It was the year Congress passed the Federal Reserve Act and ratified the 16th Amendment to the US Constitution, which authorized a federal income tax.

At first glance, these two unfortunate developments may seem unrelated. Yet what are the odds that the US would adopt both a central bank and an income tax in the very same year?

It seems implausible that this was the result of mere chance.

In fact, upon closer examination, the Federal Reserve system depends on an income tax to function as it does.

Let me put it into the simplest and most concise terms.

1. Central banks create fake money out of thin air.

2. They then loan this "money" to governments at interest by purchasing government bonds with it.

3. The primary asset held by the Fed is government debt. However, what secures and collateralizes this debt? The government's ability to tax its citizens.

4. Governments use violence and threats of violence to extract taxes from average citizens to pay the interest and service the debt owed to the central bank, which created the money it loaned to the government out of thin air.