After that last post, I did some more digging. Over the years, I have heard many seemingly contradictory tidbits about the Federal Reserve, and have yet to find a satisfactory answer as to the true nature of its workings. The official party line never quite added up, but neither did the ravings of its critics.

Well, this article comes as close to providing a complete explanation as anything I've seen so far. It's fairly lengthy, and a lot of the parts are somewhat cumbersome (though I think the author does as good a job as possible to explain it in layman's terms). I'm still not 100% satisfied, but this brings me a notch closer.