits

less: Required against new deposits
, Jf^Ôp^^^)
10,000
- i ^
equals: Excess reserves
9,000
ExpansionStage 1
Expansion takes place only if the banks that hold

these excess reserves (Stage 1 banks) increase
flieir loans or investments. Loans are made by
crediting the borrower's deposit accoimt, i.e.,
by creating additional deposit money.
STAGE
Liabilities
Assets
Loans
BANKS
9,000
Borrower
deposits
+ 9,000
Deposit Etpaxsion and Contraction
This is the beginning of the deposit expansion process.

In thefirststage offlieprocess, total loans and deposits of
the banks rise by an amount equal to the excess reserves
existing before any loans were made (90 percent of the
initial deposit increase). At the end of Stage 1, deposits
have risen a total of $19,000 (tiie initial $10,000 provided
bytiieFederal Reserve's action plustiie$9,000 in deposits
created by Stage 1 banks). See illustration 4. However,
only $900 (10 percent of $9,000) of excess reserves have
been absorbed by the additional deposit growth at Stage 1
banks. See illustration 5.
The lending banks, however, do not expect to retain
tiie deposits they create through their loan operations.
Borrowers write checks that probably wiU be deposited in
otiier banks. Astiiesechecks move through the collection
process,tiieFederal Reserve Banks debittiiereserve
accounts of the paying banks (Stage 1 banks) and credit
tiiose of the receiving banks. See illustration 6.
Whetiier Stage 1 banks actually do lose the deposits
to other banks or whetiier any or all of the borrowers'
checks are redeposited intiiesesame banks makes no
difference in the expansion process. If the lending banks
expect to lose these deposits and an equal amount of
reservesastiieborrowers' checks are paid, they will not
lend more thantiieirexcess reserves. Liketiieoriginal
$10,000 deposit,tiieloan-created deposits may be ti-ansferred to other banks, but they remmn somewhere in the
banidng system. Whichever banks receive them also
acquire equal amounts of reserves, of which all but 10
percent will be "excess."
Assuming that the banks holding the $9,000 of deposits created in Stage 1 in tum make loans equal to their
excess reserves, then loans and deposits willriseby a
fiuther $8,100 infliesecond stage of expansion. This
process can continue until deposits haverisento the point
where alltiiereserves provided by tiie initial purchase of
govemment securities by the Federal Reserve System are
just sufficient to satisfy reserve requirements against flie
newly created deposits. (See pages 10 and 11.)
The individual bank, of course, is not concemed as
to the stês of expansion in which it may be participating.
Inflows and outflows of deposits occur continuously. Any
deposit received is new money, regardless of its ultimate
source. But if bank policy is to make loans and investments equal to whatever reserves are in excess of legal
requirements,tiieexpansion process will be carried on.
How Much Can Deposits Expand
m the Banking System?
The total amount of expansiontiiatcan take place
is illustiated on page 11. Carried through to tiieoretical
limits,tiieinitial $10,000 of reserves distiibuted within flie
banking system givesriseto an expansion of $90,000 in
bank credit Qoans and investments) and supports a total of
$100,000 in new deposits under a 10 percent reserve requirement The deposit expansionfactorfor a given
amount of new reserves is thus the reciprocal oftiierequired reserve percentage (I/.IO = 10). Loan expansion
will be less by the amount oftiieinitial injection. The multiple ejqKuision is possible because the banks as a group
are like one large bank in which checks drawn against
borrowers' deposits resuk in credits to accounts of other
depositors, with no net change in total reserves.
E^qpansion throu^ Bank Investments
Deposit expansion can proceedfi-ominvestments
as well as loans. Suppose that the demand for loans at
some Stage 1 banks is slack. These banks would flien
probably purchase securities. If the sellers oftiiesecurities
were customers,tiiebanks would make payment by crediting the customers' transaction accounts; deposit liabilities
wouldrisejust as if loans had been made. More likely,
tiiese banks would purchase the securitiestiiroughdealers, paying fortiiemwitii checks on themselves or on their
reserve accounts. These checks would be deposited in
flie sellers' banks. In either case,tiienet effects on tiie
banidng system are identical with those resulting fi"om
loan operations.
As a result of the process so far, total assets and

total liabilities of all banks togeflier have risen
19,000.
ALL BANKS
Loans
Total
Excess reserves have been reduced by the

amount required against the deposits created
by the loans made in Stage 1.
Liabilities
Assets
Reserves with
F.R. Banks
+ 10,000
+ 9,000
+ 19,000
Deposits:
Initial
Stage 1
+ 10,000
+ 9,000
Total
+ 19,000
Total reserves gainedfrominitial deposits

less: Required against initial deposits
'ess: Required against Stage I deposits
10,000
1,000
900
_L?^
8,100
Whydothese banksstop increasing their loans

and deposits when they still have excess reserves?
. . .because borrowers write checks on their

accounts at the lending banks. As these checks
are deposited in the payees' banks and cleared,
the deposits created by Stage 1 loans and an
equal amoimt of reserves may be transferred
to other banks.
STAGE
Assets
Reserves with
F.R. Banks
- 9,000
Borrower
deposits
- 9,000
Liabilities
Assets
Liabilities
Reserve accounts:
Stage I banks
Other banks
OTHER BANKS
F E D E R A L RESERVE B A N K
Assets
BANKS
Liabilities
9,000
9,000-
Reserves with
F.l^ Banks
Deposits
+ 9,000
+ 9,000
Deposit expansion has just begun!
Deposit Expansion and Contmetion
Ebqjansion continues as the banks that have

excess reserves increase their loans by that
amount, crediting borrowers'deposit accounts
in the process, thus creating still more money.
STAGE 2 B A N K S
Loans
Now the banking system's assets and liabilities

have risen by 27,100.
+ 8,100
ALL
Total
Borrower
deposits
+ 8,100
BANKS
Uabilities
Assets
Reserves with
F.R. Banks
Loans:
Stage 1
Stage 2
Liabilities
Assets
+ 10,000
+ 9,000
+ 8,100
+ 27,100
Deposits:
Initial
Stage 1
Stage 2
+ 10,000
+ 9,000
+ 8,100
Total
+ 27,100
Butfterear.still7,290ofexcessresen,esinthe
^ts'T^^X^^^'d^'^^^^^^^^
bankmg system.
, ^ Required against Stage I deposits

less: Required against Stage 2 deposits
900
810....
2,710
7,290
1 '
to
Stages
banks
20
As borrowers make payments, these reserves will be further dispersed, and the process can continue through
many more stages, in progressively smaller increments, until the entire 10,000 of reserves have been absorbed
by deposit growth. As is apparent from the sunmiary table on page 11, more than two-thirds of the deposit
ejqiansion potential is reached after thefirstten stages.
It should be understood that the stages of expansion occur neither simultaneously nor in
the sequence described above. Some banks use their reserves incompletely or only after a
considerable time lag, while others expand assets on the basis ofexpected reserve growth.
The process is, in fact, continuous and may never reach its theoretical limits.
Vius through stage afief stage ofexpansion,

"money" can grow to a total oflOîmes the new
reserves supplied to the bankingsystem...
Liabilities
Assets
Reserves
Loansand
Investments
9,000
17,100
24,390
30,951
36,856
42.170
46,953
i51,2S8
55,132
58,619
Deposits
10,000
19,000
27,100
34,390
40,951
46,856
52,170
56,953
61,258
65,132
68,619
1.094
79,058
89,058
90.000
100,000
fRequirecl]
1,000
1,900
2.710
3,439
4,095
4,686
5,217
5,695
6,126
6,513
6,862
[ExcessJ
Initial reserves provided ...

Expansion Stage I
Stage 2
Stage 3
Stage 4
Stage 5
Stage 6
Stage 7
Stage 8
Stage 9
Stage 10
Total
lOvOOO
10.000
10,000
10.000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
Stage 20.
10,000
8.906
Final stage.
10,000
10,000
9,000
8.100
7,290
6,56)
5,905
5,314
4783
4,305
3;8f4-
:307
3,im.
. . . as the new deposits created by loans

at each stage are added to those created at all
earlier stages and those supplied by the initial
resen}e<reativgaction.
100.000
Deposit ExpaMiioH and CoHtfattiofi
How Open Market Sales Reduce Bank Reserves

and Deposits
Now suppose some reduction in the amount of
money is desired. Normally this would reflect temporary
or seasonal reductions in activity to befinancedsince, on
a year-to-year basis, a growing economy needs at least
some monetary expansion. Just as purchases of government securities by the Federal Reserve System can provide the basis for deposit expansion by adding to bank
reserves, sales of securities by the Federal Reserve System
reduce the money stock by absorbing bank reserves. The
process is essentially the reverse of the expansion steps
just described.
SupposetiieFederal Reserve System sells $10,000 of
Treasury billstoa U.S. govemment securities dealer and
receives in payment an "eledronic" check drawn on Bank
A. As this payment is made. Bank A's reserve account at
a Federal Reserve Bank is reduced by $10,000. As a result,
the Federal Reserve System's holdings of securities and
the reserve accounts of banks are both reduced $10,000.
The $10,000 reduction in Bank A's deposit liabilities constitutes a decline in the money stock. See illustration 11.
Contraction Also Is a Cumulative Process
While Bank A may have regained part of the initial
reduction in depositsfi-omother banks as a result of interbank depositflows,all banks taken together have $10,000
less in both deposits and reserves thantiieyhad before
the Federal Reserve's sales of securities. The amount of
reservesfi-eedby tiie decline in deposits, however, is only
$1,000 (10 percent of $10,000). Unlesstiiebankstiiatlose
the reserves and deposits had excess reserves, they are
left witii a reserve deficiency of $9,000. See illustration 12.
Altiiough they may borrowfi-omthe Federal Reserve
Banks to coverfliisdeficiencytemporarily,sooner or later
the banks will have to obtain the necessary reserves in
some other way or reducetiieirneeds for reserves.
One way for a bank to obtain the reserves it needs
is by selHng securities. But, astiiebuyers of tiie securities
pay forfliemwith funds intiieirdeposit accounts in tiie
same or otiier banks, the net result is a $9,000 decfine in
securities and deposits at aU banks. See illustration 13.
At the end of Stage 1 of tiie conti-action process, deposits
have been reduced by a total of $19,000 (tiie initial $10,000
resultingfi-omtiieFederal Reserve's action plusflie$9,000
in deposits extinguished by securities sales of Stage 1
banks). See illustration 14.
However, there is now a reserve deficiency of $8,100
at banks whose depositors drew down their accounts to
purchase the securities from Stage 1 banks. As flie new
group of reserve-defident banks, in tum, makes up tiiis
deficiency by selling securities or reducing loans, furflier
deposit contraction takes pkce.
Thus, conbaction proceeds through reductions in
deposits and loans or investments in one stage after another until total deposits have been reduced to the point
12
where the smaller volume of reserves is adequate to support them. The contraction multiple is tiie same as that
which appHes in the case of expansion. Under a 10 percent
reserve requirement, a $10,000 reduction in reserves would
ultimately entail reductions of $100,000 in deposits and
$90,000 in loans and investments.
As in the case of deposit expansion, contraction of
bank deposits may take place as a result of either sales of
securities or reductions of loans. While some adjustments
of both kinds undoubtedly would be made, the initial impad probably would be refleded in sales of govemment
securities. Most types of outstanding loans cannot be
called for payment priortotheir due dates. But the bank
may cease to make new loans or refiise to renew outstanding onestoreplace those currentiy maturing. Thus, deposits built up by borrowers for the purpose of loan retirement
would be extinguished as loans were repaid.
There is one important difference between the expansion and conh-action processes. When the Federal Reserve
System addstobank reserves, expansion of credit and
deposits may take place up to tiie limits permitted by the
minimum reserve ratio that banks are required to mamtain.
But when tiie System acts to reducetiieamount of bank
reserves, conti:action of credit and deposits must take place
(excepttothe extenttiiatexisting excess reserve balances
and/or surplus vault cash are utilized) to the point where
the required ratio of reserves to deposits is restored. But
tiie significance oftiiisdifference should not be overemphasized. Because excess reserve balances do not earn interest, there is a sb-ong incentive to convert them into earning
assets (loans and investments).
Deposit Contraction
11
When the Federal Reserve Bank sells govemment securities, bank reserves decline. This happens becausetixebuyer
of tiie securities makes payment tiirough a debit to a designated deposit account at a bank (Bank A), witii tiie U-ansfer of
funds being effected by a debit to Bank A's reserve account at flie Federal Reserve Bank.
FEDERAL RESERVE
BANK
Liabilities
U.S. government
securities
Reserves with
Reserve accounts:
Bank A
- 10,000 4 - F . R . Banks
- 10,000
Liabilities
Assets
Assets
- 10,000
Customer
deposit
- 10,000
This reduction in the customer deposit at Bank A may be spread among a number of banks through interbank deposit flows.
12
The loss of reserves means tiiat all banks taken
Total reserves kwtfromdeposit witfidrawal
10.000
togetiier now have a reserve deficiency.
"^^J^^
'^^^
equals: Deficiency Inreservesagainst remaining deposits.
9,000
ContractionStage 1
1D
The banks with the reserve deficiencies (Stage 1

banks) can sell government securities to acquire
reserves, but this causes a decline in tiie deposits
and reserves of tiie buyers' banks.
STAGE
Liabilities
Assets
U.S. govemment
securities
Reserves with
-F.R. Banks
- 9,000
+ 9,000
OTHER
FEDERAL RESERVE BANK
Assets
7^
Liabilities
Assets
Reserve accounts:
Stage I banks + 9,000
Other banks
- 9,000
Reserves with
F.R. Banks
As a result of the process so far, assets and total

deposits of all banks togetiier have declined 19,000.
Stage 1 contraction has freed 900 of reserves, but
there is still a reserve deficiency of 8,100.
I BANKS
BANKS
Liabilities
Deposits
- 9,000
- 9.000
ALL
BANKS
Assets
Liabilities
Reserves with
F.R. Banks
- 10,000
U.S. govemment
securities
Total
Deposits:
Initial
Stage 1
- 10,000
- 9,000
- 9,000
- 19,000
Total
- 19,000
Further contraction must take place!
Deposit Expansion and Contraction
Bank ReservesHow They Change

Money has been defined as the sum of transaction
accounts in depository institutions, and currency and travelers checks in the hands of the public. Currency is something almost everyone uses every day. Therefore, when
most peoplefliinkof money, they think of currency. Contrary to this popular impression, however, transaction
deposits aretiiemost significant part of the money stock.
People keep enough currency on hand to effect small faceto-face transactions, but they write checks to cover most
large expenditures. Most businesses probably hold even
smaller amounts of currency in relation to their total transactions than do individuals.
Since the most important component of money is
htansaction deposits, and since these deposits must be supported by reserves, tiie central bank's influence over money hinges on its control over the total amount of reserves
and the conditions under which banks can obtain them.
The preceding illusb-ations of the expansion and
contraction processes have demonstrated how the central
bank, by purchasing and selling govemment securities,
can deUberately change aggregate bank reserves in order
to affect deposits. But open market operations are only
one of a number of kinds of transactions or developments
that cause changes in reserves. Some changes originate
from actions taken by the public, by the Treasury Department, by the banks, or by foreign and intemational institutions. Other changes arisefromthe servicefimctionsand
operating needs offlieReserve Banks tiiemsehres.
The variousfactorsthat provide and absorb bank
reserve balances, togeflier with symbols indicating the
effects of these developments, are listed on the oppoate
page. This tabulation also indicates the nature of the balancing entries on the Federal Reserve's books. (To the
extent thatflieimpact is absorbed by changes in banks'
vault cash, the Federal Reserve's books are unaffected.)
Independent Factors Versus Policy Action
It is apparent that bank reserves are affected in several ways that are independent oftiiecontrol of the central
bank. Most of these "independent" elements are changing
more or less continually. Sometimes their effects may last
only a day or two before being reversed automatically.
This happens, for instance, when bad weather slows up the
check collection process, givingriseto an automatic increase in Federal Reserve credit in the form of "float"
Oflier influences, such as changes in the public's currency
holdings, may persist for longer periods of time.
Still other variations in bank reserves result solely
from the mechanics of institutional arrangements among
tiie Treasury,tiieFederal Reserve Banks, and the depository institutions. The Treasury, for example, keeps part of
its operating cash balance on deposit with banks. But
virtually all disbursements are madefromits balance in
14
the Reserve Banks. As is shown later, any buildup in balances atflieReserve Banks prior to expenditure by tiie
Treasury causes a dollar-for-dollar drain on bank reserves.
In conti-ast to these independent elements that affect
reserves are the policy actions taken by the Federal Reserve System. The way System open market purchases and
sales of securities affect reserves has already been described. In addition, there are two otiier ways in which the
System can affect bank reserves and potential deposit volume directiy:firstthrough loans to depository institutions;
and second, through changes in reserve requirement percentages. A change in the required reserveratio,of course,
does not alter the dollar volume of reserves directiy but
does change the amount of depositstiiata given amount of
reserves can support
Any change in reserves, regardless of its origin, has
the same potential to affect deposits. Therefore, in order to
achieve the net reserve effects consistent with its monetary
policy objectives, the Federal Reserve System continuously
must take account of what the independentfactorsare
doing to reserves and then, using its policy tools, offset or
supplement them as the situation may require.
Byfarthe largest number and amount oftiieSystem's gross open market transactions are undertaken to
o ^ t drainsfromor additions to bank reservesfromnonFederal Reserve sources that might otherwise cause abmpt
changes in credit avaifability. In addition. Federal Reserve
purchases and/or sales of securities are made to provide
the reserves needed to support therateof money growtii
consistent wifli monetary policy objectives.
In this section of the booklet several kinds of ti-ansactions that can have important week-to-week effects on
bank reserves are traced in detail. Oflier factorstiiatnormally have only a small influence are described briefly on
page 35.
Factors Cka/ii^
Reserve BdUmces-Îndependent and Policy AMom
Assets
Liabilities
Reserve
balances
Public actions
Increase in currency tioldings....
Decrease in currency holdings..
+
-
Treasury, bank, and foreign actions

Increase In Treasury deposits in F.R. Banks
Decrease in Treasury deposits in F.R. Banks
Gold purchases (inflow) or increase in official valuation*
Gold sales (outflow)*
increase in SDR certificates issued*
Decrease in SDR certificates issued*
Increase in Treasury currency outstanding*
Decrease in Treasury currency outstanding*
Increase in Treasury cash holdings*
Decrease in Treasury cash holdings*
increase in service-related balances/adjustments
Decrease in service-related balances/adjustments
Increase in foreign and other deposits in F.R. Banks
Decrease in foreign and other deposits in F.R. Banks ....
Federal Reserve actions
Purchases of securities
Sales of securities
Loons to depository institutions
Repoyment of loans to depositoiy institutions
increase in Federal Reserve float
Decrease in Federal Reserve float
Increase in assets denominated in foreign currencies....
Decrease in assets denominated in foreign currencies .
increase in other assets**
Decrease in other assets**

increase in other liabilities**
Decrease in other liabilities**
increase in capital accounts**
Decrease in capital accounts**
Other
-1-
+
+
+
+
+
+
-
+
+
+
+
-
increase in reserve requirements ...

Decrease in reserve requirements.
* These factors represent assets and liabilities of the Treasury. Changes in them typically affea reserve balances through
a related change in the Federal Reserve Banks' liability "Treasury deposits."
** Included in "Other Federal Reserve accounts" as described on page 35.
*** Effect on excess reserves. Total reserves are unchanged.
Note: To the extent that reserve changes are in the form of vault cash. Federal Reserve accounts are not affected.
Factors Affecting Bank Reserves
Changes in the Amount of

Currency Held by the Public
Currency held by the public

weekly averages, billions of dollars, not seasonally adjusted
280
Changes in the amount of currency held by the

public typically follow a fairly regular intramonthly pattern.
Major changes also occur over holiday periods and during
the Christmas shopping season times when people find
it convenient to keep more pocket money on hand. (See
chart.) The public acquires currencyfi-ombanks by cashing checks.* When deposits, which arefi-actionalreserve
money, are exchanged for currency, which is 100 percent
reserve money, the banking system experiences a net
reserve drain. Under the assumed 10 percent reserve
requirement, a given amount of bank reserves can support
deposits ten times as great but when drawn upon to meet
currency demand, the exchange is one to one. A $1 increase in currency uses up $1 of reserves.
Suppose a bank customer cashed a $100 check to
obtain currency needed for a weekend holiday. Bank
deposits decline $100 because the customer pays for the
currency with a check on his or her transaction deposit
and the bank's currency (vault cash reserves) is also reduced $100. See illustration 15.
Now the bank has less currency. It may replenish
its vault cash by ordering currency from its Federal Reserve Bank making payment by authoriang a charge
to its reserve account On the Reserve Bank's books, the
charge against the bank's reserve account is offset by an
increase in the liability item "Federal Reserve notes." See
illustration 16. The Reserve Bank shipment to the bank
might consist at least in part, of U.S. coins rather than
Federal Reserve notes. All coins, as well as a small amoimt
of paper currency still outstanding but no longer issued,
are obligations of the Treasury. To the extent that shipments of cash to banks are in the form of coin, the ofeetting entry on the Reserve Bank's books is a declme in its
asset item "coin."
The public now hasfliesame volume of money as
before, except that more is inflieform of currency and
less is inflieform of transaction deposits. Under a 10
percent reserve requirement the amount of reserves required against the $100 of deposits was only $10, while a
full $100 of reserves have been drained away by the disbursement of $100 in currency. Thus, if the bank had no
excess reserves, the $100 withdrawal in currency causes a
reserve deficiency of $90. Unless new reserves are provided from some otiier source, bank assets and deposits
will have to be reduced (according to the contraction process described on pages 12 and 13) by an additional $900.
At that point the reserve deficiency caused by the cash
withdrawal would be eliminated.
When Currency Returns to Banks, Reserves Rise
Afler holiday periods, currency returns to the banks.
The customer who cashed a check to cover antidpated
cash expenditures may later redeposit any currency still
heldtiiafs beyond normal pocket money needs. Most of it
16
1991
260
240
1990
220
1989
.1.. .
200
Feb.
Apr.
June
Aug.
r
Oct.
Deo.
probably wil have changed hands, and it will be deposited

by operators of motels, gasoline stations, restaurants, and
retail stores. This process is exactlytiiereverse of the
currency drain, excepttiiatthe banks to which currency
is retumed may not be the same banks that pdd it out
But in the aggregate,fliebanks gain reserves as 100
percent reserve money is converted back into fractional
reserve money.
When $100 of currency is returned to the banks,
deposits and vault cash are increased. See illustration 17.
The banks can keep the currency as vault cash, which also
counts as reserves. More Ukely, the currency will be
shipped to the Reserve Banks. The Reserve Banks credit
bank reserve accounts and reduce Federal Reserve note
liabilities. See illustration 18. Since only $10 must be held
against the new $100 in deposits, $90 is excess reserves
and can giveriseto $900 of additional deposits.'
To avoid multiple conh-action or expansion of deposit
money merely because the public wishes to change the
composition of its money holdings, the effects of changes
intiiepublic's currency holdings on bank reserves normally are offset by System open market operations.
'The same balance sheet entries apply whether the individual physically
cashes apaper check or obtains currency by withdrawing cash through an
automadc teller machine.
'Under current reserve accounting regulations, vault cash reserves are
used to satisfy reserve requirements in a future maintenance period while
reserve balances satisfy requirements in the current period. As a result,
the impact on a bank's current reserve position may differfromthat shown
unless the bank restores its vault cash position in the current period via
changes in its reserve balance.
75
When a depositor cashes a check, both

deposits and vault cash reserves decline.
Liabilities
Assets
Vault casii
reserves
[Required
16
Deposits
-100
-100
-'11
90j
If the bank replenishes its vault cash, its account at the Reserve Bank is drawn down in exchange for notes
issued by the Federal Reserve.
F E D E R A L R E S E R V E BANK
Assets
/y
Uabilities
Liabilities
Assets
Reserve accounts:
Bank A
F.R. notes
Vault cash
+ 100
Reserves with
R. Banks
-100
-100
+100
When currency comes back to the banks, both

deposits and vault cash reserves rise.
Liabilities
Assets
Vault cash
reserves
[Required
[Excess
JS
Deposits
+ 100
+ 100
+iol
+90]
If the currency is retumed to the Federal Reserve, reserve accounts are credited and Federal Reserve
notes are taken out of circulation.
Assets
Reserve accounts:
Bank A
F.R. notes
Liabilities
Assets
Liabilities
+ 100
-100
Vault cash
Reserves with
Res(
- F . R . Banks
-100
+ 100
17
Changes in U.S. Treasury

Deposits in Federal Reserve Banks
Reserve accounts of depository institutions constitute the bulk oftiiedeposit liabilities of the Federal Reserve System. Otiier institutions, however, also maintain
balances in the Federal Reserve BanksmainlyflieU.S.
Treasury, foreign central banks, and intemational financial
institiitions. In general, whentiiesebalances rise, bank
reserves fall, and vice versa. This occurs because flie
fiinds used by these agencies to build up their deposits in
the Reserve Banks ultimately come from deposits in
banks. Conversely, recipients of payments from these
agencies normally deposit the funds in banks. Through
die collection process these banks receive credit to their
reserve accounts.
The most important nonbank depositor istiieU.S.
Treasury. Part of the Treasury's operating cash balance
is kept intitieFederal Reserve Banks; the rest is held in
depository institutions all over the country, in socalled
Treasury tax and loan" (TT&L) note accounts. (See
chart.) Disbursements by the Treasury, however, are
made against its balances at the Federal Reserve. Thus,
transfersfi-ombanks to Federal Reserve Banks are made
through regularly scheduled "calls" on TT&L balances to
assure that sufBcientfiindsare available to cover Treasury
checks as they are presented for payment*
Bank Reserves Decline as tlie Treasury's Deposits
at tlie Reserve Banks Increase
Calls on TT&L note accounts drain reserves from
the banks by thefiiUamount offlietransfer asfiindsmove
fi-om the TT&L balances ( m charges to bank reserve
accounts) to Treasury balances at the Reserve Banks.
Because reserves are not required against TT&L note
accounts, these transfers do not reduce required reserves.'
Suppose a Treasury call payable by Bank A amounts
to $1,000. The Federal Reserve Banks are authorized to
h-ansfer the amount of the Treasury call from Bank A's
reserve account at the Federal Reserve to flie account of
the U.S. Treasury af the Federal Reserve. As a result of
tiie transfer, botii reserves and TT&L note balances of tiie
bank are reduced. On the books of the Reserve Bank,
bank reserves decline and Treasury depositsrise.See
illustration 19, This withdrawal of Treasuryfimdswill
cause a reserve deficiency of $1,000 since no reserves are
released by the decline in TT&L note accounts at depository institutions.
Bank Reserves Rise as the Treasury's Deposits
at the Reserve Banks Decline
As the Treasury makes expenditures, checks drawn
on its balances in the Reserve Banks are paid to the public,
and these fundsfindtheu- way back to banks m the form of
deposits. The banks receive reserve credit equal to the full
amount oftiiesedeposits altiiough the corresponding
increase intiieirreqifired reserves is only 10 percent of
this amount
18 I Modern Money Mechanics
Operating cash balance of the U.S. Treasury

TT&L note balances

Balances at Federal
Resen/a Banks
1990
1991
Suppose a govemment employee deposits a $1,000

expense check in Bank A. The bank sends the cheek to
its Federal Reserve Bankfor collection. The Reserve Bank
flien credits Bank A's reserve account and charges the
Treasury's account As a result the bank gains both reserves and deposits. Whiletiiereis no change in the assets or total liabilities oftiieReserve Banks,tiiefimds
drawn awayfi-omtiieTreasury's balances have been shifted to bank reserve accounts. See illustration 20.
One of the objectives oftiieTT&L note program,
which requires depository institutions that want to hold
Treasury funds for moretiianone day to pay interest on
tiiem, is to allowtiieTreasury to hold its balance at the
Reserve Banks totiieminimum consistent with current
payment needs. By maintaining a fmrly constant balance,
large drainsfi-omor additions to bank reservesfi-omwide
swings in the Treasury's balancetiiatwould require extensive offsetting open market operations can be avoided.
Nevertheless, there are still periods when these fluctuations have large reserve effects. In 1991, for example,
week-to-week changes in Treasury deposits at the Reserve
Banks averaged only $56 miflion, but rangedfi-om-$4.15
baiion to f$8.57 billion.
When theTreasuiy's balance at the Federal Reserve rises above expected:

payment needs, the Treasury may place the excess funds in TT&L,note:
accounts through, a "direct ,investment" The aeeoiJiitog entries are the
same, but of opposite signs, as those shown when fimds are transferred;
from TT&L note accounts to Treasury deposits at the Fed.
'Taxpayments received by institutions designated as Federal tax depositaries initially are credited to reservable demand deposits due to the U.S.
govemment Because such tax payments typically comefromreservable;
transaction accounts, required reserves are not materially affected ori liiis:.
day. Onthenextbusinessday,however,whenthesefundsareplacedeitheK
in a nonreservable note account or remitted to the Federal Reserve for;
credit to the Treasury's balance at the Fed, required reserves decline.
.
19
When the Treasury builds up its deposits at the Federal Reserve through "calls" on TT&L note balances,
reserve accounts are reduced.
Assets
Reserve accounts:
Bank A
U.S. Treasury
deposits
70
Uabilities
Assets
Uabilities
Reserves with
-1.000-*- - F . R . Banks
-1
+11,000
[Defidt
1.000
Treasury tax and

loan note account
1.000
1,000,
Checks written on the Treasury's account at the Federal Reserve Bank are deposited in banks. As these are
collected, banks receive credit to their reserve accounts at the Federal Reserve Banks.
Assets
Liabilities
Reserve accounts:
Bank A
U.S. Treasury
deposits
Assets
Reserves with
-i-l,000-4- F.R. Banks
+1,000
fRequM
+/00l
[Excess
+900/
-1.000
Liabilities
Private deposits
+1,000
Ckmges m Federal Reserve Float

A large proportion of checks drawn on banks and
deposited in oflier banks is cleared (collected)fliroughflie
Federal Reserve Banks. Some offliesechecks are credited immediately to flie reserve accounts of the depositing
banks and are collectedtiie^me day by debiting tiie
reserve accounts of the banks on which the checks are
drawn. All checle are credited to the accounts of the
depositing banks according to availability schedules
related to thetiflieit normally takesflieFederal Reserve to
collect the checks, but rarely more than two business days
after they are received at the Reserve Banks, even though
tiiey may not yet have been collected due to processing,
transportation, or other delays.
The reserve credit given for checks not yet collected
is included in Federal Reserve "float'"" Ontiiebooks of
the Federal Reserve Banks, balance sheetfloator statementfloatas it is sometimes ealleti, is the difference betweentiieasset account "items in process of coflection,"
andtiieliability account "deferred credit items." Statementfloatis usually positive since it is more often the case
that reserve credit is given beforefliechecks are actually
collected than the ofhenvay around.
Published data on Federal Reservefloatarebased
m a "reserves-fector" frameworkratiierthan a balance
sheet accduntingframework.As published. Federal ReServefloatincludes statementfloatas defined above, as
well asfloat-related"as-of' adjustments." The^ adjustments represent corrections for errors that arise in processing transactions related to Federal Reserve priced
services. A&of adjtistinents do notchangefliebalance
sheets of either the Federal Reserve Banks or an individual bank. Ratiiertiieyare corrections tofliebank's reserve
position, thereby affectingfliecalculation of whetiier or
not the bank meets its reserve requirements.
An Increase in Federal Reserve Float Increases
Bank Reserves
Asfloatrises, total bank reservesriseby the same
amount For example, suppose Bank A receives checks
totaling $100 drawn on Banks B, C, andD, all in distant
cities. Bank A increases the accounts of its depositors
$100, and sends the items to a Federal Reserve Bankfor
collection. Upon receipt ofthe checks, the Reserve Bank
uicreases its own asset account "items in process of collection," and increases its liability account "deferred credit
items" (checks and other items not yet credited to tiie
sending banks' reserve accounts), As long as these two
accounts move together, there is no change infloator in
total reservesfromthis source. See illustration 21.
Ontiienext, business day (assuming Banks B, C,
and D are oneway deferred availability points), the Reserve Bank pays Bank A. I h e Reserve Bank's "deferred
credit items" account is reduced, and Bank A's reserve
account is increased $100. Iftiieseitems actually take
more than one business day to collect sofliat"items in
20
Modem Mom
Mechanics
Federal Reserve float (including as-of adjustments)

annual averages, billions of dollars
0
1971
I I
1976
I I
1981
'
I I
1986
'
1991
process of collection" are not reduced that day.fliecredit

to Bank A represents an addition to total bank reserves
sincefliereserve accounts of Banks B, C, and D will not
have been commensurately reduced.^ See illustration 22.
A Decline in Fedei^ Reserve Float Reduces
Bank Reserves
Only when the checks are achially coDeeted froin
Banks B, C, and D doestiiefloatmvolved in the above example disappear"items in process of collection" of the
Reserve Bank decline as the reserve accounts of Banks B,
C, and D are reduced. See illustration 23.
On an annual average basis. Federal Reserve float
declined dramaticallyfrom1979tiirough1984, in part
reflecting actions taken to implement pro'wsions ofthe
Monetary Conti-ol Act that directedtiieFederal Reserve to
reduce and price float (See chart.) Since 1984, Federal
Reservefloathas been fairly stable on an annual average
basis, but oftenfluctuatessharply over short periods.
Fromtiiestandpoint of the effect on bank reserves, tiie
significant aspect offloatis nottiiatit exists but that its
volume changes ih a difficult-to-predict way. Float can
increase imexpectedly, for example, if weather conditions
ground planes transporting checks to paying banks for
collection. However, such periods typicaEy are followed
by ones where actual collections exceed new items being
received for collection. Thus, reserves gainedfromfloat
expansion usually are quite temporary.
'"Federal Reserve float also arises from other funds transfer services
provided by the Fed, such as wire fransfers, securities transfers, and
automatic clearinghouse transfers.
" Asofadjustments also are used as one means of pricingfloat,as discussed
on page 22, and for nonfloat'i*lated corrections, as discussed on page 35.
"Kthe checks receivedfrom Bank Ahad been erroneously assigned a twoday deferred availability, then neither statementfloatnor reserves would
increase, although both Should. Bank A's reserve position and published
Federal Reservefloatdata are corrected for this and similar errors through
as-of adjustments.
When a bank receives deposits in the form of checks drawn on other banks, it can send them to the Federal
Reserve Bank for collection. (Required reserves are not affected immediately because requirements apply to
net transaction accounts, i.e., total transaction accounts minus both cash items in process of collection and
deposits due from domestic depository institutions.)
Liabilities
Assets
Items in process
of collection
22
+ 100
Deferred
credit items
+ 100
Assets
Liabilities
Cash items in
process
of collection
Deposits
+ 100
+ 100
Iftiiereserve account of the payee bank is credited beforetiiereserve accounts oftiiepaying banks are debited,
total reserves increase.
Liabilities
Assets
Liabilities
Assets
Deferred
credit Items
-100
Reserve accounts:
Banic A
+ 100
Cash items in
process of
collection
Reserves with
F.R. Banks
/Required
[Êxcess
+90/
-100
+ 100
+/o7
23
But upon achial collection oftiieitems, accounts oftiiepaying banks are charged, and total reserves decline.
^^^^^^H
Assets
Items in process
of collection
-100
BANKS
AND D
Liabilities
Assets
Liabilities
Reserve accounts:
BankB
BankC
BankD
Reserves with
F.R. Banks
-100
(Required
-lol
iDefidt
90]
Deposits
-100
^^^^^H
-100
Factors Affecting Bant Reserves
Changes in Service-Related Balances

and Adjustments
Service-related balances and adjustments

In order to foster a safe and efficient payments system,

the Federal Reserve offers banks a variety of payments services. Prior to passage of the Monetary Control Act in 1980,
the Federal Reserve offered its services free, but only to
banks that were members of the Federal Reserve System.
The Monetary Control Act directed the Federal Reserve to
offer its services to all depository institutions, to charge for
these services, and to reduce and price Federal Reserve
floatExcept forfloatall services covered by the Act were
priced by the end of 1982. Implementation offloatpricing
essentially was completed in 1983.
The advent of Federal Reserve priced services led
to several changes that affect the use of funds in banks' reserve accounts. As a result only part oftiietotal balances in
bank reserve accoimts is identified as "reserve balances"
available to meet reserve requirements. Other balances held
in reserve accounts represent "service-related balances and
adjustinents (to compensate forfloat)."Service-related balances are "required clearing balances" held by banks that use
Federal Reserve services while "adjustments" represent balances held by banks that pay forfloatwitii as-of adjustments.
An Increase in Required Clearing Balances
Reduces Reserve Balances
Procedures for estabfishing and maintaining clearing
balances were approved by the Board of Governors of the
Federal Reserve System in February 1981. A bank may be
required to hold a clearing balance if it has no required reserve balance or if its required reserve balance (held to satisfy reserve requirements) is not large enough to handle its
volume of clearings. Typically a bank holds bofli reserve balances and required clearing balances in the same reserve
account Thus, as required clearing balances are established
or increased, the amount offimdsin reserve accounts identified as reserve balances declines.
Suppose Bank A wants to use Federal Reserve services
but has a reserve balance requirement that is less than its
expected operating needs. Witii its Reserve Bank, it is determined that Bank A must maintain a required clearing balance
of $1,000. If Bank A has no excess reserve balance, it will
have to obtainfimdsfrom some other source. Bank A could
sell $1,000 of securities, but this wifl reducetiieamount of
total bank reserve balances and deposits. See illustration 24.
Banks are bifled each month for the Federal Reserve
services they have used witii payment collected on a specified day the following month. AU required clearing balances
held generate "earnings credits" which can be used only to
offset charges for Federal Reserve services." Altemativefy,
banks can pay for services through a direct charge to their
reserve accounts. If accrued earnings credits are used to pay
for services, then reserve balances are unaffected. On the
other hand, if payment for services takes the forth of a direct
charge to the bank's reserve account, then reserve balances
decline. See illustration 25.
22
Modem Money. Mechanics
Float Pricing As-Of Adjustments Reduce

Reserve Balances
In 1983, the Federal Reserve began pricuig explicitiy
for floatspecificaDy "interterritory" checkfloati-e., float
generated by checks deposited by a bank served by one Reserve Bank but drawn on a bank served by another Reserve;
Bank. The depositing bank hastiireeoptions in paying for
uiterterritory checkfloatit generates. It can use its earnings
credits, authorize a direct charge to its reserve account or
pay for thefloatwith an as-of adjustment If either of the first
two options is chosen, the accounting entries are the same as
paying for other priced services. Iftiieas-of adjustment option is chosen, however, the balance sheets oftiieReserve
Banks and the bank are not directiy affected. In effect what
happens is that part oftiietotal balances held ui the bank's
reserve account is identified as being held to compensate the
Federal Reserve for float This part, then, cannot be used to
satisfy either reserve reqmrements or clearing balance requirements. Float pricing asof adjustments are applied two
weeks afterflierelatedfloatis generated. Thus, an individual
bank has sufiScienttimeto obtain fundsfi-omother sources in
order to avoid any reserve deficiencies that might result fi-orn
float pricing as-of adjustinents. If all banks together have no
excess reserves, however, thefloatpricing asof adjustments
lead to a decfine in total bank reserve balances.
Week-to-week changes in service-related balances and
adjustments can be volatile, primarily reflecting adjustments
to compensate for float (See chart.) Since these changes
are known in advance, any undesired impact on reserve balances can be offset easily through open market operations.
"The Act specified tiiat fee schedules cover services such as check
clearing and collection, wire transfer, automated clearinghouse, settlement, securities safekeeping, noncash collection. Federal Reserve float,
and any new serrices ollered.
""Earnings credits" are calculated by multiplying the actual average
clearing balance held over a maintenance period, up to that required plus
the clearing balance band, times a rate based on the average federal fimds
rate. The clearing balance band is 2 percent of the required clearing
balance or $25,000, whichever amount is larger,
''While some types offloatare priced directly, the Federal Reserve prices
other types offloatindirectly, for example, by including the cost offloatin
the per-item fees for the priced service.
2d
When Bank A establishes arequiredclearing

balance at a Federal Reserve Bank by selling
securities, the reserve balances and deposits of
other banks decline.
Liabilities
Assets
U.S. govemment
securities
1,000
Reserve account
with F.R. Banks:
Required clearing
+ 1,000
balance
^^^^^^H
Assets
25
OTHER BANKS
^^^^^H
Liabilities
Assets
Liabilities
Reserve accounts:
Required clearing
balances:
Bank A
+1,000
Reserve balances:
Other banks
-1,000-
Reserve accounts
with F.R. Banks:
Reserve balances -1,000
[Required
-lOOl
[Defidt
900j
Deposits
-1,000
When Bank A is biHed monthly for Federal Reserve services used, it can pay for these services by having
earnings credits applied and/or by authoridng a direct charge to its reserve account Suppose Bank A has
accrued earnings credits of $100 but incm-s fees of $125. Then both methods would be used. On the Federal
Reserve Bank's books, the liability account "earnings credits due to depository institutions" declines by $100
and Bank A's reserve account is reduced by $25. Offsettingtiieseentiles is a reduction inflieFed's (otiier)
asset account "accrued service income." On Bank A's books, the accounting entiies might be a $100 reduction to its asset account "earnings credit duefromFederal Reserve Banks " and a $25 reduction in its reserve
account, which are ofiset by a $125 decline in its liability "accounts payable." While an individual bank may
use different accounting entries, the net effect on reserves is a reduction of $25, the amount of billed fees that
were paid through a direct charge to Bank A's reserve account
Assets
Accrued service
income
-I2S
Liabilities
Assets
Liabilities
Eamings creditt
due to depository
institutions
Accounts
payable
-100
Eamings credits
due from
F.R. Banks
Reserve accounts:
Bank A
Reserves with
- 25 -4- F . R . Banks
-125
-100
- 25
Changes in Loans to
Depository Institutions
Loans to depository institutions

monthly averages, billions of dollars, not seasonally adjusted
Prior to passage of the Monetary Control Act of 1980,

only banks that were members of the Federal Reserve System had regular access to the Fed's "discount window."
Since then, all institutions having deposits reservable under
the Act also have been able to borrow from the Fed. Under
conditions set by the Federal Reserve, loans are available
under three credit programs: adjustment, seasonal, and extended credit'^ The average amount of each type of discount
window credit provided varies over time. (See chart.)
When a bank borrowsfroma Federal Reserve Bank, it
borrows reserves. The acquisition of reserves in this manner
differs in an important wayfromthe cases already illustrated.
Banks normally borrow adjustment credit only to avoid reserve deficiencies or overdrafts, not to obtain excess reserves. Adjustment credit borrowings, therefore, are
reserves on which expansion has already taken place. How
can this happen?
In their efforts to accommodate customers as weU as to
keepfiiUyinvested, banksfrequentiymake loans in anticipation of inflows of loanablefimdsfromdeposits or money
market sources. Loans add to bank deposits but not to bank
reserves. Unless excess reserves can be tapped, banks will
not have enough reserves to meet the reserve requirements
against the new deposits. Likewise, individual banks may
incur defidencies through unexpected deposit outflows and
corresponding losses of reserves through clearings. Otiier
banks receive these deposits and can increase their loans
accordingly, buttiiebankstiiatlost them may not be able to
reduce outstanding loans or investments in order to restore
their reserves to required levels vnthintiierequired time
period. In eitiier case, a bank may borrow reserves temporarilyfromits Reserve Bank.
Suppose a customer of Bank A wants to borrow $100.
On the basis offliemanagement's judgmenttiiattiiebank's
reserves wiU be sufficient to provide the necessary funds, the
customer is accommodated. The loan is made by increasing
"loans" and crediting the customer's deposit account. Now
Bank A's deposits have increased by $100. However, if reserves are insufficient to support the higher deposits. Bank A
will have a $10 reserve deficiency, assuming requirements of
10 percent See illustra tion 26. Bank A may temporarily
borrow the $10fromits Federal Reserve Bank, which makes
a loan by increasing its asset item "loans to depository institutions" and crediting Bank A's reserve account Bank A
gains reserves and a corresponding liabiEty "borrowings from
Federal Reserve Banks." See illustration 27.
To repay borrowing, a bank must gain reserves tiirough
either deposit growth or asset Hquidation. See illustration 28.
A bank makes payment by authorizing a debit to its reserve
account at the Federal Reserve Bank. Repayment of borrowing, therefore, reduces both reserves and "borrowings from
Federal Reserve Banks." See illustration 29.
Unlike loans made under the seasonal and extended
credit programs, adjustment credit loans to banks generally
24
Modem Money .\Uchanics
1985
1987
1989
1991
must be repaid within a shorttimesince such loans are made

primarily to cover needs created by temporaryfluctuationsin;
deposits and loans relative to usual patterns. Adjustments,
such as sales of securities, made by some banks to "get out
oftiiewindow" tend to t-ansfer reserve shortages to otiier
banks and may force these other banks to borrow, especially
in periods of heavy credit demands. Even attimeswhen the
total volume of adjustment credit borrowing isrising,some
individual banks are repaying loans while others are borrowing. Intiieaggregate, adjustment credit borrowing usually
increases in periods of rising business activity when the
pubfic's demands for credit arerisingmore rapidly tiian
nonborrowed reserves are being provided by System open
market operations.
Discount Window as a Tool of Monetary Policy
Altiiough reserve expansion through borrowing is initiated by banks, the amount of reserves that banks can acquire
in this way ordinarily is limited bytiieFederal Reserve's administi-ation oftiiediscount window and by its conh-ol of the
rate charged banks for adjustinent credit loans the discount
rate." Loans are made only for approved purposes, and other
reasonably available sources of funds must have been fiilly
used. Moreover, banks are discouragedfromborrowing adjustinent credit toofrequentiyor for extendedtimeperiods.
Raising the discount rate tends to restrain borrowing by
increasing its cost relative to the cost of alternative sources
of reserves.
Discount window adminisfration is an important adjunct
totiieotiier Federal Reserve tools of monetary policy. While
tiie privilege of borrowing offers a "safety valve" to temporarily
relieve severe sfrains on the reserve positions of individual
banks, there is generally a strong incentive for a bank to repay
borrowing before addingfiirtherto its loans and investinents.
"Adjustment credit is short-term credit available to meet temporary needs
for
Seasonal credit is available for longer periods to smaller institutions having regular seasonal needs for funds. Extended credit may be made
available to an institution or group of institutions experiencing sustained,
liquidity pressures. The reserves provided through extended credit borrow?
ing typically are offset by open market operations.
Kinds.
"Flexible discount rates related to rates on money market sources of funds

currently are chargedlor seasonal credit andfor extended credit outstanding
more than 30 days.
2^
A bank may incur a reserve d^ciency if it makes

loans when it has no excess reserves.
Liabilities
Assets
Loans
Reserves with
F.R. Banl<s
(Required
[pefidt
27
+ 100
+ 100
Deposits
no change
+io'
lOj
Borrowing from a Federal Reserve Bank to cover such a deficit is accompanied by a direct credit to the
bank's reserve account
Assets
Liabilities
Loans to depository
institutions:
Bank A
Reserve accounts:
Bank A
Liabilities
Assets
+ 10^
Reserves with
F.R.Banks
+ 10
Borrowings from
F.R. Banks
+ 10
+ 10
Noftirtherexpansion can take place on the new reserves because they are all needed against the deposits created in (26).
28
Before a bank can repay borrowings, it must

gain reservesfi-omsome other source.
^^^^^H
Liabilities
Assets
Securities
Reserves with
F.R. Banks
29
^^^^^^B
BANK A
- 10
+ 10
Repayment of borrowingsfi-omthe Federal Reserve Bank reduces reserves.
Loans to depository
Institutions:
Bank A
Reserve accounts:
Bank A
Liabilities
Assets
Liabilities
Assets
- 10 4
Reserves with
F . R . Banks
10
Borrowings from
F.R. Banks
- 10
- 10
Changes in Reserve Requirements

Thus far we have described transactions that affect the
volume of bank reserves and the impact these transactions
have upon the capacity offliebanks to expandflieirassets
and deposits. It is also possible to influence deposit expansion or contraction by changing the required minimum ratio
of reserves to deposits.
The authority to vary required reserve percentages for
banks that were members oftiieFederal Reserve System
(member banks) wasfirstgranted by Congress to the Federal Reserve Board of Governors in 1933. The ranges wthin
which this authority can be exerdsed have been changed
severaltimes,most recently ui the Monetary Conti-ol Ad of
1980, which provided for the estabUshment of reserve requirements that appfy uniformly to all depository institutions.
The 1980 statute estabUshed the following fimits:
On transaction accounts
first $25 million
above $25 million
On nonpersonal time deposits
3%
8% to 14%
0%to9%
The 1980 law initially set the requirement against fi-ansaction

accounts over $25 milHon at 12 percent and that against
nonpersonaltimedeposits at 3 percent The initial $25 million "low reserve tranche" was indexed to change each year
in line with 80 percent of the growth in transaction accounts
at all depository institutions. (For example, the low reserve
tranche was increased from $41.1 milHon for 1991 to $42.2
million for 1992.) In addition, reserve requirements can be
imposed on certain nondeposit sources of fimds, such as
Eurocurrencyfiabifities.^'(InitiallytiieBoard set a 3 percent
requirement on Eurocurrency liabilities.)
The Gam-St (Jermain Ad of 1982 modified these provisions somewhat by exempting from reserve requirements
fliefirst$2 milUon of total reservable liabifities at each depository institution. Similar totiielow reserve tranche adjustment for transaction accounts, the $2 miUion "reservable
Habifities exemption amount" was indexed to 80 percent of
annual increases in total reservable liabilities. (For example,
the exemption amount was increased from $3.4 milHon for
1991 to $3.6 milHon for 1992.)
The Federal Reserve Board is autiiorized to change, at
its discretion, the percentage requirements on transaction
accounts above the low reserve tranche and on nonpersonal
time deposits witiiin the ranges indicated above. In addition,
tiie Board may impose differing reserve requirements on
nonpersonaltimedeposits based on the maturity ofthe deposit (Jhe Board initially imposed the 3 percent nonpersonal time deposit requirement only on such deposits witii
original maturities of under four years.)
Duringtiiephase-in period, which ended in 1984 for
most member banks and in 1987 for most nonmember institutions, requirements changed according to a predetermined
schedule, without any action by the Federal Reserve Board.
Apartfi-omtiieselegaDy prescribed changes, oncetiieMonetary Control Ad provisions were implemented in late 1980,
26
tiie Board did not change any reserve requirement ratios until
late 1990. (The original matiirity break for requirements on
nonpersonaltimedeposits was shortened several times, once
in 1982 and twice in 1983, in connection with actions taken to
deregulate rates paid on deposits.) In December 1990, flie
Board reduced reserve requirements against nonpersonal
time deposits and Eurocurrency Habifitiesfi-om3 percent to
zero. Effective in April 1992,tiiereserve requirement on
transaction accounts above the low reserve tranche was lowered from 12 percent to 10 percent
"When reserve requirements are lowered, a portion of
banks' existing holdings of required reserves becomes excess
reserves and may be loaned or invested. For example, with a
requirement of 10 percent $10 of reserves would be required
to support $100 of deposits. See illustration 30. But a reduction in the legal requirement to 8 percent wouldtieup only $8,
freeing $2 out of each $10 of reserves for use in creating additional bank credit and deposits. See illustration 31.
An increase in reserve requirements, on the other hand,
absorbs additional reservefimds,and banks which have no
excess reserves must acquire reserves or reduce loans or
uivestments to avoid a reserve defidency. Thus an increase
in the requirementfi-om10 percent to 12 percent would boost
required reserves to $12 for each $100 of deposits. Assunung
banks have no excess reserves, this would force them to
Hquidate assets until the reserve deficiency was eHminated,
at which point deposits would be one-sbctii less than before.
See illustration 32.
Reserve Requirements and Monetaiy Policy
The power to change reserve requirements, Hke purchases and sales of securities bytiieFederal Reserve, is an
instmment of monetary poUcy. Even a small change in requirements say, one-half of one percentage pointcan
have a large and widespread impact Other instruments of
monetary poUcy have sometimes been used to cushion the
uutial impad of a reserve requirement change. Thus, the
System may sell securities (or purchase lessttianotherwise
would be appropriate) to absorb part of the reserves released
by a cut in requirements.
It should be noted that in addition to their initial impad
on excess reserves, changes in requirements alter the expansion power of every reserve dollar. Thus, such changes affed
tiie leverage of aU subsequent increases or decreases in reservesfi-omany source. For this reason, changes in the total
volume of bank reserves actually held between points in time
when requirements differ do not provide an accurate indication ofthe Federal Reserve's poUcy actions.
Both reserve balances and vault cash are eHgible to
satisfy reserve requirements. Toflieextent some institiitions
normaDy hold vault cash to meet operating needs in amounts
exceeding their required reserves,tiieyare unfikety to be
affected by any change in requirements.
"The 1980 statute also provides that "under extraordinary circumstances"
reserve requirements can be imposed at any level on any liability of
depositoiy institutions for as long as sfat months; and, if essential for the
conduct of monetary policy, supplemental requirements up to 4 percent of
transaction accounts can be imposed.
Under a 10 percent reserve requirement,

$10 of reserves are needed to support each
$100 of deposits.
Assets
Loans and
investments
Reserves
[Required
[Excess
^ J
With a reduction in requirementsfrom10

percent to 8 percent, fewer reserves are
required against the same volume of deposits
so that excess reserves are created. These can
be loaned or invested.
Uabilities
Deposits
100
90
10
lol
OJ
Assets
Uabilities
Loans and
investments
Reserves
[Required
[_Excess
Deposits
100
90
10
Assets
Uabilities
N O CHANGE
32
with an increase in requirementsfrom10

percent to 12 percent, more reserves are
required agamst the same volume of deposits.
The resulting deficiencies must be covered by
Uquidation of loans or investments...
There is no change in the total amount of bank reserves.
Assets
Uabilities
Loans and
investments
Deposits
Reserves
[Required
[Defidt
100
90
10
1
Assets
Uabilities
N O CHANGE
.. .because the total amount of bank reserves remains

unchanged.
Fadon Affecting Bank Reserves
Changes in Foreign-Related Factors

The Federal Reserve has engaged in foreign currency
operations for its own account since 1962. In addition,
it acts as the agent for foreign currency transactions of the
U.S. Treasury, and since the 1950s has executed transactions for customers such as foreign central banks. Perhaps
the most publicized type of foreign currency transaction
undertaken by the Federal Reserve is intervention in the
foreign exchange markets. Intervention, however, is only
one of several foreign-related transactions that have the
potential for increasing or decreasing reserves of banks,
thereby affecting money and credit growth.
Several foreign-related transactions and their effects
on U.S. bank reserves are described in the next few pages.
Included are some but not all of the types of transactions
used. The key point to remember, however, is that the
Federal Reserve routinely ofifeets any undesired change in
U.S bank reserves resultingfromforeign-related transactions. As a result, such transactions do not affect money
and credit growth in the United States.
Foreign Exchange Intervention for the Federal
Reserve's Own Account
When the Federal Reserve intervenes in foreign
exchange markets to sell dollars for its own accoimt," it
acquires foreign currency assets and reserves of U.S. banks
mitially rise. In contrast, when the Fed intervenes to buy
dollars for its own account, it uses foreign currency assets
to pay for fee dollars purchased and reserves of U.S. banks
initially M .
Consider the example where the Federal Reserve
intervenes in the foreign exchange markets to sell $100 of
U.S. dollars for its own account Intillstransaction, the
Federal Reserve buys a foreign-currency-denominated
deposit of a U.S. bank held at a foreign commerdal bank,*
and pays for this foreign currency deposit by crediting $100
toflieij.S. bank's reserve account at the Fed. The Federal
Reserve deposits the foreign currency proceeds in its account at a Foreign Central Bank, and as this transaction
clears, the foreign bank's reserves at the Foreign Central
Bank declme. See illustration 33 on pages 30-31. Initially,
then, the Fed's intervention sale of dollars in this example
leads to an increase in Federal Reserve Bank assets denominated in foreign currencies and an increase in reserves of
U.S. banks.
Suppose instead thatthe Federal Reserve intervenes
in the foreign exchange markets to buy $100 of U.S. dollars,
agam for its own account The Federal Reserve purchases a
dollar-denominated deposit of a foreign bank held at a U.S.
bank, and pays for this dollar deposit by drawing on its
foreign currency deposit at a Foreign Central Bank. (The
Federal Reserve might have to sell some of its foreign currency investments to build up its deposits at the Foreign
Central Bank, but this would not affect U.S. bank reserves.)
As the Federal Reserve's account at the Foreign Centii-al
Bank is charged, the foreign bank's reserves at the Foreign
Central Bank increase. In tum, the dollar deposit of the
foreign bank at the U.S. bank declines as the U.S. bank
b-ansfers ownership of those dollars to the Federal Reserve
28
Federal Reserve Bank assets denominated

in foreign currencies
end of month, billions of dollars, not seasonally adjusted
40 I
1979
1982
1985
1988
1991
via a $100 charge to its reserve account at the Federal Reserve. See illustration 34 on pages 30-31. Initially,ttien,flie
Fed's intervention purchase of dollars in this example leads
to a decrease in Federal Reserve Bank assets denominated ki
foreign currendes and a decrease in reserves of U.S. banks.
As noted earlier,flieFederal Reserve offsets or "sterilizes" any undesired change in U.S. bank reserves stemmmg
from foreign exchange intervention sales or purchases of
dollars. For example. Federal Reserve Bank assets denominated in foreign currencies rose dramatically in 1989, in part
due to significant U.S. intervention sales of dollars. (See chart
on this page.) Total reserves of U.S. banks, however, declined
s%htly in 1989 as open market operations were used to "sterilize" the irutial intervention-induced increase in reserves.
Monthfy Revaluation of F o r e ^ Currency Assets
Another set of accounting transactionstibataffects
Federal Reserve Bank assets denominated in foreign currendes is the monthly revaluation of such assets. Two busuiess
days prior to the end of tiie month, the Fed's foreign currency
assets are increased iftiieirmarket value has appreciated or
decreased if their value has depreciated. The offeetting accounting entry onttieFed's bdance sheet is to the "exchangetranslation accounf included in "otiier F.R Uabilities." These
changes intiieFed's balance sheet do not alter bank reserves
directiy. However, since the Federal Reserve turns over its
net eamings to the Treasury each week, the revaluation affects the amount of flie Fed's payment to the Treasury, which
in tum influences the size of TT&L calls and bank reserves.
(See explanation on pages 18 and 19.)
"Overall responsibility for U.S. intervention in foreign exchange markets
rests with the U.S. Treasury. Foreign exchange transactions for the
Federal Reserve's account are carried out under directives issued by the
Federal Reserve's Open Market Committee within the general framework
of exchange rate policy established by the U.S. Treasury in consultation
with the Fed. They are implemented at the Federal Reserve Bank of New
York, typically at the same time that similar transactions are executed for
the Treasury's Exchange StabiUzation Fund.
^'Americans traveling to foreign countries engage in "foreign exchange"
transactions whenever they obtain foreign coins and paper currency in
exchange for U.S. coins and currency. However, most foreign exchange
transactions do not involve the physical exchange of coins and currency.
Rather, most of these transactions represent the buying and selling of
foreign currencies by exchanging one bank deposit denominated in one
currency for another bank deposit denominated in another currency. For
ease of exposition, the examples assume that U.S. banks and foreign banks
are the market participants in the intervention transactions, but the impact
on reserves would be the same if the U.S. or foreign public were involved.
Foreign-Related Transactions for the Treasury

U.S. intervention in foreign exchange markets by flie
Federal Reserve usually is divided between its own account
and the Treasury's Exchange Stabilization Fund (ESF) account The impact on U.S. bank reservesfromthe uiterventionti-ansactionis the same for botii sales of dollars add
to reserves while purchases of dollars dram reserves. See
illustration 35 on pages 30-31. Depending upon how the
Treasury pays for, orfinances,its part of the intervention,
however, the Federal Reserve may not need to conduct
offsetting open market operations.
The Treasury typically keeps only minimal balances
in the ESFs account at the Federal Reserve. Therefore,
the Treasury generally has to convert some ESF assets into
dollar or foreign currency deposits in order to pay for its part
of an interventiontiânsaction.likewise, the dollar or foreign currency deposits acquired by the ESF ui the intervention typically are drawn down when the ESF invests the
proceeds in earning assets.
For example, tofinancean intervention sale of dollars
(such as that shown in illustiâtion 35),flieTreasury might
redeem some offlieU.S. govemment securities issued to
tiie ESF, resulting in atiînsferof fundsfromthe Treasury's
(general account) balances attiieFederal Reserve to tiie
ESFs account attiieFed. (OnflieFederal Reserve's balance sheet tiie ESFs account is included ui the UabiHty
category "other deposits.") The Treasury, however, would
need to replenish its Fed balances to desired levels, perhaps
by increasingtiiesize of TT&L calls ati:ansactionthat
drains U.S. bank reserves. The intervention and financuig
transactions essentially occur simultaneously. As a result
U.S. bank reserves added in the intervention sale of dollars
are offset by the drain in U.S. bank reservesfromthe TT&L
call. See illustrations 35 and 36 on pages 30-31. Thus, no
Federal Reserve offsetting actions would be needed if the
Treasuryfinancedthe intervention sale of dollars through
a TT&L call on banks.
Offeetting actions bytiieFederal Reserve would be
needed, however, if the Treasury restored deposits affected
by foreign-related transactions through a number of transactions involving the Federal Reserve. These include the
Treasury's issuance of SDR or gold certificates \o the Federal Reserve and the "warehousing" of foreign currencies by
the Federal Reserve.
SDR certificates. OccasionaflytiieTreasury acquires
dollar deposits for tiie ESFs account by issuing certificates
totiieFederal Reserve against allocations of Special Drawing Rights (SDRs) receivedfromthe Intemational Monetary
Fund.2i For example, $3.5 bilfion of SDR certificates were
issued in 1989, and another $1.5 biUion in 1990. This "monetization" of SDRs is reflected on the Federal Reserve's balance sheet as an increase in its asset "SDR certificate
accovmt" and an increase in its UabiUty "other deposits
(ESF account)."
If the ESF uses these dollar deposits dfrectiy in an
intervention sale of dollars, then the intervention-induced
increase in U.S. bank reserves is not altered. See illustrations 35 and 37 on pages 30-31. If not needed immediately
for Ml interventiontiansaction,the ESF might use the dollar
depositsfromissuance of SDR certificates to buy securities
U.S gold stock, gold certificates and SDR certificates

end of year, billions of dollars
Gold stock
GoldS
certificates
J
SDR
y
cartificates/
' ' ' ' ' ' ' 1 ' '1 f 1 1 1 1 1 1 r 1 / T i l
1951
1961
1971
1 1
1981
'
1 11 1 1 1 1 1 11
1991
fromtiieTreasury, resulting in a transfer offimdsfromthe

ESFs account attiieFederal Reserve to the Treasury's account attiieFed. U.S. bank reserves would then increase as
the Treasury spent thefimdsor h-ansferred them to banks
through a dfrect investment to TT&L note accounts.
Gold stock and gold certificates. Changes in the U.S.
monetary gold stock used to be an important factor affecting
bank reserves. However, the gold stock and gold certificates
issued h) the Federal Reserve in "monetiaing" gold, have not
changed significantiy since the early 1970s. (See chart on
this page.)
Prior b) August 1971, the Treasury bought and sold
gold for afixedprice in terms of U.S. doflars, mainly at the
initiative of foreign central banks and governments. Gold
purchases by the Treasury were added to the U.S. monetary
gold stock, and paid forfromits accoimt at the Federal
Reserve. Astiiesetters deposited the Treasury's checks in
banks, reserves increased. To replenish its balance at the
Fed, the Treasury issued gold certificates totiieFederal
Reserve and received a credit to its deposit balance.
Treasury sales of gold have the opposite effect Buyers' checks are credited to the Treasury's account and reserves decfine. Because the official U.S. gold stock is now
fully "monetized,"tiieTreasury currentiy has to use its
deposits to retire gold certificates issued to the Federal
Reserve whenever gold is sold. However, the value of gold
certificates retired, as wefl as the net contraction in bank
reserves, is based on the official gold price. Proceeds from
a gold sale atfliemarket price to meet demands of domestic
buyersfikelywould be greater. The difference represents
the Treasury's profit which, when spent restores deposits
and bank reserves by afikeamount
Whfle the Treasury no longer purchases gold and
sales of gold have been Kmited, increases in the official price
of gold have added totiievalue of the gold stock. (The
official gold price was last raised,from$38.00 b) $42.22 per
ti-oy ounce, in 1973.)
Warehousing. The Treasury sometimes acquires dollar deposits attiieFederal Reserve by "warehousing" foreign
currencies -mtiiflieFed. (For example, $7 bilfion of foreign
2'SDRs were created in 1970 for use by governments in ofScial balance of

payments transactions.
Fttdors Affecting Bank Reserves
29
When the Federal Reserve intervenes to sell dollars for its own
account, it pays for a foreign-currency-denominated deposit of a U.S.
bank at a foreign commercial bank by crediting the reserve account of
the U.S. bank, and acquires a foreign currency asset in the form of a
deposit at a Foreign Central Bank The Federal Reserve, however, will
offset the increase in U.S. bank reserves if it is inconsistent with
domestic policy objectives.
When the Federal Reserve intervenes to buy dollars for its own
account, it draws down its foreign currency deposits at a Foreign
Central Bank to pay for a dollar-denominated deposit of a foreign bank
at a U.S. bank, which leads to a contraction in reserves of the U.S.
bank. This reduction in reserves will be offset by the Federal Reserve
if it is inconsistent with domestic policy objectives.
35
Assets
Liabiltties
Deposits at
Foreign Central
Bank
+ 100
Reserves:
U.S. bank
Assets
Liabilities
Deposits at
Foreign Central
Bank
- too
Reserves:
U.S. bank
100
In an intervention sale of dollars for the U.S. Treasury, deposits of the ESF at the Federal Reserve are used to pay
for a foreign currency deposit of a U.S. bank at a foreign bank, and the foreign currency proceeds are deposited in
an accoimt at a Foreign Central Bank. U.S. bank reserves increase as a result of this intervention transaction.
U.S. TREASURY
Uabilities
Assets
Deposits at
F.R. Banks
Liabilities
Assets
Liabilities
Assets
Reserves:
U.S. bank
- 100
+ 100 -
Otiier deposits;
100
ESF
Deposits at
Foreign Central
Bank
+ 100
36
+ loo-*-
Concurrently, the Treasury mustfinancethe interventionti-ansactionin (35). The Treasury might build up depoats in
tiie ESPs account at the Federal Reserve by redeeming securities issued to tiie ESF, and replenish its own (general
account) deposits attiieFederal Reserve to desired levels by issuing a call on TT&L note accounts. This set of timsactions drains reserves of U.S. banks bytiiesame amount as the intervention in (35) added to U.S. bank reserves.
U.S. TREASURY
Liabilities
Assets
U.S. govt.
securities
Deposits at
F.R. Banks
- 100
+100
Assets
Uabilities
TT&Laccts.
- 100
Deposits at
F.R. Banks
Securities
Issued ESF
net 0
Liabilities
Assets
- 100
Reserves:
U S . banks
-100-4-
Treas. deps.;
net 0
[}omUXbank
fpwn US. bonk + / 0 0 l

[to ESF
-lOOj
ItoESF
+/0d]
-lOOj
Other deposits;
ESF
+100
37
Alternatively,tiieTreasury mightfinancethe intervention m (35) by issuing SDR certificates to the Federal

Reserve, atiansactionthat would not disturb the addition of U.S. bank reserves in intervention (35). The Federal
Reserve, however, would offset any undesired change in U.S. bank reserves.
U.S. TREASURY
Liabilities
Assets
Deposits at
F.R. Banks
30
+100
S D R certificates
issued to
F.R.Banl<s
+100
Assets
Liabilities
Assets
Liabilities
S D R certificate
account
+ 100
Other deposits:
ESF
+ 100
Liabilities
Assets
Reserves with
-F.R.Banl<s
+100
Deposits at
foreign banlc
FOREIGN CENTRAL BANK
FOREIGN BANK
U.S. BANK
Assets
Uabilities
Reserves with
Foreign Central
Bank
Deposits of
U.S. bank
Assets
- 100
100
100
Reserves with
F.R. Banks
- 100
Liabilities
Assets
Deposits of
foreign bank
Deposits at
U.S. bank
- 100
Assets
Uabilities
- 100
Reserves with
Foreign Central
Bank
+ 100
U.S. RANK
Assets
^^^^^H
Liabilities
Reserves with
> F.R. Banks
+100
Deposits at
foreign bank
Liabilities
Reserves with
Foreign Central
Deposits of
U.S. bank
"'
-100
+ 100
Reserves of
foreign bank
- 100
^^^^^B
Assets
-100
Liabilities
Deposits of
F.R. Banks
- 100
Reserves of
foreign bank
+ 100
FOREIGN C E N T R A L BANK
Liabilities
Deposits of
ESF
+100
Reserves of
foreign bank
-100
Liabilities
Assets
Reserves with
- > F . R . Banks
- 100
Assets
FOREIGN BANK
Assets
Deposits of
F.R. Banks
FOREIGN C E N T R A L BANK
FOREIGN BANK
Assets
Liabilities
TT&Laccts.
- 100
Liabilities
NO CHANGE
currencies were warehoused in 1989.) The Treasury or

ESF acquires foreign currency assets as a result of transactions such as intervention sales of dollars or sales of U.S.
govemment securities denominated in foreign currencies.
When the Federal Reserve warehouses foreign currendes
for the Treasury,^ "Federal Reserve Bank assets denominated in foreign currencies" increase as do Treasury deposits at the Fed. As these deposits are spent, reserves of U.S.
banks rise. In contrast, the Treasury likely will have to
increase the size of TT&L calls a transaction that drains
reserveswhen it repurchases warehoused foreign currendes from the Federal Reserve. Qn 1991, $2.5 billion of
warehoused foreign currencies were repurchased.) The
repurchase transaction is refleded on the Fed's balance
sheet as declines in both Treasury deposits at the Federal
Reserve and Federal Reserve Bank assets denominated in
foreign currendes.
Transactions for Foreign Customers
Many foreign central banks and governments maintam deposits at the Federal Reserve to facilitate dollardenominated transactions. These "foreign deposits" on the
liability side of the Fed's balance sheet typically are held at
minimal levels that vary littiefromweek to week. For example, foreign deposits at the Federal Reserve averaged
only $237 million in 1991, rangingfrom$178 million to $319
million on a weekly average basis. Changes in foreign
deposits are small because foreign customers "man^"
their Federal Reserve balances to desired levels daily by
buying and selling U.S. govemment securities. The extent
of these foreign customer "cash management" transactions
is reflected, m part, by large andfrequentchanges in marketable U.S. govemment securities held in custody by the
Federal Reserve for foreign customers. (See chart.) The
net effed of foreign customers' cash management transactions usually is to leave U.S. bank reserves unchanged.
Manc^ngforeign deposits through sales ofsecurities.
Foreign customers ofthe Federal Reserve make dollardenominated payments, includmg those for intervention
sales of dollars by foreign centiâl banks, by drawing down
their deposits at the Federal Reserve. As these funds are
deposited in U.S. banks and cleared, reserves of U.S. banks
rise. See illustration 38. However, if paymentsfromtheir
accounts at the Federal Reserve lower balances to below
desfred levels, foreign customers will replenish their Federal Reserve deposits by selling U.S. govemment securities.
Acting as their agent the Federal Reserve usually executes
foreign customers' sell orders infliemarket As buyers pay
for the securities by drawing down deposits at U.S. banks,
reserves of U.S. banks fall and offset the increase in reservesfromthe disbursement transactions. The net effed
is to leave U.S. bank reserves unchanged when U.S. govemment securities of foreign customers are sold in the market See illustrations 38 and 39. Occasionally, however, tiie
Federal Reserve executes foreign customers' sell orders
with the System's accoimt When this is done, the rise in
reservesfromthe foreign customers' disbursement of funds
remains in place. See illustrations 38 and 40. The Federal
Reserve might choose to execute sell orders witiitiieSystem's account if an increase in reserves is desired for domestic policy reasons.
32
Modem
Money
Mechanics
Marketable U.S govemment securities held in

custody for foreign customers during 1991
Wednesday outstandings, billions of dollars
265
235 l l I l l I I I l l I I I I I I h 1 1 I 11 I I 1 I I I I I I I I I I I I I I I 1 1 l l 1 1 1 1 1 l l
Feb.
Apr.
June
Aug.
Oct
Deo.
Managingforeigndeposits through purchases ofsecurities. Foreign customers oftiieFederal Reserve also receive
a variety of dollar-denominated payments, including proceedsfromintervention purchases of dollars by foreign
central banks, that are drawn on U.S. banks. As these funds
are credited to foreign deposits at the Federal Reserve, reserves of U.S. banks decline. But if receipts of dollar-denominated payments raisetiieirdeposits at the Federal Reserve
to levels higher than desired, foreign customers will buy U.S.
govemment securities. The net effedt generally istoleave
U.S. bank reserves unchanged when the U.S. govemment
securities are purchased in the market
Using the swap network. Occasionally, foreign central
banks acquire dollar deposits by activating the "swap" network, which consists of reciprocal short-term credit arrangements between the Federal Reserve and certain foreign
cenb-al banks. When a foreign central bank draws on its
swap line attiieFederal Reserve, it immediately obtains a
dollar deposit at the Fed in exchange for foreign currendes,
and agrees to reverse the exchange sometime intiiefuture.
On the Federal Reserve's balance sheet activation ofthe
swap network is reflected as an increase in Federal Reserve
Bank assets denominated in foreign currencies and an increase in the liability category "foreign deposits." When the
swap line is repaid, both of these accounts decline. Reserves
of U.S. banks willrisewhen the foreigri central bank spends
its dollar proceedsfromthe swap drawing. See illustration
41. In contrast reserves of U.S. banks will M as the foreign
central bank rebuilds its deposits at the Federal Reserve
in order to repay a swap drawing.
The accounting entries and impact on U.S. bank reserves are the same if the Federal Reserve uses the swap
network to borrow and repay foreign currencies. However,
tiie Federal Reserve has not activatedtiieswap network in
recent years.
^Technically, warehousing consists of two parts: the Federal Resenê's

agreement to purchase foreign currency assets from the Treasury or ESF
for dollar deposits now, and the Treasury's agreement to repurchase the
foreign currencies sometime in the fiiture.
38
When a Foreign Central Bank makes a dollar-denominated paymentfromits accomit at the Federal Reserve, the
recipient deposits the funds in a U.S. bank. As the payment order clears, U.S. bank reserves rise.

Assets
Liabilities
Assets
Liabilities
Reserves:
U.S. bank
Reserves with
+ I 0 0 4 > F . R . Banks
+ 100
Foreign
deposits
- 100
Deposits
Assets
100
Liabilities
Deposits at
F . R Banks
- 100
Accounts
payable
100
If a decline in its deposits at the Federal Reserve lowers the balance below desired levels, the Foreign Central Bank
will request that the Federal Reserve sell U.S. govemment securities for it If the sell order is executed in the
market, reserves of U.S. banks will fall by the same amount as reserves were increased in (38).
^^^^^^H
Liabilities
Reserves:
U.S. bank
Foreign
deposits
40
U.S. BANK
Assets
^^^^^H
Uabilities
Reserves with
- 1 0 0 - 4 > F . R . Banks
- 100
Deposits of
securities
buyer
+ 100
Liabilities
Assets
- 100
Deposits at
F.R. Banks
+100
U.S. govt
securities
- 100
Jf the sell order is executed with the Federal Reserve's account however, the increase in reservesfrom(38) will
remain m place. The Federal Reserve might choose to execute the foreign customer's sell order with the System's
account if an increase in reserves is desired for domestic policy reasons.

Assets
U.S. govt.
securities
Assets
Liabilities
+ 100
Foreign
deposits
Uabilities
+ 100
NO CHANGE
41
Liabilities
Assets
Deposits at
F.R. Banks
+100
U.S. govt
securities
- 100
When a Foreign Central Bank draws on a "swap" line, it receives a credit to its dollar deposits at the Federal
Reserve in exchange for a foreign currency deposit credited to the Federal Reserve's account Reserves of U.S.
banks are not affected by the swap drawing transaction, but will increase as the Foreign Central Bank uses the
funds as in (38).

Assets
Liabilities
Deposits at
Foreign Central
Bank
+100
Foreign
deposits
Assets
Uabilities
Assets
Deposits at
F . R Banks
+ 100
Liabilities
+ 100
Deposits of
F.R. Banks
+100
NO CHANGE
33
Federal Reserve Actions Affecting Its

Holdings of U.S. Govemment Securities
In discussmg various factors that affect reserves, it
was often indicated that the Federal Reserve ofeets undesired changes in reserves through open market operations,
that is, by buying and selling U.S. govemment securities in
the market However, outright purchases and sales of securities by the Federal Reserve in the market occur infrequently, and typically are conducted when an increase or decrease
in anotherfectoris expected to persist for some time. Most
market actions taken to implement changes in monetary
policy or to offset changes in otherfectorsare accomplished
throughflieuse of transactionstiiatchange reserves temporarily. In addition, there are off-market transactions the
Federal Reserve sometimes uses to change its holdings of
U.S. govermnent securities and affect reserves. (Recall the
example in illustrations 38 and 40.) The impact on reserves
of various Federal Reserve transactions in U.S. govemment
and federal agency securities is explamed below. (See table
for a summary.)
Outr^ht transactions. Ownership of securities is
transferred permanentiy to the buyer in an outright transaction, and the funds used ki the transaction are transferred
permanentiy totiieseller. As a result an outright purchase
of securities by the Federal Reservefroma dealer in the
market adds reserves permanentiy while an outright sale of
securities to a dealer drains reserves permanently. The
Federal Reserve can achieve the same net effect on reserves
through off-market transactions where it executes outright
sell and purchase ordersfromcustomers internally with flie
System account In contrast there is no impact on reserves
if the Federal Reservefillscustomers' outright sefi and purchase orders in the market
Temporary transactions. Repurchase agreements
(RPs), and associated matched sale-purchase agreements
(MSPs),ti-ansferownership of securities and use of fiinds
temporarily. In an RP transaction, one party seUs securities
to another and agrees to buy them back on a specified future
date. In an MSP transaction, one party buys securities from
another and agrees to sell them back on a specified fiiture
date. In essence, then, an RP for one party in the transaction
worksfikean MSP fortiieother party.
When the Federal Reserve executes what is referred
to as a "System RP," it acquires securities m the market from
dealers who agree to buy them back on a specified future
date 1 to 15 days later. Bofli the System's portfoUo of securities and bank reserves are increased during the term of the
RP, but decline again when the dealers repurchase the securities. Thus System RPs increase reserves only temporarily.
Reserves are drauied temporarily when the Fed executes
what is known as a "System MSP." A System MSP works
fike a System RP, only in the opposite direction. In a System
MSP,tiieFed seUs securities to dealers ui the market and
agrees to buy them back on a specified day. The System's
holdings of securities and bank reserves are reduced during
tiie term oftiieMSP, but both increase when the Federal
Reserve buys back the securities.
34
Impact on reserves of Federal Reserve transactions

in U.S. govemment and federal agency securities
Federal Reserve Transaction
Reserve Impact
Outright Purchases of Securities

- From dealer In market
- To fill customer sell orders Internaity
(If customer sell orders filled in market)
Permanent increase
Permanent increase
(No impact)
Outright Sales of Securities

- To dealer in market
- Tofillcustomer buy orders internally
(If customer buy orders filled in market)
Permanent decrease
Permanent decrease
(No impact)
Repurchase Agreements (RPs)

- With dealer in market in a System RP
Temporary increase
Matched Sale-Purchase Agreements (MSPs)

- Witti dealer In market In a System MSP
- To fill customer RP orders internally
(If customer RP orders passed to market as
customer-related RPs)
Redemption of Maturing Securities
- Replace total amount maturing
- Redeem part of amount maturing
- Buy more than amount maturing*
Temporary decrease
No impacT"
(Temporary increase*)
No impact
Permanent decrease
Permanent increase**
* Impact based on assumption that the amount of RP orders done

Internally is the same as on the prior day.
**The Federal Reserve currently is prohibited by law from buying securities
directly fi-om the Treasury, except to replace maturing Issues.
The Federal Reserve also uses MSPs tofillforeign

customers' RP orders intemally with the System accoimt
Considered in isolation, a Federal Reserve MSP transaction with customers would drain reserves temporarily.
However, these transactions occur every day, with the
total amount of RP orders being fafrly stablefromday
to day. Thus, on any given day, the Fed both buys back
securitiesfromcustomers to fulfilltiieprior day's MSP,
and sells them about the same amount of securities to
satisfy that day's agreement As a result there generally is
Uttie or no impact on reserves when the Fed uses MSPs to
fiU customer RP orders intemafiy with the System accoimt
Sometimes, however, the Federal Reservefiflssome of tiie
RP orders intemafiy and the rest in the market The part
that is passed on to the market is known as a "customerrelated RP." The Fed ends up repurchasing more securitiesfromcustomers to completetiieprior day's MSP than
it sefis to them in that day's MSP. As a result customerrelated RPs add reserves temporarily.
Maturing securities. As securities held byflieFederal Reserve mature, they are exchanged for new securities. Usually the total amoimt maturing is replaced so that
there is no impact on reserves since the Fed's total holdings remain the same. Occasionally, however, the Federal
Reserve wifi exchange only part of the amount maturing.
Treasury deposits decfine as payment forflieredeemed
securities is made, and reserves fall as the Treasury replenishes its deposits at the Fed through TT&L cafis. The
reserve drain is permanent IftiieFed were to buy more
than the amount of securities maturing directiyfromthe
Treasury, then reserves would uicrease permanentiy.
However, the Federal Reserve currentiy is prohibited by
lawfrombuyuig securities directiyfromtiieTreasury,
except to replace maturing issues.
Miscellaneous Factors Affecting

Bank Reserves
The factors described below normally have negUgible effects on bank reserves because changes in them either
occur very slowly or tend to be balanced by concurrent
changes in otherfectors.But at times they may reqmre
offsetting action.
Treasuiy Currency Outstanding
Treasury currency outstanding consists of coins,
silver certificates and U.S. notes originally issued by the
Treasury, and other currency originafiy issued by commercial banks and by Federal Reserve Banks before July 1929
but for which the Treasury has redemption responsibifity.
Short-run changes are smaU, and their effects on bank
reserves are indirect
The amount of Treasury currency outstanding currently increases only through issuance of new coin. The
Treasury ships new coui to the Federal Reserve Banks for
credit to Treasury deposits there. These deposits will be
drawn down again, however, as the Treasury makes expenditures. Checks issued against these deposits are paid out
to the pubfic. As uidividuals deposit these checks in banks,
reserves increase. (See explanation on pages 18 and 19.)
When any type of Treasury currency is retired, bank
reserves decfine. As banks tum in Treasury currency for
redemption, they receive Federal Reserve notes or coin ra
exchange or a credit to theu- reserve accounts, leaving
their total reserves (reserve balances and vault cash) initiafiy unchanged. However, the Treasury's deposits in the
Reserve Banks are charged when Treasury currency is
retired. Transfers from TT&L balances in banks to flie
Reserve Banks replenish these deposits. Such b-ansfers
absorb reserves.
Treasuiy Cash Holdings
In addition to accounts m depositoiy institutions and
Federal Reserve Banks, the Treasury holds some currency
U l its own vaults. Changes ui these holdings affect bank
reserves justfikechanges in the Treasury's deposit account
at the Reserve Banks. When Treasury holduigs of currency
uicrease,tiieydo so at the expense of deposits in banks.
As cash holduigs of the Treasury decfine, on the oflier
hand, these funds move uito bank deposits and increase
bank reserves.
When these customers draw on theu- Federal Reserve balances (say, to purchase securities), these funds
are paid tofliepubfic and deposited in U.S. banks, thus
increasing bank reserves. Justfikeforeign customers,
these "other" customers manage their balances at the
Federal Reserve closely so that changes in their deposits
tend to be smaU and have mimmal net impact on reserves.
Nonfloat-Related Adjustments
Certdn adjustments are incorporated uito pubUshed
data on reserve balances to reflect nonfloat-related corrections. Such a correction might be made, for example, if an
uidividual bank had mistakenly reported fewer reservable
deposits than actually existed and had held smaUer reserve balances than necessary in some past period. To
correct for this error, a nonfloat-related as-of adjustment
wifi be appKed to the bank's reserve position. This essentiaUy results in the bank havuig to hold higher balances in
its reserve account in the current and/or future periods
than wotdd be needed to satisfy reserve requirements in
tiiose periods. Nonfloat-related asK)f adjustments affect
tiie afiocation of fimds in bank reserve accounts but not
the total amount in these accounts as reflected on Federal
Reserve Bank and individual bank balance sheets. Pubfished data on reserve balances, however, are adjusted to
show onfy those reserve balances held to meet the current
and/or future period reserve requirements.
Other Federal Reserve Accounts
Earfier sections of this booklet described the way ui
which bank reserves increase when the Federal Reserve
purchases securities and decfine whentiieFed sells securities. The same results foUow from any Federal Reserve
expenditure or receipt Every payment made by the Reserve Banks, in meeting expenses or acquiring any assets,
affects deposits and bank reserves infliesame way as does
the payment to a dealer for govemment securities. Sunilarfy, Reserve Bank receipts of interest on loans and securities and increases in paid-in capital absorb reserves.
Other Deposits in Reserve Banks

Besides U.S. banks,flieU.S. Treasury, and foreign
cenh-al banks and governments, there are some intemational organizations and certain U.S. govemment agencies
that keep funds on deposit in the Federal Reserve Banks. In
general, balances are built uptiu-oughtransfers of deposits
held at U.S. banks. Such transfers may take place either
directiy, where these customers also have deposits in U.S.
banks, or indkectly by the deposit of funds acquired from
otiiers who do have accounts at U.S. banks. Such transfers
into "other deposits" drain reserves.
Tlte Reserve Multiplier Why It Varies

The deposit expansion and contraction associated
with a given change in bank reserves, as illustrated eariier
in this booklet, assumed afixedreserve-to-deposit multipfier. That multipUer was detenmned by a uniform percentage reserve reqmrement specified for transaction accounts.
Such an assumption is an oversimplification of the actual
relationship between changes in reserves and changes ui
money, especially in the short run. For a number of reasons, as discussed in this section, the quantity of reserves
assodated vrtth a given quantity of transaction deposits is
constantly changing.
One sfippage affecting the reserve multipBer is vaiiation in the amoimt of excess reserves. In the real world,
reserves are not ahvays fuDy utifized. There are ahrays
some excess reserves in the banking system, reflecting
fiictions and lags as fimdsflowamongfliousandsof indwidual banks.
Excess reserves present a problem for monetary
poUcy implementation oniy because the amount changes.
To the extent that new reserves suppfied are offeet by risuig
excess reserves, actual money growth M s short of the
theoretical maxunum. Conversely, a reduction m excess
reserves by the banking system hastiiesame effect on
monetary expansion as the injection of an equal amount
of new reserves.
SUppages also arisefi-omreserve requirements being
unposed onfiabiUtiesnot uicluded ui money as weB as
differing reserve ratios being appfied to transaction deposits
according to the size ofthe bank. From 1980 through 1990,
reserve requirements were imposed on certain nontransaction Habifities of afi depository institutions, and before flien
on aU deposits of member banks. The reserve multipHer
was affected byflowsof funds between uistitutions subject
to differing reserve requirements as wefi as by shifts of
funds between transaction deposits and other Habifities
subject to reserve requirements. The extension of reserve
reqmrements to aU depository institutions ui 1980 and the
efimfiiation of reserve requirements against nonpersonal
time deposits and Eurocurrency Habifities in late 1990
reduced, but did not efiixunate,flfissource of instabifity in
the reserve multipHer. The deposit ejqjansion potential of
a given volume of reserves still is affected by shifts of transaction deposits between larger uistitutions and those either
exempt from reserve reqiurements or whose transaction
deposits are within the tranche subject bi a 3 percent
reserve requirement
In addition, the reserve multipfier is affected by conversions of deposits into currency or vice versa. This factor
was unportant in the 1980s as the pubKc's desujed currency
holduigs relative to transaction deposits ki money shifted
considerably. Also affecting the multipUer are shifts between transaction deposits included in money and other
transaction accounts that also are reservable but not uicluded U l money, such as demand deposits due to depository
36
uistitutions, tiie U.S government and foreign banks and

offidal institutions. In the aggregate, these non-mouQr
transaction deposits are relatively smafi in comparison to
total h:ansaction accounts, but can vary significantiy from
week to week.
A net injection of reserves has widely different effects
depending on how it is absorbed. Only a dofiar-for-dofiar
increase in the money supply would result if the new reserves were paid out in currency to the pubUc. With a uniform 10 percent reserve requirement, a $1 increase in
reserves would support $10 of additional transaction accounts. An even larger amount would be supported under
the graduated ^ t e m where smafier uistitutions are subject
to reserve reqmrements below 10 percent But $1 of new
reserves also would support an additional $10 of certan
reservable transaction accounts that are not counted as
money. (See chart below.) NormaUy, an uicrease in reserves would be absorbed by some combination of these
currency and transaction deposit changes.
AB of these factors are to some extent predictable
and are taken into account in dedsions as to flie amount of
reservesfliatneed to be suppHed to achieve the desked
rate of monetary expansion. They help explain why shortrunfluctuationsin bank reserves often are disproportionate
to, and sometimes inflieopposite dfi-ectionfi-om,changes
in the deposit component of money.
The growth potential of a $1 million reserve injection
$12 5 mil
$1 million
Money Creation and Reserve Management

Another reason for short-run variation in the amount
of reserves supplied is that credit expansion and thus
deposit creation is variable, reflecting uneven timing of
credit demands. Although bank loan policies normally take
account ofthe general avmlability of funds, the size and
timing of loans and investments made underfliosepolicies
depend largely on customers' credit needs.
hifliereal world, a bank's lending is not normally
constrained by the amount of excess reserves it has at
any given moment Rather, loans are made, or not made,
depending onfliebank's credit policies and its expectations
about its ability to obtain the funds necessary to pay its
customers' checks and maintain required reserves in a
timely fashion. In fact because Federal Reserve regulations in effectfrom1968 through early 1984 specified that
average reqiured reserves for a given week should be
based on average deposit levels two weeks earUer ("lagged"
reserve accounting), deposit creation actuaUy preceded the
provision of supporting reserves. In early 1984, a more
"contemporaneous" reserve accounting system was implemented Ul order to unprove monetary conti-ol.
In February 1984, banks shifted to maintafiiing average reserves over a two-week reserve maintenance period
enduig Wednesday against average transaction deposits
held overtiietwo-week computation period endkig only
two days earUer. Under this rule, actual transaction deposit
expansion was expected to more closely approxunate the
process explauied at the beginnuig oftillsbooklet However, some sfippages stiU exist because of short-run uncertainties about the level of bofli reserves and transaction
deposits near the close of reserve maintenance periods.
Moreover, not aU banks must mauitaui reserves accorduig
to the contemporaneous accounting system. SmaUer institutions are eitiier exempt completely or only have to mauitaui reserves quarterly against average deposits ui one
week of the prior quarterly period.
On balance, however, vaiiabflity infliereserve multipUer has been reduced by the extension of reserve reqmrements to aU institutions in 1980, by the adoption of
contemporaneous reserve accounting ui 1984, and by tiie
removal of reserve requirements against nontransaction
deposits and Uabilities in late 1990. As a result short-term
changes in total reserves and transaction deposits ui money
are more closely related now than they were before. (See
charts on this page.) The lowering of the reserve reqmrement against transaction accounts above the 3 percent
hanche in ^ r i l 1992 also should contribute to stabUizuig
the multipUer, at least ui theory.
fi-onicafiy, these modifications conhibuting to a less
variable relationship between changes in reserves and
changes ui h-ansaction deposits occurred as the relationship
between transactions money (Ml) and the economy deteriorated. Because the M l measure of money has become
less useful as a guide for poUcy, somewhat greater attention
has shifted to the broader measures M2 and M3. However,
reserve multipUer relationships for the broader monetary
measures arefermore variable than that for Ml.
The relationship between short-term changes in

reserves and transaction deposits was quite
volatile before the Monetary Control Act of 1980 . ,
. . . and before adoption of contemporaneous

reserve accounting in 1984 . . .
27
3.0
Weekly changes, 1983
-1.0
-2.0
, but less variable afterward.
Note: All data are In billions of dollars, not seasonally adusted. Scaling
approximately reflects each year's average ratio of transaction deposits
to total resen/es.
Variahilily in the reserve multiplier
Although every bank must operate within the system where the total amount of reserves is controlled by
the Federal Reserve, its response to policy action is indirect The individual bank does not know today precisely
what its reserve position will be at the time the proceeds
of today's loans are pad out Nor does it know when new
reserves are being supplied to the banidng system. Reserves are distributed among thousands of banks, and the
individual banker cannot distinguish between inflows
origmatingfromadditions to reserves through Federal
Reserve action and shifts of funds from other banks that
occur in the normal course of business.
To equate short-run reserve needs with available
fimds, therefore, many banks tum to the money market
borrowing funds to cover deficits or lending temporary
surpluses. When the demand for reserves is strong relative to the supply,fimdsobtainedfrommoney market
sources to cover deficits tend to become more esqiensive
and harder to obtaui, which, in tum, may induce banks to
adopt more restrictive loan pofides and thus slow the rate
of deposit growth.
Federal Reserve open market operations exert
control over the creation of deposits mahilyfliroughtiiefiimpact on the availability and cost offimdsintiiemoney
market When the total amount of reserves suppfied to
the banidng system through open market operations faUs
short of the amoimt required, some banks are forced to
borrow at the Federal Reserve discount wuidow. Because
such borrowing is restricted to short periods, the need
to repay it tends to induce restraint on further deposit
expansion by the borrowuig bank. Conversely, when
there are excess reserves ui the banking system, uidividual banksfindit easy and relatively inexpensive to acquire
reserves, and expansion in loans, investinents, and deposits is encouraged.
38
Copies of this worltboolc

are available from:
Public Information Center
Federal Reserve Bank of Chicago
P.O. Box 834
Chicago, IL 60690-0834
[312] 322-5111
This publication originally was written
by Dorothy M. Nichols in May 1961.
The June 1992 revision was prepared
by Anne liarie L. Gonczy
REVISED
May 1968
September 1971
June 1975
October 1982
June 1992
February 1994 40M
Printed in U.S.A.
@
Printed on recycled paper

OFCHIGKGO
FREEDOM
CLUB
Freedom Foundation USA
4002 Hwy 78
530-321
May 11, 2010

Dear President Obama,
T h a n k y o u for your recent support of F r e e d o m Foundation U S A .
W e will truly be bringing an enormous "stimulus program" to the A m e r i c a n
people providing t h e m most needed funds to free themselves from debt, start
businesses and create jobs.
Trillions of dollars will be released directly to working and unemployed
A m e r i c a n s plus will be directed into much needed business, benevolent and
infrastructure projects to restore America.
T h e best part is these funds are grants and will never need to be paid back nor
will the A m e r i c a n debt increase o n e cent. W e immediately release these n e w
monies from the Treasury obligations leaving no outstanding debt on their books.
It truly is a win-win-win for all; the A m e r i c a n people, t h e e c o n o m y and the
government.
My d e e p e s t gratitude to y o u and your administration.
T o m Lawler, Mgr.
F r e e d o m Foundation USA
www.freedomclubusa.com
achiever(a)mindspring.com
770-498-2886
F r e e d o m F o u n d a t i o n U S A , LLC
jrREBBOM
CL
4002 Hwy 78, Suite 530-321

Snellville, GA 30039 USA
Fax!
January 23, 2014

President Baracl< Obama
Tiie White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Fax:|
Mr. Jacob J. Lew
US Treasury Secretary
Department o f t h e Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220
Fax:!
Dear President Barack Obama and US Treasury Secretary Jack Lew:
Several months ago. Jack Lew was provided a live packet of documents, Administrative Remedy (AR),
f r o m Freedom Foundation USA (Freedom Club USA).
We would like to know the status of that documents package and an estimated time in which we can
expect process of same and forthcoming payment. We would like to proceed with subsequent processes
and would be happy to answer any remaining questions you may have at this time in order to move
forward as swiftly as possible.
METHOD
These claims were created by utilizing the UCC Administrative Remedy (AR) procedure addressing the
"conversion" inherent in every bank "loan" or IRS/CRA collection. Each defendant failed to respond by
their third notice, thus a default judgment was rendered. The claims are now ready t o be submitted to
the US Treasury to process these financial obligations.
Payments are quite simple.
O i l
Documents included with each submission:
GUIDANCE
FFUSA is now ready to begin submissions for processing and payment. Please provide us the proper
department, address and contact person for submissions.
Please correct and advise us of any administrative and/or technical deficiency in submission in order
for you to expedite and process payment accordingly.
It is evident that ongoing manual submissions will prove to be quite cumbersome. We look forward
t o receiving specific instructions for dedicated electronic submission as part of a cooperative effort
t o make this time and cost effective for all.
CONTACT
Please direct questions or documents to myself at the address above!
Email
^^^B^^^mQQ (place FFUSA first in the subject line).
Phone:
BBBHHHI or
Fax:MMMM^Bi.
Sincerely,
Thomas Lawler, Treasurer

Freedom Foundation USA, LLC
HISTORY OF NESARA
The National Economic Security & Reformation Act
Compiled by Nancy Detweiler, M.Ed., M.Div.
Information is added as it becomes known, along with the date it is included.
NOTE: Writing a history of NESARA requires locating the separate dots and
attempting to put them together to create truth. The original documents are
sequestered and those individuals directly involved are still under a strict gag
order. I have used as my foundation a history written by James Rink. My
research set out to prove NESARA by locating original documents and articles
written by reputable people that illustrated each of the tenets. I have inserted
some of these URLs for these tenets into Rink's history. In my 7+ years of
research, I have found nothing to disprove the existence of the NESARA
LAW. The internet is loaded with disinformation that can be easily dismissed by
research.
As you read this history, you will find mention of high officials being cloned. The
capacity to clone an adult individual signifies just one of the many secrets
withheld from the public. As "all that is hidden is revealed," this fact will be
confirmed. Cloning of an adult individual is used for various reasons by those
working behind the scenes-one example will become known at the divine right
moment-the cloning of Princess Diane to avoid her death. Another example is to
clone a public figure to prevent public reaction to he/she being removed from
their position, as occurred with Janet Reno (info, added 2014).
Now that information regarding the government/military cover-up of the
extraterrestrial presence is in the public domain, we can see parallels of the
facets regarding NESARA that many have used to discredit it. Some of these
are: deliberate cover-up of information, government/military gag orders, the
suspicious death of persons who attempted to tell the truth, control of the media,
and the ruining of individual lives and professions.
I encourage all to do your own research and add to the pool of documented
evidence on the truth of NESARA.
Now is the perfect time for NESARA to be released to the world!
NESARA
Demonstration in front of the Peace Palace, the Hague, Netherlands
1892 - Bankers adopted their Bankers' Manifesto of 1892 in which it was
declared: 'We [the bankers] must proceed with caution and guard every move
made, for the lower order ofpeople are already showing signs of restless
commotion. Prudence will therefore show a policy of apparently yielding to the
popular will until our plans are so far consummated that we can declare our
designs without fear of any organized resistance. The Farmers Alliance and
Knights of Labor organizations in the United States should be carefully watched by
our trusted men, and we must take immediate steps to control these organizations in
our interest or disrupt them....
The courts must be called to our aid, debts must be collected, bonds and
mortgages foreclosed as rapidly as possible.
When through the process of the law, the common people have lost their
homes, they will be more tractable and easily governed through the influence of the
strong arm of the government applied to a central power of imperial wealth under
the control of the leading financiers. People without homes will not quarrel with
their leaders."
1907-1917 - In order to warn Americans,thel892 Bankers' Manifesto was
revealed by US Congressman Charles A. Lindbergh, Sr. from Minnesota before
the US Congress sometime during his term of office between the years of 1907
and 1917.
1910 - John E . DiNardo, professor of public policy and economics at the

University of Michigan, writes in his article "The Federal Reserve Act": "On the
night of November 22,1910, a small group of surrogates of the most powerful
bankers of the World met... under the veil of utmost secrecy.
Over the next few weeks these men would perpetrate, under the orders of their
masters, ... perhaps the most colossal and devastating fraud ever inflicted upon the
American People.
This ultra-secret fraud is known as the Federal Reserve Act of 1913.... The
Federal Reserve Act of 1913 concocted legislation, to be foisted upon the People's
Congress of the United States, that empowered and commissioned this secret cabal
of World-dominant bankers to PRINT UNITED STATES CURRENCY, a
usurpation of our Constitution's explicit edict empowering ONLY THE UNITED
STATES GOVERNMENT to print and coin currency. This world banking empire
used their stolen power to print, out of thin air, paper currency which, in no way
represents the gold and silver reserves that authentic currency is supposed to
represent."
1913 - The Federal Reserve Act of 1913 Complete text of Act may seen
at: http://www.federalreserve.gov/aboutthefed/fract.htm
1933 - 1934 - Prior to 1933, Federal Reserve Notes were backed by gold. This
changed with the new law: Congressional Record, March 9,1933 on HR 1491 p.
83. "Under the new lawthemoney is issued to the banks in return for government
obligations, bills of exchange, drafts, notes, trade acceptances, and bankers
acceptances. The money will be worth 100 cents on the dollar, because it is backed
by the credit of the nation. It will represent a mortgage on all the homes, and other
property of all the people of the nation."
The Bankers' Manifesto ties in with the U.S. Senate Document No. 43, 73^^
Congress, P* Session (1934), which states: "The ultimate ownership of all property
is in the State; individual so-called 'ownership' is only by virtue of Government, i.e.,
law, amounting to mere 'user' and use must be in acceptance with law and
subordinate to the necessities of the State."
1970s - The Federal Land Bank illegally foreclosed on farmers mortgages all
throughout the Midwest. In each of these cases the farmers were defrauded by
the banks with the approval of the Federal Reserve System. These court cases
would eventually become known as the Farmer Claims Program.
1978 - An elderly ranch farmer in Colorado purchased a farm with loan from
the Federal Land Bank. After he died the property was passed on to his son Roy
Schwasinger, Jr., who was a retired military general. Soon after a Federal Land
Bank officer and Federal Marshall appeared on his property and informed him
the bank was foreclosing on his farm, ordering him to vacate within 30 days.
Without his knowledge, his deceased father had signed a stipulation which
reverted the property back to the Federal Land Bank in the event of the
borrower's death.
Outraged, Roy E . Schwasinger, Jr. filed a class action lawsuit in the Denver
Federal Court system. The suit was dismissed on the basis of incorrect filing.
This prompted Roy Schwasinger's investigation into the inner workings ofthe
banking system.
1982 - Roy Schwasinger was given a contract by the US senate and later
Supreme Court to investigate banking fraud. But because he was under a strict
non-disclosure order he was not allowed to tell the media what he discovered. In
the late 80s he began sharing his knowledge with others including high ranking
military personnel who helped him bring about a class action lawsuit against the
federal government.
The first series of these lawsuits began in the mid 1980's when William and
Shirley Baskerville of Fort Collins, Colorado were involved in a bankruptcy case
with First Interstate Bank of Fort Collins; who was trying to foreclose on their
farm. At a restaurant their lawyer informed them that he would no longer be
able to help them and walked-off. Overhearing the conversation Roy
Schwasinger offered his advice on how to appeal the case in bankruptcy court.
So in 1987 they filed an appeal (Case No. 87-C-716) with the United States
District Court in Colorado.
1988 - On November 3,1988, the Denver Federal Court system ruled that indeed
the banks had defrauded the Baskervilles and proceeded to reverse its
bankruptcy decision. But when the foreclosed property was not returned they
filed a new lawsuit. Eventually, 23 other farmers, ranchers, and Indians swindled
by the banks in the same manner would join in the case.
In these cases, the banks were foreclosing on the properties using fraudulent
methods such as charging exorbitant interest, illegal foreclosure, or by not
crediting mortgage payments to their account as they should have but instead
would steal the mortgage payments for themselves triggering foreclosure on the
property. After running out of money they continued their fight without the help
of lawyers. With some assistance by the Farmers Union a new lawsuit was filed
against the Federal Land Bank and the Farmers Credit System. Case No. 92-C1781
The District Court ruled in their favor and ordered the banks to return the
stolen properties with help from either Federal Marshals or the National Guard.
But when no payments were made, the farmers declared involuntary Chapter
Seven Bankruptcy against the Federal Land Bank and the Farmers Credit
System. The banks appealed their case insisting they were not a business but a
federal agency therefore they were not liable to pay the damages.
So the farmer's legal team adopted a new strategy. According to the Federal
Land Bank's 1933 charter they are not allowed to make loans directly to
applicants, but instead could only back loans as a guarantor in case of default.
Because the Federal Land Bank had violated this rule the farmer's legal team
was able to successfully sue the bank for damages.
Word of the lawsuit began to spread; the legal team would teach others how to
fight foreclosure and to help them file lawsuits as well (Case No. 93-1308-M).
Celebrities such as Willie Nelson joined in the cause and helped raise money
during his "Farm Aid" concerts.
The Baskerville case had now become the Farmer Claims Class Action Lawsuit.
Worried about the legal ramifications the government retaliated against the
farmers by hitting them with either outrageous IRS fees, or by imprisoning the
legal team under frivolous nonrelated charges. When the farmers realized they
were being unfairly targeted, they had military generals such as General Roy
Schwasinger sit in the courtroom to make sure the bribed judges would vote
according to constitutional law.
The farmers now with a large team of knowledgeable people of the law behind
them filed a new case to claim additional damages from the fraudulent loaning
activities of the Farmers Credit System.
The government tried to settle but they had already lost many cases and were
now loosing the appeals as well. More and more evidence was collected.
According to the National Banking Act all banks are required to register their
charters with the Federal and State Bureau of Records, but none ofthe banks
complied, allowing the legal team to sue the Farmers Credit System. Not only
was Farmers Credit System not chartered to do business with the American
Banking Association, but so were other quasi government organizations such as
the Federal Housing Administration, The Department of Housing and Urban
Development, and even the Federal Reserve Bank.
The Farmers Clauns lawsuit was thrown out of court at each level with the
records purposely destroyed. An example of these court cases may be viewed
at: http://openiurist.org/25/f3d/1055/baskerville-ib-v-federal-land-bank-na
1990s - In the early 1990's Roy Schwasinger brought the case before the United
States Supreme Court. Some of the content of this case is sealed from public eyes
but most of it can be viewed today.
The U.S. Supreme Court Justices ruled that the Farmers Union claims were
indeed valid, therefore, all property foreclosed by the Farmers Credit System
was illegal and all those who were foreclosed on would have to receive damages.
In addition, they ruled that the U.S. federal government and banks had
defrauded the farmers, and all U.S. citizens, out of vast sums of money and
property.
Furthermore, the court ruled the shocking truth that the IRS was a Puerto Rican
Trust. Read more at: http://www.supremelaw.org/sls/31 answers.htm
In addition the court ruled that the Federal Reserve was
unlawful: http://www.save-a-patriot.org/files/view/frcourt.html
http://www.globalresearch.ca/index.php?context=va&aid=10489
http://www.apfn.net/doc-100 bankruptcv27.htm
That the income tax amendment was only ratified by four states and therefore
was not a legal amendment, that the IRS code was not enacted into '"'^Positive
Law^^ within the Code of Federal Regulations. Positive Law = Laws that have
been enacted by a properly instituted and recognized branch of the government.
http://www.givemelibertv.org/features/taxes/notratified.htm
That the U.S. government illegally foreclosed on farmer's homes with help from
federal agencies. Irrefutable proof was presented by a retired CIA agent. He
provided testimony and records of the banks illegal activities as further evidence
that the Farmers' Union claims were indeed legitimate. The implications of such
a decision were profound. All gold, silver, and property titles, taken by the
Federal Reserve and IRS must be returned to the people.
The legal team sought assistance from a small group of benevolent visionaries,
consisting of politicians, military generals, and business people who have been
secretly working to restore the constitution since the mid 1950's. Somehow
within their ranks, a four star U.S. army general received "title" and "receiver"
of the original 1933 United States Bankruptcy.
When the case was brought before the U.S. Supreme Court, they ruled in his
favor, giving the Army General title over the United States, Inc. Legal action was
then passed on to the Senate Finance Committee and Senator Sam Nunn, who
was working with Roy Schwasinger.
1991 - With the help of covert congressional and political pressure. President
George H.W. Bush issued an Executive Order on Oct. 23,1991, which provided a
provision allowing anyone who has a claim against the federal government to
receive payment as long as it's within the rules of the original format ofthe
case. You may read Executive Order No. 12778 at the URL below.
http://www.presidencv.ucsb.edu/ws/index.php?pid=20129#axzz2iJWHk3Ki
According to the Federal Reserve Act of 1913, all present and succeeding debts
against the U.S. Treasury must be assumed by the Federal Reserve. Thus the
famer's claims legal team was able to use that executive order to not only force
the Federal Reserve to pay out damages in a gold backed currency but also allow
them to receive legal ownership over the bankruptcy of United States, Inc.
To collect damages the farmers legal team used an obscure attachment to the
14th amendment which most people are not aware of. After the civil war the
government allowed citizens to claim a payment on anyone who suffered
damages as a result of the Federal Government failing to protect its citizens from
harm or damages by a foreign government. President Grant had this attachment
sealed from public eyes but somehow, someone on the farmer's legal team got a
hold of it.
If you read that carefully, it specifies damages by a foreign government. That
foreign government is the corporate federal governmentwhich has been
masquerading to the public as the constitutional government. See
http://www.freerepublic.com/focus/f-news/813840/posts for explanations.
Remember this goes back to the Organic Act of 1871 and the Trading with the
Enemies Act of 1933, which defined all citizens as enemy combatants under the
federal system known as the United States. The Justices and farmer's legal team
recognized how evil and corrupt our federal government had become and to
counteract this they added some provisions in the settlement to bring the
government back under control.
a. First they would have to be paid using a lawful currency, backed by gold and
silver as the constitution dictates. This would eliminate inflation and gyrating
economic cycles created by the Federal Reserve System. See Article 1, Section 10
of the US Constitution.
b. Second they would be required to go back to common law instead of admiralty
law under the gold fringe flags. Under common law if there is no damage or
harm done then there is no violation of the law. This would eliminate millions of
laws which are used to control the masses and protect corrupt politicians.
c. Lastly the IRS would have to be dismantled and replaced with a national sales
tax. This is the basis of the NESARA Law.
When the legal team finally settled on a figure, each individual would receive an
average of $20 million dollars payout per claim. Multiplied by a total of 336,000
claims that were filed against the U.S. Federal Government, the total payout
would come out to a staggering $6.6 trillion dollars.
The U.S. Supreme Court placed a gag order on the case, struck all information
from the Federal Registry, and placed all records in the Supreme Court files. Up
to that point Senator Sam Nunn had kept the Baskerville Case records within his
office. A settlement was agreed to out of court and the decision was sealed by
Janet Reno. Because the case was sealed, claimants are not allowed to share
court documents to media outlets without violating the settlement, but they can
still tell others about the lawsuit. This is why you probably have not heard about
this.
1991 - Roy Schwasinger went before a senate committee to present evidence of
the banks and governments criminal activity. He informed them how the
Corporation of the United States was tied to the establishment of a New World
Order which would bring about a fascist one world government ruled by the
international bankers.
1992 - A task force was put together consisting of over 300 retired and 35 active
US military officers who strongly supported constitutional law.* This task force
was responsible for investigating governmental officials, congressional officers,
judges, and the Federal Reserve.
*Chief of Naval Operations, Admiral Jeremy Boorda
General David McCloud
*Former Director of Central Intelligence, William Colby

They uncovered the common practice of bribery and extortion committed by
both senators and judges. The criminal activity was so rampant that only 2 out of
535 members of congress were deemed honest. But more importantly they
carried out the first ever audit of the Federal Reserve.
The Federal Reserve was accustomed to giving orders to politicians and had no
intentions of being audited. However after they were informed their offices
would be raided under military gunpoint if necessary; they complied with the
investigation. After reviewing their files the military officers found $800 trillion
dollars sitting in accounts which should have been applied to the national debt.
And contrary to federal government propaganda they also discovered that most
nations had in fact owed money to the United States instead of the other way
around.
These hidden trillions were then confiscated and placed into European bank
accounts in order to generate the enormous funds needed to pay the farmers
claims class action lawsuit. Later this money would become the basis of the
prosperity programs.
Despite these death blows President George H.W. Bush and the illuminati
continued on with their plans of global enslavement.
1992 - In August 1992 the military officers confronted President Bush and
demanded he sign agreement that he would return the United States to
constitutional law and ordered him to never use the term New World Order
again. Bush pretended to cooperate but secretly planned to bring about the New
World Order anyway by signing an Executive Order on December 25,1992, that
would have indefinitely closed all banks giving Bush an excuse to declare martial
law.
Under the chaos of martial law, Bush intended to install a new constitution which
would have kept everyone currently in office in their same position for 25 years
and it would have removed all rights to elect new officials. The military
intervened and stopped Bush from signing that Executive order.
1993 - In 1993 members ofthe Supreme Court, certain members of congress and
representatives from the Clinton government meet with high ranking US
military officers who were demanding a return to constitutional law, reforms of
the banking system, andfinancialredress. They agreed to create the farm claims
process which would allow the legal team to set up meetings all over the country
on a grass roots level to help others file claims and to educate them about the
lawsuit.
A claim of harm could be made on any loan issued by a financial institution for
all interest paid; foreclosures; attorney and court fees; IRS taxes or liens; real
estate and property taxes; mental and emotional stress caused by the loss of
property; stress related iUness such as suicide and divorce; and even warrants,
incarceration, and probation could also be claimed.
1994 - But the Clinton government undermined their efforts by requiring the
farm claims to use a specific form designed by the government. This form
imposed an administrative fee of $300 for each claim, which was later used in
1994 as a basis to arrest the leaders of the legal team including Roy Schwasinger.
The government was so afraid of what they would say during their trial in
Michigan that extra steps were taken to conceal the true nature of the case.
County courthouse employees were not allowed to work between Monday and
Thursday during the course of the trial. And outside the courthouse, FBI agents
swarmed the perimeter preventing the media and visitors from learning what
was going on as well.
Harassment and retaliation by the government increased, many where sent
prison or murdered while incarcerated. Despite being protected by his military
personnel the army general who acquired the original 1933 Title of Bankruptcy
ofthe United States; was imprisoned, killed, and replaced with a clone. This
clone was then used as a decoy to prevent any further claims from being filed. (I
am not qualified to speak on the fact of human clones; however, that they exist is
a fairly widely accepted fact among those who study behind the scenes
activities. You may read more
at: http://www.questacon.edu.au/indepth/cloning/arguments against cloning.ht
ml Don't allow the thought of clones running the government cause you to refuse
to consider the veracity of this history. As truth emerges, we will be shocked at
much we hear. (2013 - the above URL is no longer available; however, the fact
that cloning has been an ethical question for yrs. is a good indication that the
Secret Government knows more than they have released to the public.)
During the first Clinton administration the military delayed many of Clinton's
federal appointments until they were sure these individuals would help restore
constitutional law. One such individual who promised to bring about the
necessary changes was Attorney General Janet Reno.
1993 - In agreement with the Supreme Court ruling on June 3,1993, Janet Reno
ordered the Delta Force and Navy Seals to Switzerland, England, and Israel to
recapture trillions of dollars of gold stolen by the Federal Reserve System from
the strategic gold reserves. These nations cooperated with the raid because they
were promised their debts owed to the United States would be canceled and
because the people who stole the money from the United States also stole money
from their nations as well.
This bullion is to be used for the new currency backed by precious metals. It's
now safely stockpiled at the Norad Complex at Colorado Springs, Colorado and
four other repositories. Janet Reno's action so enraged the powers-that-be, that
it resulted in her death. She was then replaced with a clone and it was this
creature that was responsible for covering-up the various Clinton scandals.
To keep the Secretary of the U.S. Treasury Robert Rubin in hue, he too was also
cloned. For the remainder of their term in office both Reno and Rubin received
their salaries from the International Monetary Fund as foreign agents and not
from the U.S. Treasury. Despite these actions the legal team continued on with
their fight while managing to avoid bloodshed and a major revolution.
After 1993 the farmer claims process name was changed to Bank Claims.
Between 1993 and 1996, the U.S. Supreme Court required U.S. citizens to file
"Bank Claims" to collect damages paid by the U.S. Treasury Department. This
process CLOSED in 1996.
During this time the U.S. Supreme Court assigned one or more Justices to
monitor the progress of the rulings. They enlisted help of experts in economics,
monetary systems, banking, constitutional government and law, and many other
related areas. These justices built coalitions of support and assistance with
thousands of people worldwide; known as ^''White Knights.'''' The term 'White
Knights' was borrowed from the world of big business. It refers to a vulnerable
company that is rescued from a hostile takeover by a corporation or a wealthy
persona White Knight.
To implement the required changes, the five Justices spent years negotiating how
the reformations would occur. Eventually they settled on certain agreements,
also known as Accords, with the U.S. government, the Federal Reserve Bank
owners, the International Monetary Fund, the World Bank, and with numerous
other countries including the United Kingdom and countries of the Euro Zone.
Because these U.S. banking reformations will impact the entire world; the IMF,
World Bank, and other countries had to be involved. The reformations require
that the Federal Reserve be absorbed by the U.S. Treasury Department and the
banks' fraudulent activities must be stopped and payment must be made for past
harm.
1998 - The military generals who originally participated in the famer's claim
process realized that the US Supreme Court justices had no intentions of
implementing the Accords. So they decided the only way to implement the
reformations was through a law passed by congress.
1999 - A 75 page document known as the National Economic Security and
Reformation Act (NESARA) was submitted to congress where it sat with little
action for almost a year.
2000 - Late one evening on March 9,2000, a written quorum call was handdelivered by Delta Force and Navy SEALs to 15 members ofthe US Senate and
the US House who were sponsors and co-sponsors of NESARA. They were
immediately escorted by the Delta Force and Navy SEALs to their respective
voting chambers where they passed the National Economic Security and
Reformation Act. President Clinton signed the Act into LAW.
These 15 members of congress were the only people lawfully allowed to hold
office in accordance with the original 13th amendment. Remember British
soldiers destroyed copies of the Titles of Nobility Amendment (TONA) in the war
of 1812 because it prevented anyone who had ties to the crown of England from
holding public office. President Clinton relinquished his bar registry.
NESARA is the most ground breaking reformation to sweep not only this
country but our planet in its entire history. The act does away with the Federal
Reserve Bank, the IRS, the shadow government, and much more.
NESARA implements the following changes:
1. Zeros out all credit card, mortgage, and other bank debt due to illegal banking
and government activities. This is the Federal Reserve's worst nightmare, a
"jubilee" or a forgiveness of debt.
2. Abolishes the income tax.
3. Abolishes the IRS. Employees ofthe IRS will be transferred into the US
Treasury national sales tax area.
4. Creates a 14% flat rate non-essential new items only sales tax revenue for the
government. In other words, food and medicine will not be taxed; nor will used
items such as old homes.
5. Increases benefits to senior citizens.
6. Returns Constitutional Law to all courts and legal matters.
7. Reinstates the original Title of Nobility amendment.
8. Establishes new Presidential and Congressional elections within 120 days after
NESARA's announcement. The interim government will cancel all National
Emergencies and return us back to constitutional law.
9. Monitors elections and prevents illegal election activities of special interest
groups.
10. Creates a new U.S. Treasury rainbow currency backed by gold, silver, and
platinum precious metals, ending the bankruptcy of the United States initiated
by Franklin Roosevelt in 1933.
11. Forbids the sale of American birth certificate records as chattel property
bonds by the US Department of Transportation.
12. Initiates new U.S. Treasury Bank System in alignment with Constitutional
Law
13. Eliminates the Federal Reserve System. During the transition period the
Federal Reserve will be allowed to operate side by side of the U.S. treasury for
one year in order to remove all Federal Reserve notes from the money supply.
14. Restores financial privacy.
15. Retrains all judges and attorneys in Constitutional Law.
16. Ceases all aggressive, U.S. government military actions worldwide.
17. Establishes peace throughout the world.
18. Releases enormous sums of money for humanitarian purposes.
19. Enables the release of over 6,000 patents of suppressed technologies that are
being withheld from the public under the guise of national security, including
free energy devices, antigravity, and sonic healing machines.
October 10, 2000 - Because President Clinton's clone had no interest in signing
NESARA into law on October 10, 2000; under orders from U.S. military
generals, the elite Naval Seals and Delta Force stormed the White House and
under gunpoint forced Bill Clinton to sign NESARA. During this time Secret
Service and White House security personnel were ordered to stand down,
disarmed, and allowed to witness this event under a gag order.
From its very inception Bush Sr., the corporate government, major bank houses,
and the Carlyle group have opposed NESARA. To maintain secrecy, the case
detaOs and the docket number were sealed and revised within the official
congressional registry, to reflect a commemorative coin and then again it was
revised even more recently. This is why there are no public Congressional
Records and why a search for this law will not yield the correct details until after
the reformations are made public.
Members of congress will not reveal NESARA because they have been ordered
by the U.S. Supreme Court Justices to deny its existence or face charges of
treason punishable by death. Some members of Congress have actually been
charged with obstruction. When Minnesota Senator Paul Wellstone was about to
break the gag order, his small passenger plane crashed killing his wife, daughter,
and himself.
If fear isn't enough to keep Washington in line, money is. Routine bribes are
offered to governmental/military officials by the power elite/secret government.
Not surprisingly, much disinformation about NESARA can be found on the
internet. Wikipedia's article is total disinformation. Dr. Harvey Francis
Barnard's NESARA billNational Economic Stabilization and Recovery Act
was rejected by congress in the 1990s. Dr. Barnard was a systems philosopher
and had tried for years to interest Congress in his monetary reform
suggestions. A testimony by Dr. Barnard's close friend, Darrell Anderson, may
be read at: http://nesara.org/book/ You may also read articles by Darrell
Anderson at this site. Both men were interested in monetary reform.
September 11,2001 - The next step is to announce NESARA to the world, but
it's not an easy task. Many powerful groups have tried to prevent the
implementation of NESARA.
The NESARA law requires that at least once a year, an effort be made to
announce the law to the public. Three then current US Supreme Court judges
control the committee in charge of NESARA's announcement. These Judges
have used their overall authority to secretly sabotage NESARA's announcement.
In 2001 after much negotiation the Supreme Court justices ordered the IO?***
Congress to pass resolutions approving' NESARA. This took place on September
9, 2001, eighteen months after NESARA became law. On September 10,2001,
George Bush Sr. moved into the White house to steer his son on how to block the
announcement. The next day, on September 11,2001, at 10 AM Eastern Daylight
Time, Alan Greenspan was scheduled to announce the new US Treasury Bank
system, debt forgiveness for all U.S. citizens, and abolishment of the IRS as the
first part ofthe public announcements of NESARA.
Just before the announcement at 9 am. Bush Sr. ordered the demolition of the
World Trade Center's Twin Towers to stop the international banking computers
on Floors land 2 in the North Tower from initiating the new U.S. Treasury Bank
system. Explosives in the World Trade Center were planted by operatives and
detonated remotely in Building 7, which was demolished later that day in order
to cover-up their crime.
Remote pilot technology was used in aflyoverevent to deliver a payload of
explosives into the Pentagon at the exact location of the White Knights in their
new Naval Command Center who were coordinating activities supporting
NESARA's implementation nationwide. With the announcement of NESARA
stopped dead in its tracks, George Bush Sr. decapitated any hopes of returning
the government back to the people.
For the past 10 years, life in the USA, and numerous other countries, has been
dictated by the staged terrorist' attack and its repercussions. Seldom does a day
go by that we do not hear mention of 9/11.
2005 - Dr. Harvey F. Barnard died on May 18,
2005. http://ssdi.rootsweb.ancestrv.com/cgibin/newssdi?sn=Barnard&fn=Harvev&nt=exact
2009 - Roy E . Schwasinger, Jr. died on 8/23/2009 at the age of 75. Verification Social Security Death Index at:
http://ssdi.rootsweb.ancestrv.com/cgibin/newssdi?sn=Schwasinger&fn=Rov&nt=exact
2011 - The Debt Ceiling debacle kindled re-newed interest in NESARA. As we
watch the world economy collapse, we can know that the NESARA LAW
remains in the background, ready to be announced.
ADDITIONAL PHOTOS OF DEMONSTRATIONS FOR NESARA IN

HAGUE, NETHERLANDS may be seen
at: http://www.pathwavtoascension.eom/nesara.html#photos
11-21-14
From:
gov
Tliomas J. Lawler
4002 Hwy 78
Suite 530-321
770-498-2886
To:
Richard B. Russell Federal Building
75 Spring Street, SW
2211 U.S. Courthouse
Dear Clerk of Courts:

Attached is Civil Action No. 1:14-CV-02468-AT by defendant with Exhibits for immediate filing.
Thank you.
Thomas J. Lawler
770-498-2886

Tom Lawler's 100 Page Hissy Fit

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Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 1 of 36

FILED IN CLERK'S OFFICE

DEFENDANT'S SUPPLEMENTAL PLEADING / D E C L A R A T I O N

under duress, hereby submits this

SUPPLEMENTAL PLEADING / DECLARATION / MOTION

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 2 of 36

AMEND / RELIEF FROM JUDGMENT. Defendant must be allowed to

DENYING MOTION TO DISMISS as well as relief from ORDER ON

In an effort to not restate in entirety, all previous submissions to

Defendant(s) proceed under great duress and have been denied

the court appointment of legal counsel and denied adequate fmancial

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 3 of 36

Aside from Defendants' denial of due process, Defendant

maintains that Plaintiff has offered NO real valid basis or evidence, as it

Plaintiff is not a Private Club Member and thus is sorely

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 4 of 36

Plaintiff is not an injured party.

engaged in egregious, reckless

knowingly and intentionally ignoring, omitting and bastardizing substantial

Defendants maintain that the Plaintiff has not established a

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 5 of 36

"spin" and language, with no proof to the contrary of Mr. Lawler's

Plaintiff has infringed upon Defendant's First Amendment

Plaintiff: SECURITIES AND EXCHANGE COMMISSION

Thomas John Lawler, Defendant, Pro Se,

domiciled in the State of Georgia, FREEDOM FOUNDATION USA LLC

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 6 of 36

Nevada, VIOLET BLESSINGS LLC, ORDER PROCESSING LLC and

Defendant(s) claim all rights at all times and waive none of

them at any time for any cause or reason.

Defendant(s) claim substantial Due Process rights to have

Thomas Lawler, Defendant, Pro Se, who is unschooled in law,

asks the court to take Judicial Notice of the enunciation of principles as

Plaintiff(s) reserve the right to supplement and/or amend as

Defendant continues to challenge jurisdiction and venue.

Plaintiff has placed an incorrect emphasis on an unassociated jurisdiction.

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 7 of 36

Change of jurisdiction has previously been established and ignored. Parties

Defendants' have been denied Due Process. Defendant Lawler

Mr. Lawler did not appear in person at the scheduled hearing on

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 8 of 36

technicality. He continued his unsuccessful effort to secure legal counsel. He

A l l Defendants have been denied the right and ability to

Attached is a supplemental DECLARATION OF TRUTH,

submitted by Thomas Lawler. (See Exhibit A)

Defendant submits supplemental information, fact and law in

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 9 of 36

Perimeter College, accredited by the Southem Association of Colleges and

During an event hosted Oct. 30, 2009, by the UNC Center on

Poverty, Work and Opportunity in Chapel Hill, N . C , Associate Justice

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 10 of 36

Plaintiff offers NO valid basis or evidence to estabhsh this

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 11 of 36

Defendant argues and clearly disproves the securities allegation.

The supplemental information, facts and law must not be ignored.

"Howey Test". Justice Murphy formulated one of the U.S.

Supreme Court's earliest tests to determine whether an instrument qualifies

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 12 of 36

statement need be filed or in effect as there was and is no offering of

Since the definitions of "Investment" and "Security" are so

broad, the authorities utilize these phrases/law as a catch-all whenever

Case 1:14-cv-02468-AT Document 32 Filed 11/24/14 Page 13 of 36

To draw a parallel, i f one engages a resume service/recruiter,