SLEIGHT OF HAND

"I have never seen more Senators express discontent with their jobs....I think the major cause is that, deep down in our hearts, we have been accomplices in doing something terrible and unforgivable to our wonderful country. Deep down in our heart, we know that we have given our children a legacy of bankruptcy. We have defrauded our country to get ourselves elected." — John Danforth (R-Mo)

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            We are in a credit crisis. Banks aren’t lending! Small businesses can’t get loans and home-buyers can’t get mortgages. Why? Banks are making money without having to go to the trouble to make a loan. Thanks to the Fed’s near zero interest rates, the banks are getting nearly free money. Instead of lending it out, they’re buying government debt – at a high interest rate. And so, they’re getting money for practically nothing and turning around and giving it to our illustrious government for a lot more. How nice.

A good question is, why does our government go through a middleman and not deal with the Fed directly? An even better question is, why does our government go through the Fed at all? As President Wilson once said, ‘If the Nation can issue a dollar bond it can issue a dollar bill.’

        Instead, our government borrows the money it needs that it must repay with interest. No, that citizens must repay with interest. How much do we owe the Fed? As of March 2011 it was $1.6 trillion. This is 42% of the government’s total debt. According to congressional rule, the government can buy out the Fed for $450 million and own its own debt. But no, government spending must be slashed in order to reduce our deficit spending and pay back what we owe. Of which, at least 42% came from thin air – money the government had someone else make, that it could have made itself.