Pretend for a moment that you're the Federal Reserve; since December 2008 you've maintained your key interest rate at right around zero percent and you've committed at least $6.4 Trillion in bailouts, but the economy is still stalled out. To boot, you've already doubled the money supply. So what do you do? Inflate some more, of course!
According to the AP, the Federal Reserve will begin purchasing $10 Billion of government debt monthly. The article describes this as "a small amount;" however, as Murray Rothbard showed rather elegantly $10 Billion can quickly turn into $100 Billion due to our fractional reserve banking system.
So every month the Federal Reserve is going to pump $100 Billion created out of thin air directly into the banking system. Sooner or later all of this money is going to make its way out into the general economy, and when it does, God help us all. Weimar Republic, anyone?
End the Fed already!
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