There has been vigorous discussion in recent years concerning an unorthodox new measure taken by the U.S. Federal Reserve. They call it ‘quantitative easing’ but what it really means is ‘creating money out of thin air.’ The question that raises eyebrows most is; “How can a central bank exercise such dramatic policy decisions independently of the government?”
Perhaps a better question we should be asking is, how long has this been going on? Or more to the point, is our entire banking system based on sleight-of-hand? The next article explains in the true (albeit simplified) story of how our capitalist Fractional Reserve system actually came into being. Of course, it is much more sophisticated today; however the basic idea is still the same.