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  • Sep 19, 2014
  • Updated: 8:52pm
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Kunming mother sues US central bank over shrinking cash

She claims Federal Reserve has allowed her deposit of US$250 to lose a third of its value

PUBLISHED : Tuesday, 16 April, 2013, 12:00am
UPDATED : Tuesday, 23 April, 2013, 9:26am

A woman in Kunming, Yunnan province, is trying to sue the United States central bank after discovering that the real value of the US$250 she put in an account in 2006 had shrunk by 30 per cent.

She claims it was a result of the Federal Reserve issuing too much money.

Her attorney, her son Li Zhen, called the lawsuit "litigation for the public good" which aimed to stop the Fed from continuing its quantitive easing policy and promote people's awareness of their rights.

He filed the lawsuit alleging "the abuse of monopoly in issuing currency" last month at the Kunming Intermediate People's Court on behalf of his mother, Liu Hua , but the court has yet to decide whether to officially place the case on file.

Since the global financial crisis, the Fed has been pumping more money into the economy via several rounds of so-called quantitative easing to try to boost consumer spending and revive economic growth.

The judges were "greatly surprised" to see the indictment, said the 36-year-old lawyer, adding he was the first mainlander to have filed a lawsuit against a foreign country's central bank.

Li, who works at the Yunnan Tongbang Law Firm, said he referred to Black's Law Dictionary, the most cited legal dictionary in the US, and concluded that the Fed is a private institution instead of a government department.

According to the dictionary, US financial institutions are required to invest in the Federal Reserve System if they want to join it, which he construed as meaning the Fed is privately owned.

"Since the Fed is a private institution which enjoys a monopoly over the issuing of currency, US dollar holders can sue it for printing too much money," he said.

Li said he requested two things from the court - that the Fed halts the abuse of its monopoly over the issuing of dollars and that it makes a "symbolic compensation" of US$1. Asked about the possibility of whether the court will accept the case, Li said it was "difficult to say".

He added: "Since the Anti-Monopoly Law was enforced in 2008, there have been not many serious lawsuits in this regard.

"It was not until early last year that a judicial interpretation for civil anti-monopoly cases was issued … besides, this case involves very professional issues and is very complex."

He said he was looking for more "victims" like his mother and expected to bring a class action in a US court.

Professor Wang Xiaoye , an expert on anti-monopoly law, said the depreciation of a currency was a business risk that holders had to bear.

 

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peterpalms
I think that it is easiest to think of the Fed as a “middle man” between the U.S. government and the global elite. It was designed by the international bankers for the benefit of the international bankers. The entire goal of the Federal Reserve system is to make the ultra-wealthy even wealthier.
The Fed is a privately-owned banking cartel that has a monopoly over money creation in the United States. Nobody else, including the U.S. government, can print money. So those that claim that “the U.S. government can print money” are just dead wrong.
When the U.S. government wants to spend more money than it has, it asks the Fed to make some more money. The Fed then creates money out of thin air that did not previously exist. Normally this money is not even printed up. It is just entered into a computer .
In return for the new money, the U.S. government gives the Federal Reserve some U.S. Treasury bonds. In essence, U.S. Treasury bonds are promises to pay back money. But the U.S. government always agrees to pay back more money than it receives. So a larger amount of debt is created than the amount of new money that is created.
When the Federal Reserve receives those U.S. Treasury bonds, most of the time they take them and auction them off to interested buyers. This is how they get into the hands of the ultra-wealthy and the international bankers.
So how is the U.S. government ever supposed to pay back all that debt if the amount of new debt created is always larger .
peterpalms
One of the painful truths about the Federal Reserve's attempt to stimulate growth in the USA post the 2008 global financial crash, is that it has effected a massive transfer of wealth from savers to spenders. Much the same thing has happened in the UK and Europe, and has been happening for a few decades now in Japan. Sub 1% interest rates do not reward savings, they penalize them. You get back less than you put in, in real terms, once you adjust for inflation, which is still running in excess of 2%.
This means extremely hard times for many middle class pensioners who were relying on fixed interest returns from savings and it has forced them out of "safe" investments and into riskier investments. An example of the former would be sovereign bonds, currently paying microscopically low amounts, while an example of the latter would be blue chip stocks paying dividends of say 3-4%.

Fed Chairman Bob Bernanke would probably hail that shift as "progressive" in the current era since it channels funds away from public sector spending towards the private sector, which is generally more efficient than the public sector and which is therefore more likely to get the US economy back on track. Where savers are really getting hammered, however, is in countries where it is compulsory to use pension savings to buy an annuity. The amount of annual income that a £100,000 annuity will buy these days is unlikely to be able to pay a pensioner's heating bills by 2020 in a "cold" country.
peterpalms
One of the most perplexing questions associated with this process is "Where does the money come from to pay the interest?" If you borrow $10,000 from a bank at 9%, you owe $10,900. But the bank only manufactures $10,000 for the loan. It would seem, therefore, that there is no way that you—and all others with similar loans— can possibly pay off your indebtedness. The amount of money put into circulation just isn't enough to cover the total debt, including interest. This has led some to the conclusion that it is necessary for you to borrow the $900 for the interest, and that, in turn, leads to still
more interest. The assumption is that, the more we borrow, the more we have to borrow, and that debt based on fiat money is a never-ending spiral leading inexorably to more and more debt.
This is a partial truth. It is true that there is not enough money created to include the interest, but it is a fallacy that the only way to pay it back is to borrow still more. The assumption fails to take into account the exchange value of labor. Let us assume that you pay back your $10,000 loan at the rate of approximately $900 per month and that about $80 of that represents interest. You realize you are hard pressed to make your payments so you decide to take on a part-time job. The bank, on the other hand, is now making $80 profit each month on your loan. Since this amount is classified as "interest," it is not extinguished as is the larger portion which is a return of the loan itself.
peterpalms
The stock market expresses its valuation opinions about stocks in Federal Reserve Notes that change in real value (purchasing power) daily, due to the fiat (legalized counterfeiting) by the Fed which then monetizes the Notes into currency by buying assets of the United States Government. This fiat causes inflation. So stock prices are not really higher as the price increases because value of the notes has gone down and more are needed to pay the same amount in purchasing power value. The Previous three central banks of the United States collapsed before one of them managed to last 20 years. as have all fiat and fractional banking systems of the world. The current Fed , when all liabilities are included, is $224 trillion. A quick look at GDP tell you it cannot be paid. Those who have been elected to Govern can only retain power through a default after a collapse. A collapse without a default would eliminate those in power. The stock markets could be saved by
rescinding the Federal reserve Act of 1913 and repaying the debt . The bottom line of the calculation is that the value of each Federal-Reserve Note will be equal to .0047 silver dollar. One new silver dollar would be worth 213 Federal reserve Notes as of October 2010. Unfortunately for the American people, those in Power will not let that happen. hence the warning of an impending stock market crash is warranted, but, however, those governing will not allow it until the dollar becomes worthless in international trade.
Camel
Why? USD250 is still USD250 in the States. That you get now less RMB for those USD250 is the risk of saving foreign currency.
impala
This is hilarious!

I like it as a stunt, although I suspect the real motive might be for the son to get his name out!
hkbulib2
The yuan is "pegged" to the dollar, so if this is true, then a lot of people will have a case against the Chinese central bank as well. Using price inflation, you could make the case that the RMB has lost a similar amount of value.
sudouest
The Chinese central bank, PBOC is not a private institution but a govt department, hence it cannot be sued under the Law. Did you not read the article above ??
 
 
 
 
 

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