The Federal Reserve Bank of the United States ought to be abolished

"It was more an honest question. How DOES Quantitative easing increase inflation when such money, we know, does not create aggregate demand?" I see. Well, this is how. If the nominal interest rate is at or very near zero, the central bank cannot lower it further. Such a situation, called a liquidity trap,[20] can occur, for example, during deflation or when inflation is very low.[21] In such a situation, the central bank may perform quantitative easing by purchasing a pre-determined amount of bonds or other assets from financial institutions without reference to the interest rate.[5][22] The goal of this policy is to increase the money supply rather than to decrease the interest rate, which cannot be decreased further.[23] This is often considered a "last resort" to stimulate the economy.[24][25] -Wikipedia And it is not a good idea to stimulate the economy by just throwing more money into it. It never works. Which is a major flaw in Keynesian economics. "Once again, the overwhelming vast majority of our government's spending comes from either taxes or borrowing through the bond markets. Seigniorage can be calculated by taking the amount of money that the government borrows over a certain amount of time and reducing it by the inflation rate over that period of time. Inflation, because it has been incredibly low, and actually negative when you look at the period of 2009-2012, has not reduced real bond yields on treasury bills. " Well, actually, inflation is not low, and its definitely not negative. The government says it is at 3.1%. But the formula they use to calculate it is by using products that people rarely buy, like cars, and houses. This formula is called the CPI (Consumer Price Index), and its basically a load of crap. The real inflation rate is actually above a whopping 8%. This includes all products that you buy everyday like milk and cereal. This formula is called the EPI (Everyday Price Index) I’m sure you and I agree that the government always has a way of making things look better than they are… And, there’s really no way of telling whether Congress taxes more than the FED because there’s no real straight story on how much the FED creates a year, and there’s also not a straight story on how much the government receives in taxes per year. Also the FED creates money depending on the economy. In 2008, the FED gave the government 7.7 trillion dollars for the bailout. And that was in secret. That is way more than the government takes in with taxes, which from what I’ve seen, averages around 2 trillion a year. There is really no way of telling how much money they pump into the economy. But another problem is that the government spends way more than it takes in. The Federal Reserve creates most of its money from debt. This means that our money is basically backed by debt. This creates a false prosperity from government. It might seem good at some points, but that’s only because all of this money is just credit. Bad credit. I'm sorry but where are you getting this information from? Nothing that involves debt with our government is negative, because then we not be able to produce any money whatsoever. And the reason that Austrian economics sometimes use examples from hundreds and hundreds of thousands of years ago, is because, there’s only so many variations of government. Throughout time, governments have functioned pretty much the exact same way. And its not like Austrians are the only one to do this. Every school of thought has to base its knowledge from somewhere, and most of the time, its from hundreds of years ago. Sources http://marty4650-spincycle.blogspot.com... http://en.wikipedia.org... http://www.nypost.com... http://www.freerepublic.com... http://abcnews.go.com... http://spectator.org... http://mykindred.com...