The Federal Reserve Is Why You Can't Afford Food And GasSubmitted by bobbyw24 on Wed, 06/29/2011 - 07:06
The Federal Reserve is supposed to promote full employment and stable prices, yet its actions cause jobs to disappear and prices to rise. This should come as no big surprise, at least it shouldn't if you're not inclined to think government intervention is either desirable or productive. The Fed is government intervention at its purest: the central bank with the legal monopoly on the creation of new money.
The Fed has essentially one trick. It can legally conjure new money whenever it wants. With this one trick it manages to force interest rates down. Mainly it lends the new money to the U.S. government. That is to say, it buys government bonds.
The artificial demand the Fed creates by throwing billions of dollars at government bonds has a depressive effect on interest rates. But these lower interest rates are not a result of those free market forces we champion at the Whiskey Bar. Rather, they are the result of the machinations of a government-chartered bank with a monopoly on the issuance of currency.