12 Nov 2009

How the Fed’s Original Rules Were Relaxed to Allow It to Pay for World War I

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This is a really good article by John Paul Koning. At first I thought it was just going to be a standard “the government uses inflation to pay for wars because the public wouldn’t stand for the taxes and borrowing.” But it’s really specific. Koning goes over the safety mechanisms that were originally in place on Fed lending, and shows how they were systematically pulled back in order for the Fed to sop up the Treasury’s “war bonds” and make the world safe for democracy.

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