The massive U.S. loans to the Allies, and
the subsequent American entry
into the war, could not have been financed by the relatively hard-money, gold standard system that
existed before 1914. Fortuitously, an
institution was established at the end of 1913 that made the loans and war finance possible:
the Federal Reserve System. By
centralizing reserves, by providing a government-privileged lender of last resort to the banks,
the Fed enabled the banking system
to inflate money and credit, finance loans to the Allies, and float massive deficits once the
U.S. entered the war. In addition,
the seemingly odd Fed policy of creating an acceptance market out of thin air
by standing ready to purchase acceptance at
a subsidized rate, enabled the Fed to rediscount acceptance on munitions exports.
The Federal Reserve was the outgrowth of
five years of planning, amending,
and compromising among various politicians and concerned financial groups, led by the major
financial interests, including the
Morgans, the Rockefellers, and the Kuhn, Loebs, along withtheir assorted
economists and technicians.
Read it all at: https://www.lewrockwell.com/2015/12/murray-n-rothbard/wall-street-banks-american-foreign-policy/
