Photos: Inauguration Day in Washington

The Federal Reserve, a nice racket to be in

I heard the chairman of the Federal Reserve say he's fighting deflation because it would be bad for the government. It would cause less money to be collected in taxes. He was suggesting inflation would be better for the government even though it will hurt the people when prices rise.

So where does the Fed get its money to buy things? If the U.S. Treasury prints the dollars and gives it to the Federal Reserve which gives it to banks, what kind of scheme is that? What would the Fed be if the treasury stopped giving them money? Do they have some other way of making money? Aren't they just a middle man, like when banks hire someone to repossess your car? Everyone hates the repo man, incidentally.

Suppose someone approached you with a deal like I described. Would you trust them? Don't ask questions just hand over your life's savings or your taxes. What would happen if they cut out the middle man and the U.S. Treasury did all the work? Maybe that wouldn't fit the scheme.

Vince of Baltimore

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