In its never-ending quest to spend money it doesn’t have, but not wanting to raise taxes, especially during the current election cycle, on Thursday, November 5 Congress passed a $325-billion, six-year transportation bill that is to be financed by selling off some of the country’s strategic petroleum reserves and raiding the Federal Reserve.
In its editorial complaint about the bill, the Washington Post said that the bill “takes money out of one government pocket — the Fed — and puts it into another — the highway program.” The implication is that Congress should use “real” money, taken by force from the American taxpayer, whether he likes it or not, instead of using “paper” money created by the Fed out of nothing.
It’s hardly a distinction. The Fed has, for the last 102 years, been a gigantic money printing press that has morphed — via “mission creep” — into the government’s largest and most invasive federal agency, with its actions affecting every financial transaction undertaken by every American every time he or she spends a dollar. Sold initially back in 1913 as the “lender of last resort” for banks that got themselves into trouble, the Fed has since the Great Depression become Congress’ “lender of first resort” when taxpayers refused to be mulcted further directly through tax increases.
As a result, the Fed has been financing congressional deficit spending for years, indirectly taxing those taxpayers through inflation — the gradual incremental loss of purchasing power of their money.
The usual apologists for the Fed showed up in print shortly after the bills were passed by Congress (which are waiting now for conference to iron out differences before being sent to the president) to explain, as best they could, why using the Fed’s capital to pay for highways was a bad idea. First up was former chairman of the Fed, Ben Bernanke, who now holds forth at the liberal Brookings Institute as a distinguished fellow. Writing in his Brookings blog, Bernanke did his best to come up with reasons why this taking of funds from the Fed’s capital account is a bad idea: “It’s not good optics or good precedent for Congress to be seen as raiding the supposedly independent central bank to pay for spending.”
http://www.thenewamerican.com/economy/commentary/item/22010-congress-votes-to-raid-fed-s-slush-fund-to-pay-for-highways
In its editorial complaint about the bill, the Washington Post said that the bill “takes money out of one government pocket — the Fed — and puts it into another — the highway program.” The implication is that Congress should use “real” money, taken by force from the American taxpayer, whether he likes it or not, instead of using “paper” money created by the Fed out of nothing.
It’s hardly a distinction. The Fed has, for the last 102 years, been a gigantic money printing press that has morphed — via “mission creep” — into the government’s largest and most invasive federal agency, with its actions affecting every financial transaction undertaken by every American every time he or she spends a dollar. Sold initially back in 1913 as the “lender of last resort” for banks that got themselves into trouble, the Fed has since the Great Depression become Congress’ “lender of first resort” when taxpayers refused to be mulcted further directly through tax increases.
As a result, the Fed has been financing congressional deficit spending for years, indirectly taxing those taxpayers through inflation — the gradual incremental loss of purchasing power of their money.
The usual apologists for the Fed showed up in print shortly after the bills were passed by Congress (which are waiting now for conference to iron out differences before being sent to the president) to explain, as best they could, why using the Fed’s capital to pay for highways was a bad idea. First up was former chairman of the Fed, Ben Bernanke, who now holds forth at the liberal Brookings Institute as a distinguished fellow. Writing in his Brookings blog, Bernanke did his best to come up with reasons why this taking of funds from the Fed’s capital account is a bad idea: “It’s not good optics or good precedent for Congress to be seen as raiding the supposedly independent central bank to pay for spending.”
http://www.thenewamerican.com/economy/commentary/item/22010-congress-votes-to-raid-fed-s-slush-fund-to-pay-for-highways
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