[Adam]

I honestly don't see what the big deal is about the Federal Reserve being privatized. It is a heavily regulated body, and does not have power without the consent of elected officials. Guess who elected those officials. While those officials are ultimately responsible for what happens in the Fed, we, as citizens of the United States, are the ones responsible for giving them the power that they have.

All government power comes from consent from the people, whether those people are fairly represented or not. If you consent to be oppressed, then you give those who govern you the power to oppress you.

Does the Fed control the economy? Absolutely not. In fact, they have very little direct control over the economy. The economy is based around the barter of goods and services. Money is a physical abstraction of those goods and services... In other words, the more money you have, the more favors other people owe you. Money can be *anything.* Money does not have to be soy ink on cotton with a holographic word and micro-printing on it... It can be two dozen pigs exchanged for a wife, or a large rock chiseled into a disk. In fact, gold is no more "money" than the slips of paper that ship with the game Monopoly.

The only thing that turns these physical abstractions of favors into money is the value that individuals hold for it, and that is most definitely a subjective value. Treating money as an object is foolish, because currency's value changes with the mood of the people making the exchange.

Who creates inflation? Well, since money is an abstract concept, there is no such thing as inflation... only the devaluation of the physical representation of money. What this does is punish those who are not working within the economy (hoarding their wealth) while rewarding those who are active in the economy (investing). The devaluation of currency is not bad, it is just severely misunderstood, so those who misunderstand it are punished for looking at money objectively, rather than subjectively.

Here's a quick example for those who have not studied economics in depth. Admittedly, this is an example of a micro-economy, but events that happen on a micro scale also affect events on a macro scale.

Let's say that a business owner sees a headline on a newspaper that says that lean times are coming. He had been planing to remodel a room in his house, but because of this prediction, he decides to save his money instead to make it through those lean times. Because he did not remodel his room, the designer loses a customer, and has to cut back on his budget, which means that he can not buy the art that he wanted for his own house. The artist now has a surplus of paintings that he can not sell, so he can not buy any more supplies... and his supplier happens to be the business owner who read the prediction in the newspaper, which means that the entire economic chain closes down because one person lost confidence in the economy.

The result of pulling your money out of the economy is that the economy slows down, leaving people with fewer ways to earn a living. From the viewpoint of the evolution of an economy, inflation is a very healthy aspect, since it keeps people actively involved, continuing to strengthen the economy. Without inflation, we would have stagnation, resulting in the same economic conditions that the US, and much of the world, faced in the 1930's, where people could not gather enough money, in whatever physical form, to feed themselves.

I'll admit that a world wide economy is more complex than that, but the foundations of the economy remains the same: Money, as an abstract, subjective concept, must change hands. Inflation is a tool that uses the physical currency to keep the value of money high, so that it is not hoarded by a few individuals, or even many individuals, so that the economy keeps on moving in a healthy manner. You must trade your currency for real, abstract money in order for the concept of money to have any value at all, and that is what inflation guarantees.