Remember when you were in third grade and you were learning about poor people in your community or other countries and you asked, “Teacher, why can’t the government just print more money and give it to the poor people so they can eat and have a place to live?” To this your teacher reflexively held back a smile with tense lips and said, “Well Johnny that’s a nice thought but the government can’t just print more money…” And before you could reply with a quick “why,” you stopped yourself because if your teacher said that they can’t then they probably can’t.
Fast forward twenty years, and voila! You’ve just found out that your teacher was probably just too fortunate to ever hear of the Federal Reserve. It turns out your poor little educator friend was horribly mistaken in her definitive assertion that the government can’t just create more money. They do create new money all the time, the only difference is that, sorry little Johnny, they don’t ever give it to the poor; they give it to the rich! Who better to handle massive sums of money like 1.6 trillion dollars right? Well what then, do the rich have to do with the money? Umm…. Umm… Should we be tracking what they do with it? Oh wait, they make interest off it from people they loan it to!