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(See The Comic) Perpetual Debt Machine Federal Reserve Inflation The Federal Reserve (FED) is the unconstitutional, quasi-governmental private organization that is responsible for managing the supply of money and credit in the United States. The FED is theoretically supposed to keep prices and the economy steady by setting interest rates, and by buying and selling bonds. Consequently, if there is inflation, the Federal Reserve isn't doing its job. Because, after all, if there is inflation, the FED is actually causing it, since they manage money supply. Why doesnâ€™t the FED do its job? The simple answer is that, inflation is a hidden tax. Instead of directly raising taxes to spend copious amounts of money on things like, big government, pointless wars, corporate bailouts, and government goodies, the government instead goes into debt. And by going into debt, that increases the money supply. in the Federal Reserve System, money is made from debt. And since money is no longer backed by a hard asset like gold, there is no limit to money supply growth. The more debt, the more money. As debt increases, more money is needed to pay off that debt, and so interest rates are lowered and the money supply is increased by making more debt. It is an explosive feedback loop. In a real, free-market economy, excesses (malinvestments) would be wiped out automatically. But in a managed economy, excesses are able to be maintained by making more excesses, which leads to a perpetual growth, perpetual debt economy. The growth feeds the debt and the debt feeds the growth. The Real Environmental Problem Since the current economy is dependent on perpetual debt and perpetual growth, it must perpetually consume resources to stay alive. In other words, it is unsustainable. Environmentalism is a losing battle until there are fundamental changes into the nature of the economy. Debt begets debt. Growth begets growth. Thus, the economy is like an ouroboros: a serpent consuming its own tail. bankruptcy law Unsustainable Consumption Coming Next: Part 3 Seeing Through Government Deception