http://www.lewrockwell.com/woods/woods66.html
Why Do They Love the Fed?
by Thomas E. Woods, Jr.
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The Fed doesn’t just benefit the well connected; it also harms those who aren’t so well connected. We know inflation hurts people on fixed incomes (since their incomes stay the same while the prices for the goods they buy go up), but what people usually overlook are the distribution effects of inflation. More money in the economy normally means higher prices. But when the government spends billions of dollars created out of thin air (yes, the Fed can do this) on the defense industry, for example, defense firms get the money at the very beginning of this process, before prices have commensurately risen. In effect the economy doesn’t yet know how much the money supply has increased, and prices have not yet adjusted accordingly. By the time the new money makes its way through the whole economy, prices will have risen throughout most if not all sectors. But while this process is taking place, the privileged firms that are lucky enough to get the new money early benefit from being able to make their purchases at the previously existing price level – thereby silently looting those from whom they buy. By the time the new money finally makes its way to the average Joe, prices have already been rising for quite a while, and he’s been paying those prices all this time on his existing income.
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The Federal Reserve Bank ain’t.
It ain’t “federal”; it’s as “federal” as FedEx. It ain’t a “reserve” of anything; except maybe paper. It ain’t a “bank”; try and transacts some business there.
So what is it? It’s is a tool of the banking industry and the old money elite to allow inflation to erode the value of money. It also destroys savings, the savings ethic, and out moral fiber.
Good for Ron Paul to point this out.
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