Why government goes through banks when they can just print and spend it themselves?

Economics Economics Questions
1

A friend of mine posed this question to me, and I did some thinking to come up with my own explanation, but I want to hear others’ thoughts on this. This question surely is an economic one, but perhaps mostly a political one.

Question: Why does the federal government borrow money from the banks to fund their warfare/welfare state, when hypothetically, they could just get it directly from the Federal Reserve?

Here were some of my initial thoughts, but I want to hear your own explanations - new ideas and also corrections to my own understanding below.

Governments in Eastern Europe learned the hard way that printing without restraint can cause hyperinflation, civil unrest, and a flight of currency, where the people choose to get rid of the government currency. This reduces the power of the government when the people decide to no longer hold its currency. The key is to print as much money as possible without causing currency collapse. I believe the banking cartel is key to controlling this. It’s all about managed and controlled inflation. By spreading the money around and having tight control and regulation on the “private” banks, they not only try and prevent ‘too much’ liquidity, but the key is to have as much control over the currency as possible, and by going THROUGH the banks (rather than just printing and spending itself) they have banks around the country dependent upon a central bank. The whole system would collapse without the Fed: banks don’t have the money to pay back all their depositors by themselves (we can get into fractional reserve banking later) and they are completely dependent on a central bank. By using the middle man, they have more control over the middle man, and so their control spreads throughout the country… and globe. The Fed has its hands in banks throughout the world, funding corruption and war everywhere.

So those are two aspects of it: managed inflation and greater control. It’s more subtle, secretive, and complex this way so the people may not wake up. But it’s the nature of power and evil grow to too fast and too big - the currency will eventually collapse, but after that, we’ll want freedom and free-market-competing currencies, the socialists will want to set up a new currency and new central bank to retain their power. Who will prevail?

I’ll always remember that quote from “None Dare Call it Conspiracy,” where the author says that Lenin said that centralizing credit (a central bank) is 90% of socializing a country. It is so true and most are blind to it. But not Ron Paul.

What are some of your thoughts?

2

The government declared bankruptcy in 1913. The “Federal Reserve” (a group of international banking interests) now owns the government.

3

The process can be made to look legitimate. The central bank can then pretend to be doing real double column accounting like it’s a real bank.

The mathematical monetary cranks can then pretend they’re real scientists dealing with a real monetary institution as oppose to some political institution.

4

Concealing the issue and avoiding hyperinflation is a big part of it.

Another aspect is the attempt to draw as much real funding from the rest of the economy as possible - so it’s not necessary to print as much and the process seems more legitimate. Also, the alliance with bankers is a useful thing by itself.

5

The US Federal Government does not own nor does it have any control over the US Fed. So as powerful as you might think the President and Congress are, they are small potatoes compared to the Fed. The Fed controls how much money banks keep in reserve, ergo any loanable funds come from or through these organizations. If the govenrment decided to go it alone can only increase taxes and fees. If it wants to loan money, it has to go to the Fed or the central bank of some other country that is closely allied with the Fed.

Face it, the Fed is the most powerful institution in the political economy of the entire globe. Of course the past 10 years have put a huge dent in its power as it has made the dollar increasingly worthless. And quite predictably it will, maybe shortly, yield to the much better run banks of BRIC countries.

6

Nonfederal Nonreserve,

Bankruptcy? I must have missed their chapter filing.