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Right. Except the Federal Reserve has zero impact on tax or fiscal policy. These are not "tax dollars". The means by which the Fed extracts wealth from US ci
by haploid 16y ago
Right. Except the Federal Reserve has zero impact on tax or fiscal policy. These are not "tax dollars".
The means by which the Fed extracts wealth from US citizens is not by taxation, but by inflation, since they effectively control the monetary base on which the money supply rests.
Some would argue that inflation is worse than taxation, since it disproportionately affects the lower class who pay the leading inflation "tax" in higher food and energy prices.
But that's an argument for another day. The fact is that journalists habitually get it wrong when they refer to the Federal Reserve as using "tax dollars", which is a blatant lie.
Also, as ars pointed out, these are currency swaps and loans, not handouts.
- jpadkins 16y agoloans and swaps on toxic assets are essentially handouts. The real market value was probably less than 10% of the collateral price. A different way to show it was a handout: What if the Federal Reserve gave out loans to all Americans with underwater loans (against the purchased price of the house, not current market value)? Why did the Fed give out loans to the CDS and loan holders of those very same assets? Isn't the default risk the same?
- dpatru 16y agoGovernment's promise to pay back its debt is a promise to tax its citizens to pay it back. So at least to the extent that the Fed finances the US government, the Fed "lends" money it creates but expects to be paid back in tax money (money the citizens have worked for.)