Do people understand The Fed?
Sadly, I do not know as much about economics as I would like to, but I think a lot of people know even less about the Federal Reserve System than they do about the economy. The Fed hasn’t been around since the beginning of the country. It was formed in 1913 to “add stability” to our banking system. This system wasn’t made to protect Joe and Jane Taxpayer but to protect the interests of the major banks at the time, to give them a “just in case…” in case some of their investments started going south.
The Fed is America’s Central Bank, and can create legal tender how it sees fit (which is in direct conflict with the Constitution, but I digress) and NO people, our money is no longer backed by gold – though maybe it should be. Inflation is caused by The Fed, not rising prices. Inflation is caused by The Fed releasing more money into the market, thus, devaluing the dollar. A devalued dollar decreases the value of our currency (look at WWII era Germany for instance).
Admittedly I do not understand as much about the way the Fed works as I would like. However, what I do understand is that the government creating money out of thin air without any backing, such as gold is what makes the least sense. As the dollars become created out of thin air, their value drops, harming the working and middle classes.
September 16, 2008 at 11:04 pm
Don’t forget the fraudulent “fractional reserve” system, whereby not only the Fed, but any old bank can “create” money (in the form of IOUs based off loan debt). On top of that is the usurious concept of “interest” that rewards those who have, not those who work. “Capitalism” is based on capital, which is, by definition, assets and savings. A fiat regime that glorifies “investment” and passive (parasitic) income is built on a sandy foundation.
There are some fundamental, systemic problems with our economy, and it’s not a question of whether or not they will cause a collapse, but when.