We don't BUY money. we lend it. small banks lend from the Fed. The Fed makes money off of the interest. The Fed can't keep this money, or else the amount of money would inflate at close to twice the rate it does now. Interest paid to the fed is either removed from the money supply or it is given directly to the government.

It IS a way that we get taxed, but it also keeps our money from inflating too fast and it gives one singular group the ability to affect the demand of housing. since they have that power they use it to help americans.

if you've been watching wall street, you would have seen that we are close to a recession. however, the fed lowered interest rates so much that we may just be able to stop ourselves before we fall to that point.

i will consider your theory proven if you can explain what the fed does with its money that it makes off inflation.

I'm not really sure where to begin there. The FED prints the money for the United States. We borrow it FROM them at interest. We pay them to print our money. So in short, we are buying our money from them.

Perfectly true, except the last line. This discussion is showing that they are not using that power to help Americans, and therein lies the core problem.

Recession, we'll be lucky if that's all. You can mark my words, we will be in a depression before it's over. That's what this entire system has been building to, the control of the citizens through the only means of value-trading they've allowed; money. The FED lowering the interest rates is just to appease the people. Keep in mind, if you're thinking about things in their terms of the hows whens and whys, they're going to keep the public as unaware and happy as long as they can. In the end, those lowered interest rates won't mean a thing when they crash the market. Yes, they will crash it.

Makes off inflation or interest? The answers would be different, but here's the thing: it doesn't matter. You're focusing on the outside facade and forgetting that they print the money. Any money they "make" in return is just superfluous paper with a trail. Money means nothing to those who create it.

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Ignorance Empowers The Corrupt

alright. first, i don't think they would crash the market simply because they make money off the market. here is a chart f the stock market for as long as yahoo can provide: http://finance.yahoo.com/q/bc?s=%5EDJI&t=my the federal reserve was created in 1913. your argument might have been creditable in the depression, when it seriously looked like we were going to crash to the bottom. but now the markets wont crash, and i'm confident that the government has saved the markets. it will likely go down tomorrow, but it wont likely keep going down. it will come back, and as you can see our correction is nothing more than a blip on the radar.

now, as far as the fed printing money, yes, they do print money. explaining this would quickly get over most people's head, but i think you can wrap your mind around it. the model that they're following is the Keynesian economics model. basically this model says that markets are only affected by demand. as employment goes up it at first goes up slowly - because you always need people working and the most skilled people are always going to work - then it begins to speed up. the goal of the fed is to use interest rates to influence the demand for loans.

here's an example. if we didn't have the fed, and banks all loaned out money at 3% interest, everyone would be able to get a house. that would mean that the demand for a house would fall. now assuming that housing is the only industry in the world - god knows it's the most expensive - the lower the demand, the less amount of jobs can be created. here is a doodle i drew for you in paint:



As i tried to explain with this graph, the fed actually boosts the rate of employment, because it became harder to get a home, therefore the demand rose.

when the interest rates were so low we ran the risk of actually deflating our money supply which meant a lot of people who took out loans had to pay more because of deflation of money. which meant it was harder to get loans, which meant we didn't have as many people opening a businesses.

This is gonna freak you out.

You are dead right.

However it is because of that the what used to be capitalism has turned into monopolies. What used to be free enterprise is now only big business.

That is only a fraction of the real problem, and their real objective.

The problem is inherent in it's pseudo-solution: that same so called balance that, on the surface appears to be a very good idea, is ultimately it's biggest failure. Follow that same pattern again, and what happens is we have another depression with more business loss and more homes being lost, more families on government assistance, more government spending, which means more borrowing which means more debt. It also means people there will be lots of people who have no choice but to turn to their government which translates into more control of the people.

Change the interest, save the people, come out smelling like roses. In the meantime your objective has still been satisfied: get rid of as many independent lower to middle class as you can.

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Ignorance Empowers The Corrupt