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Politics : BS Bernanke (Ben Shalom Bernanke), 14th Fed Chairman
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From: Northern Marlin1/22/2008 7:24:59 AM
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Greetings.

I'm wondering why we need the Federal Reserve. Since its inception in 1913 has it been successful protecting the value of our currency? Has it prevented booms and busts? These are easy questions to answer.

However, what is the role of the Federal Reserve in deficit spending by our federal government? Well, let's see. The federal government sells bonds to cover expenditures beyond their revenue stream from tax collection. The Federal Reserve purchases a large portion of these bonds. How does the Federal Reserve get the money to purchase these bonds? Why, they just print it! What does that do to the money supply? And who do you think is hurt the most when the money supply increases? (Hint: it's the same people who fall all over themselves to vote for the politicians who promise the most free lunches).

Phil
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