Why We Have Deficit Spending - Thievery

Have you ever wondered why the federal government spends more than it has? It does not have to; but, it benefits someone. It benefits the banks. It benefits the Federal Reserve bank which is privately owned and is not a part of the government.

In the simplest terms, the Federal Reserve is a private bank. In fact, banks are required to own stock in their local Federal Reserve and they elect some of their board members. I should also note that the Federal Reserve is guaranteed a return on it's loans to the government. It must be nice to be guaranteed a profit. The more money it loans, the more profit it makes. If the government did not have deficits, they wouldn't need to borrow money and less profit for the banks.

Right now the Federal Reserve is buying $85 Billion a month in bonds. At 6% in profit, just imagine how much money they are making. Now lets look at another aspect of this. By holding down interest rates, that guaranteed 6% profit starts looking really good. They buy bonds at practically 0% interest, loan it out at 2% interest and are guaranteed 6% return on the money they lend the government and own the assets.

It is a little more complicated than I have made it out; but, I wanted to keep it simple. When the government and banks do things that appear to be just stupid, there is usually someone benefiting. I want to recommend a book for my readers, it is called "The Creature from Jekyll Island : A Second Look at the Federal Reserve".

I do not agree with some of the politics and beliefs of the author; but, the history of the Federal Reserve and the description of how it operates is worth knowing.