In this simplified form, there are five players. The Saver has $1 he would like to keep safe and earn interest, so he deposits it into the bank. Using Fractional Reserve Banking, the Bank creates $10 out of thin air, and lends it out to the Spender. The Spender uses that money to buy a toy from Wal-Mart. The Spender works for a Small Business who pays him $20. The Spender must then give the $20 to the Bank because of the interest on his loan. So while there was $21 in circulation ($1 from the Saver, and $20 from the Small Business), there is now $31 in circulation. Because there is more money, the value of the dollar is lowered. In this case the value is lowered by almost 50%. The next time the Spender wants to buy another toy, it will cost him $15 instead of $10. Furthermore, because the Bank now holds $21, they could lend out $210, creating more inflation.
This is what is meant by inflation being the "Hidden Tax." You must now earn more to make up for rising prices of every product because the banks create money out of thin air. In a world without Fractional Reserve Banking, the Saver could deposit $10 into the Bank who lends out $10 to the Spender. The Spender buys his toy from Wal-Mart, and uses his $20 pay check from the Small Business to pay back the Bank for his loan. At the start, there was $30 in circulation ($10 from the Saver, and $20 from the Small Business). After this, there is still only $30 in circulation, and prices will not rise because there is no inflation.
So why have you not been free for the past 100 years? In the Revolutionary War, we fought against the British, and specifically the Bank of England, to claim our independence. In 1913, Congress illegally passed a charter creating the private Federal Reserve. This private bank was no more federal than Federal Express. The Federal Reserve is made up of a cartel of other banks who control it. These banks include Goldman Sachs, Bank of America, and none other than the Bank of England. Our money, and our lives are controlled by the very institution we fought hard to be rid of. Instead of creating $10 out of thin air, the Federal Reserve creates tens of trillions of dollars out of thin air, and charges the American people interest on this money that we could print without interest if we got rid of the Federal Reserve.
Congress has always had the power to create money, but they gave that up to the private Federal Reserve. Obama has been bought and paid for by Goldmann Sachs and the other big banks. It was overheard Bank of America telling Rick Perry they "had his back." Herman Cain used to work for the Federal Reserve itself. And Michelle Bachmann used to be an IRS enforcer who just thugs for this cartel of banks.
The only candidate who is willing to end the Federal Reserve, and put the power of our money back in the people's hands is Ron Paul. He is the only candidate who warned that the housing bubble would crash. He may be a representative for Texas, but he is one of the only members of Congress who has stood up for all Americans by holding the Federal Reserve accountable by trying to pass a bill to audit the Fed.
Our country was created with the Constitution to limit the federal government, and to protect people's natural rights. Following this supreme law is the only way to keep America safe. Giving way to one part of the Constitution destroys it all. This is why we have TSA groping our men, women, and children; this is why we have presidents who go to war with whoever he feels like without asking Congress for a declaration of war; this is why the same president has ordered the assassinations of US citizens without due process or a trial; this is why you are not free to choose between pasteurized milk, and fresh raw milk; this is why you are not allowed to own a gun in many big cities and must wait precious minutes for cops to show up to a house intruder (if they show up at all). We are not free until we stand up for our rights, and Ron Paul is the only 2012 candidate who is a true constitutionalist.
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