The Beginning Of The End Ad
Gold Buying Guide: Golden Eagle Coins

Recent Posts

The Preppers Blueprint Economic Collapse Blog Get Prepared Now Ad

Enter your email to subscribe to The Economic Collapse Blog:

Delivered by FeedBurner

Where Does Money Come From? The Giant Federal Reserve Scam That Most Americans Do Not Understand

Share on FacebookTweet about this on TwitterPin on PinterestShare on Google+Share on LinkedInShare on StumbleUponEmail this to someone

How is money created?  If you ask average people on the street this question, most of them have absolutely no idea.  This is rather odd, because we all use money constantly.  You would think that it would only be natural for all of us to know where it comes from.  So where does money come from?  A lot of people assume that the federal government creates our money, but that is not the case.  If the federal government could just print and spend more money whenever it wanted to, our national debt would be zero.  But instead, our national debt is now nearly 16 trillion dollars.  So why does our government (or any sovereign government for that matter) have to borrow money from anybody?  That is a very good question.  The truth is that in theory the U.S. government does not have to borrow a single penny from anyone.  But under the Federal Reserve system, the U.S. government has purposely allowed itself to be subjugated to a financial system in which it will be constantly borrowing larger and larger amounts of money.  In fact, this is how it works in the vast majority of the countries on the planet at this point.  As you will see, this kind of system is not sustainable and the structural problems caused by such a system are at the very heart of our debt problems today.

So where does money come from?  In the United States, it comes from the Federal Reserve.

When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars.

Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve.

The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds.

So why does the U.S. government go to all this trouble?  Why doesn’t the U.S. government create the money itself?

Those are very good questions.

One of the primary reasons why our system is structured this way is so that wealthy people can get even wealthier by lending money to the U.S. government and other national governments.

For example, last year the U.S. government spent more than 454 billion dollars just on interest on the national debt.

Over the centuries, the ultra-wealthy have found lending to national governments to be a very, very profitable enterprise.

The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system.

But wait.

There is a problem.

Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created.

So where will the U.S. government get the money to pay that debt?

Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt.

But that never actually happens, does it?

And the creators of the Federal Reserve understood this as well.  They understood that the U.S. government would not have enough money to both run the government and service the national debt.  They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game.

That is why I call the Federal Reserve a perpetual debt machine.  The Federal Reserve was created to trap the U.S. government in an endlessly expanding debt spiral from which there is no escape.

And the Federal Reserve is doing a great job at what it was designed to do.  Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

Another way that money comes into existence in our economy is through the process of fractional reserve banking.

I originally pulled the following simplified explanation of fractional reserve banking off of the website of the Federal Reserve Bank of New York, but it has been pulled down since then.  But I still think it is helpful in understanding the basics of how fractional reserve banking works….

If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+…=$1,000).”

When you put your money into the bank, it does not say there.  The bank only keeps a relatively small amount of money sitting around to satisfy the withdrawal demands of account holders.  If all of us went down to the banks right now and demanded our money, that would create a major problem.

If I put 100 dollars into the bank and the bank lends out 90 of those dollars to you, now it looks like there are 190 dollars floating around.  I have “100 dollars” in my bank account and you have “90 dollars” that you just borrowed.

The new debt that you have taken on (90 dollars) has “created” more money.  But of course you are going to end up paying back more than 90 dollars to the bank, so more debt has been created than the amount of money that has been created.

And that is one of the big problems with our financial system.  It is designed so that the amount of debt and the amount of money are supposed to be perpetually expanding, and the amount of debt created is always greater than the amount of money that is created.

So is it any wonder that our society is swamped with nearly 55 trillion dollars of total debt at this point?

A debt-based financial system is unsustainable by nature because it will always create debt bubbles that will inevitably burst.

Are you starting to see why so many Americans are saying that we need to abolish the Federal Reserve system?

Our founding fathers never intended for our financial system to work this way.

According to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is supposed to have the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

So why has this authority been given to a private institution that is dominated by the big Wall Street banks and that has actually argued in court that it is “not an agency” of the federal government?

Thomas Jefferson once said that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing….

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

But instead, we have become enslaved to a system where government borrowing actually creates our money.

The borrower is the servant of the lender, and we have allowed our government to enslave us to the tune of nearly 16 trillion dollars.

There are alternatives to this system.  Things do not have to work this way.

Unfortunately, the vast majority of our politicians consider the Federal Reserve to be good for America and steadfastly refuse to do anything to change the status quo.

So if you are waiting for “solutions” to these problems on the national level you are going to be waiting for a very long time.

The debt problems that the United States and Europe are experiencing did not come into existence by accident.  They are the result of fundamental structural problems with the financial system.

A debt-based financial system is always going to fail in the long run.  Unfortunately, most Americans still do not understand this and so we will all get to suffer the consequences.

  • What a scam, how can I get in on this scam?
    Where do I sign up? How much money can I expect to make the first year?
    What kind of benefits do I get?
    What kind of perks, bonus, car, phone, house etc. etc.?
    And do I get free medical, dental, vision and prescription coverage too?
    Can I make over $1,000,000 per year plus bonuses?
    WOW sign me up for that one…

  • Barn cat

    People don’t get rich buying Treasury bonds. Not when they pay 2% and real inflation is 10%. The Federal Reserve is capable of just creating money out of thin air. That’s OK to do if it mirrors the amount of economic growth. So if GDP increases by 2% it makes sense to increase the money supply to 2%. Prices doubled between 1967 and 1977 because the Federal Reserve allowed the federal government to finance itself using inflation.

    • Dan

      Lol inflation occurs when the amount of money in the system increases, it becomes depreciated, it loses value so it seems like “prices are rirsing” but they’re not, they’re the exact same! the value of your dollar is less now, THATS what inflation is. its not really government controlled.

    • 007

      You are missing the fact that these bonds are in tremendous demand because people are scared to death of an economic collapse. People flock to buy these which drives their price up. If you look at the price appreciation along with the small amount of interest paid, you will find these investors are making over 25% return on their investment. The best performing investments this year are treasury bond funds.

      Ain’t that sick and twisted. It reminds me of the flock of people scrambling to the bow of the Titanic as it sunk. They didn’t rush there because it was safe. They went there because there was nowhere else to go.

  • Rodster

    Excellent article, Michael.

    • Michael

      Thank you. 🙂


    • John G

      Rodster, I agree. This is an excellent article. It is very well written. It explains the Federal Reserve and its money/debt creation in a manner which is easily understood.

      • Michael

        Thank you for the kind words.

        One of my goals is not to “preach to the choir” but to put things in such a way that the general public can understand and hopefully wake up.


        • Deklan

          That is one reason, out of many, why your site is refreshing to read.

  • Alvin

    It’s not a question of how much debt, there is no magic number as to when X amount of debt is hit, everything goes to hell in a hand basket. Paper ( electronic) money is confidence of value. The moment a large segment of the population loses confidence that the $$$ they are handed are quickly losing value, then the velocity starts up and when it hits panic mode, game is over and no matter how much paper / electronic money you have, no one will take it.
    In past times velocity was somewhat slow moving as it took time to print and distribute paper money to banks then people, but with electronic banking when the panic starts it will happen soooo fast, it will be over in a flash. Why do you think that there are no budgets anymore, it would scare the hell out of the general public as to how big the debt REALLY IS and it’s not 15 Trillion. Need money for Food Stamp cards, just order up billions of electronic created dollars and send it over by computer. Don’t even need paper and ink.

    • mondobeyondo

      When a nation’s debt exceeds its gross domestic product, that nation is in serious trouble. It means your debt exceeds your ability to produce goods the rest of the world wants (build cars, grow crops, make computers, sell high quality wine, whatever). If something isn’t done FAST, to fix this situation, your country’s economy is gonna be toast. Argentina found this out the hard way, about 10 years ago. I think the USA is getting very, very close to this point.

      • “When a nation’s debt exceeds its gross domestic product, that nation is in serious trouble”

        Compute it vs. the amount we actually collect and you will find out its around 300%.
        We spend $3 for every $1 we collect.

        Real US debt is $200 TRILLION.
        Prof. l. Kotlikoff.

  • matt

    Excellent Michael, perhaps the most understandable description of our “system” I have seen. However, as you have posted before, it is far far to late to just “abolish” the fed. They have created “mutually assured destruction” if anyone should try to shut it down. The Trillions in digital debt have been spread about the world so that all it’s current residents may live a fantasy life. When the emperor is discovered to be naked, the world will collapse to a level below the stone age. We are on the cusp of the greatest mass extinction the earth has ever seen. Billions of people cannot exist with the use of barter. I pray that the suffering and death that is to come will be brief, but that however is a grace we should not look for. In the 80’s, Carl Sagan boggled the minds of thinking people with his idea of Billions and Billions of stars concept. Those were numbers he said that were beyond the ability of the human mind to conceptualize. Now WE owe Trillions and Trillions of debt. The mind reels trying to take in the horrific events this folly has created.

    • Kev

      They could wipe the debt overnight.The money never existed in the first place.

  • HecatesMoon

    ….. :l
    We owe ourselves money?….

    • Michael

      We don’t owe it to ourselves.


  • HecatesMoon

    I must be misunderstanding something…

    • jaxon64

      we essentially sell our nation in the form of promissory notes known as “Treasury Bonds”..the Federal Reserve technically buys the US Treasury Bonds for the money they print ( oput of nothing as Michael pointed out). The Ferderal Reserve then turns around and sells much of this US debt/bonds to foreign countries, Big Banksters and of course they hold onto alot to collect interest.

      All of these countries, banks and reserves profit by collecting interest payments on those “promissory notes” ( known as Treasury bonds). The USA is so far in debt that we can never reduce the debt and struggle just to pay the interest we owe on what we already borrowed.

      Eventually we won’t even be able to afford the interest or countries and banks won’t purchase our prommisory notes/treasury bonds anymore–this is when the bubble pops and the government checks stop being mailed each month..and this is when chaos ensues…it WILL HAPPEN-IT HAS TO–it is just a wonder we have scammed and manipulated this debt based system this long but it cannot last, it is mathematically impossible.

      • GaryToo

        jaxon i bang my head against a wall trying to get anyone to understand exactly that. and that being one of 3 major outcomes that will blindside them like a bolt from the blue.

        1, euro bailout process runs out of steam and default leads to panic.
        2, iran is invaded and oil supply is disrupted (to put it mildly) grinding economy down.
        3, US debt spirals up reaching point that interest can not be serviced and defaults.

        if you have three things all with at least 50 % probability,overall same outcome that in effect is 100% probable right?

        • PocoPete

          I believe the probability is 87.5% assuming each possibility is independent of the others.

  • so we all get to suffer the consequences? I will not agree or disagree in that
    area but will leave it open.I have been prepping for a very,very long time and feel that I have a sizeable amount of items that are of bartering use and also being a jack of all trades I also can exchange services for such so if the financial system was to collapse I do not believe I and others with me would suffer that bad, maybe a few inconviences, but I believe we would be better off for it.

  • Tim

    About six years ago, a colleague and I were en route to The Federal Reserve Bank in Pittsburgh to do some audit work as part of our audit of the Schedules of Federal Debt. While we were riding in the hotel shuttle van, the driver, an elderly man, said that he had recently learned that the Federal Reserve wasn’t part of the federal government. I said “that’s right. It’s a privately owned corporation.” I was surprised that the man knew that. However, my colleague didn’t know that!

  • Rain23

    People on this site get it, but I doubt the vast majority of Americans realize their paper money is just paper. You can’t take it to the bank and exchange it for something of value anymore. Once trust in it is gone and it isn’t accepted for goods and services, you might as well have a toddler draw pictures for you and print your own alternative currency on the copier. No, I take that back. At least I would enjoy a picture drawn by a toddler I know; I can’t say I enjoy the picture the Federal Reserve is painting for us by cranking out all this currency so that at some point in our future a bag of groceries you can carry in one hand costs $50.

    • OLdFART

      What a slap in the face(posthumusly)! Andrew Jackson on a FRN.

      • knowtwodrugs

        I just said that the other day. He must be turning over in his grave.

    • Navy91

      The future is here. I can carry a bag of groceries in one hand that costs $50 now.

    • davidmpark

      I did that today! Spent $57 dollars on just the basics; ended up filling only one bag. Food prices are insane; and now we have drought and fires around here burning our food supplies and people’s homes! What’s the big news story here: the primary elections.

  • Gilberto

    Doesn’t the immaculate christ messiah comrade sobama make it with is magic scepter?

    • GaryToo

      thats right gilberto, no credit where it is due, bush jnr deserved the nobel peace prize since he started the afghan and iraq wars and opened gitmo. Ohbummer gets a nobel prize for promising to close gitmo, but building many more for all the potential domestic teristits.

  • SeektheEschaton

    The creature from Jekyll Island has us. In the age of the internet there is no excuse for people to still be ignorant of this system. Crisis brings the opportunity for change. We know the crisis is coming, what kind of change will there be?

  • McKinley Morganfield

    Excellent, concise review of how the greenback comes into existence and how it is all a scam.

  • hey there friend,
    we want you to be a guest on our show again. We have switched from LBN to CUBN – Christians United Broadcasting Network. We are also on and WE are boarding a plane tomorrow for Israel. We will be set up remotely there and will be interviewing our best guests from there. We will be set up in a few weeks. We are staying in a kibbutz and they offer internet, but we are going to use a video cam and download so we can do it from the many sites in Israel. Give us a chance to get set up there, and then we will interview you. You will also be blasted through youtube, ustream, livestream, and and and
    Email me back, but it may take a few days to get back to you. I dont use my phone for emails (i am old school; this new video stuff is new to me, but we will do God willing)> We have exploded over the past months. We heard you on Rick Wiles, and we always email his guests. Tonight we had on Dr. Steinle and this week we had on other “famous” guests. God is no respector of persons, but people are! Thanks for being a part of CUBN-Christians United Broadcasting Network..remember, give me a few days to get back with you. WE LOVE YOU

    • Michael

      I look forward to being back on your show again some time.

      And you all can find my interview on TruNews right here….


      • Jodi

        Thanks for the post, great interview!

        • Michael

          I really appreciate Rick Wiles – he has been doing such a great job for so many years.


      • K

        Good explanation on the Fed. Also thank-you for the link to trunews. Very informative interview. The folks that think problems could start in October, may well be correct.

      • Gay Veteran

        wow! the host of that show is utterly delusional!

        • GaryToo

          deluded about what gv? I listened to several of the interviews and while the intro is cheesy, the content was sound to me and I am veeery sceptical of everything. one point though you cannot “cite un-named sources” that is a contradiction in terms, which detracts from his credibility.

  • TtT Engine

    Ok, so the Federal Reserve System creates the money out of thin air and loans it to the U.S. Taxpayers. We get socked with owing the principle and the interest. The Federal Reserve/Wall St. is the straw man. It give the allusion of not creating money out of thin air. It is a fiction to the tune of $4 BILLION A DAY to keep the lights on for the U.S. Government. Quantitative easing is the fancy name for actual currency creation aka money printing. The U.S. Gov. does plenty of this also. When you are the backbone of the international financial system and the international reserve currency, you can do these things and live in the “Neighborhood of Make Believe”. You can do this also if you have little or no regard for the fiduciary duty that goes along with posessing the world’s reserve currency and little or no regard for the U.S. Taxpayers aka the modern day working peasants. Please vote for Mr. Rogers in Nov. 2012, I heard Lady Elaine Fairchilde gave him her Boomerang-Toomerang-Zoomerang to turn things rightside up again and to fix this debt tsunami, we gonna need it ! Christi Fidelis !!

  • CAngel

    Another great article, Michael. I love it when you write about the Federal Reserve, THE most EVIL institution ever put upon man. It really boils down to this, sound money = Liberty and banksters printing money = Tyranny. When this system breaks down completly and it comes time to build a new system, the people will know all about the Federal Reserve and other central banks and will not allow it, at least that is my hope.

    • Michael

      That is one reason why I have to remind myself to keep writing about the Federal Reserve. Sometimes I assume that people already know these things, but the truth is that we have a long way to go in getting the general public educated.


      • Graham


        Once again, great article. You have set things up perfectly to deliver a “Part 2” to this story. I note so far that nobody has asked the obvious questions. Will you consider this a “reminder”, or perhaps a “challenge”?

        Now that you have exposed to all what the FR is and how it functions, the obvious questions would be as follows. Who brought the FR into being? How exactly was it achieved? And more importantly, will you venture forthright into which family’s and bloodlines control what is the GLOBAL Federal Reserve System? Also, what happens to countries who have their own independent central banks? Gets very interesting.

        You may also want to include the connections with all the major Wall Street banks (TBTF) and name the individuals at the top who control and run them. Such information should obviously lead your audience into a blatant realisation. If they take that realisation further, they will crack the underlying cause of the majority of issues we are experiencing across this planet, in addition to the reasons why. The “real” data is critical.

        You may also want to consider another piece of history, which dates back to Germany in the 30/40’s. Treasury Certificates were issued in order to bypass the central bank this created mass employment and prosperity because it was no longer reliant on a debt based central banking system. Take into account the Treaty of Versailles and what it did to Germany as a nation after WW1. Is the debt based system and it effects on the USA/EU today any different? Are the family’s and bloodlines any different? No.

        I will refrain from publishing the links here, but they emphasise the exact reason why the Federal Reserve needs to be abolished, amongst many other things. The truth arises from their “names”. Checkout the “Khazars”. The latter are NOT of “Abraham” lineage as many would believe!

        The truth is ESSENTIAL to understanding our PAST and properly SHAPING our future.. if the coming mess is to be avoided. The truth of our history must be told, as much has been eradicated in order to control and enslave the masses (goyim). Many many things tie in with this. It is truly time “to waken up” to what is and why.

  • davidmpark

    “Fiat money” or or current dollar is NOT money. The definition of money is, “A medium of exchange with intrinsic value”. Fiat money has no value equal to the products it purchases. It’s high-grade paper; not gold, silver, or pure copper.

    On a side note: pre-1983 pennies are 95% pure copper ($0.02 melt value) and the copper and nickel in nickels ($0.05 melt value) is actually worth something, but everything else isn’t.

    And to make matters worse we have “digital money”; an even worse form of fiat money. Digital money is a number on a computer screen solely comprised of binary data; worthless without electricity to power the computers.

    One EMP in the ionosphere, and a vast majority of our currency – gone.

    The idea of the Federal Reserve Bank and our current economic system… and I know I’ll be very unpopular for saying this… violates the laws that govern money. Not the laws man pretends it has; I mean the natural laws that actually govern money. Ayn Rand’s works and the book “The Richest Man in Babylon” have published those laws in basic terms.

    What is going on now with the debt was inevitable. That is the nature of money; violate it’s laws and it becomes it’s own avenger by using the folly of those few sociopathic men that lust and greed to torment all men. Those who are our “leaders” have done horrific things to us because of their lust for wealth and power, and our precious consent. They ran up massive debts in our names to feed their sin, but sin is only an evil devouring void; it’s never satisfied.

    “For the people turneth not unto him that smiteth them, neither do they seek the Lord of hosts. Therefore the Lord will cut off from Israel head and tail, branch and rush, in one day. The ancient and honourable, he is the head; and the prophet that teacheth lies, he is the tail. For the leaders of this people cause them to err; and they that are led of them are destroyed. Therefore the Lord shall have no joy in their young men, neither shall have mercy on their fatherless and widows: for every one is an hypocrite and an evildoer, and every mouth speaketh folly. For all this his anger is not turned away, but his hand is stretched out still.” Isaiah 9:13-17

    “For wickedness burneth as the fire: it shall devour the briers and thorns, and shall kindle in the thickets of the forest, and they shall mount up like the lifting up of smoke. Through the wrath of the Lord of hosts is the land darkened, and the people shall be as the fuel of the fire: no man shall spare his brother. And he shall snatch on the right hand, and be hungry; and he shall eat on the left hand, and they shall not be satisfied: they shall eat every man the flesh of his own arm: Manasseh, Ephraim; and Ephraim, Manasseh: and they together shall be against Judah. For all this his anger is not turned away, but his hand is stretched out still.” Isaiah 9:18-21

    This country is finished unless the Lord spares it. His hand is stretched out still – take hold! Prepare for what’s coming; be watchful; warn; and most importantly: FEAR NOT!

    • Lennie Pike

      Excellent and accurate comment. Thanks.

    • mondobeyondo

      You are correct as far as the metal content of coins is concerned. I was an avid coin collector as a kid, got away from it for a while (something called “life” intervened in my hobby), and I am now trying to get back into it again.

      My major regret is not searching harder for pre-1964 dimes, quarters and half dollars back in the mid-1970’s.

  • It’s funny you brought this up, I’ve recently been explaining to people that the money doesn’t even exist! I didn’t really address the debt issue as you have but I have discussed the effects of the monetary system and what it could possibly mean for the future. These simple people simply don’t ask simple questions. Functioning out of ignorance is failed endeavor from the start. But hey, what can we expect when people don’t bother to find out what they’re eating and drinking, and where that came from? Nor do they ask why there are so many masonic symbols in every piece media that is produced. Nor do they ask why our world is becoming more and more like what was shown in movies and music videos years. Even worse they, they don’t seek the reason as to why going to the doctor doesn’t make them feel better! That one should be the most obvious! Brainwashing is a powerful tool, but it is amplified by ignorance. Not saying ignorance is inherently bad, for we are all ignorant of something. But being ignorant of the world you operate with and how it affects is disastrous.

    If anyone wants to check out article on money not existing, you can see it here:

  • mark

    The government should print our own money. We would have to deal with the inflation if we print as much as we spend today, but at least we would not be in debt as a nation. The answer is to shrink government inorder to reduce the cost and print our own keeping in mind not over printing.

  • Thomas

    I am from India and have been tracking your posts for almost a year.I am astounded at the fact that most Americans are unaware that the FED is a private entity and has been perpetuating this gigantic PONZI scheme and misleading the whole world.I wonder why no legal action can be initiated especially since this scheme can mathematically be proven to be unmanageable?

    • Michael


      I think legal action should be taken, but I think it would be really hard to fight the system.

      And it is great to hear from India! I love the fact that people from the other side of the world are enjoying this site. 🙂


      • 21st Century Plutocracy


        In theory, no legal action is needed. All that’s needed is for Congress to pass legislation that would repeal the Federal Reserve Act, or “Abolish the Fed.” because while it may not be run or overseen like a government agency per say, like the United States Postal Service (which is entirely run separate from the government and raises its own operational funds) it is still a creation of the federal govrnment and can just as easily be destroyed. Thus, also in theory, the debt the Federal Reserve holds doesn’t really exist.

        Th problem is not so much that politicians DON’T want to abolish it, but more so they’re deathly afraid to do so. As you know, Rich Bankers don’t play with their money and will make sure blood is shed if someone dares try to take it from them. That’s why the people throughout time who had been vocal about the federal reserve system and its ponzi scheme and had power were either killed or systematically discredited.

        That said, I completely disagree with getting rid of the central banking system altogether. I do think it should b significantly reformed. In fact, a Central Banking system could actually work in our favor if setup correctly. For example, how about setting up a banking system similar to North Dakota’s?

  • sharath

    Hi Michael,

    What all alternatives would be available to a debt based financial system ? Do they have also have serious disadvantages that is not present in debt based system ?

  • ScotinOz

    I dont want to rain on everyones parade but the Fed actually returns profit made to the treasury

    I am by no means a supporter of the fed, I believe it has systematically ruined the USD and the economy. I am sure that somehow money made is also paid out to the private banks that own the fed (we will never know most likely)but most of it is returned back to the US

    • Michael


      You are right. But most of the debt is owed to entities other than the Fed.

      The Fed itself is not a money making machine. But the Federal Reserve system is a machinery that enables hundreds of billions of dollars a year to be transferred from the taxpayers to the ultra-wealthy.


  • Rus Investor

    (Sorry for my bad english)
    Guys, what can you say for: that FED all percents on debt that they take from bonds – the give back for us treasury. So FED dont take profit, money stay in treasury.

    • Michael


      The Federal Reserve is not making much money.

      But the Federal Reserve system itself is a tool that allows others to make a lot of money.

      Does that make sense?


      • StokeyBob

        Man! I’ve been thinking they are making money hand over fist.

        Let’s say we forget about all this one central bank takes in from just this one government.

        Don’t they have a hand in the pie of every dollar banks lend out that they don’t really have to lend. Aren’t they the source?

        Then again it really isn’t necessary to go into. Once we get a grasp of the way we’ve been taken and our lives have been under the mercy of one social engineering program after the other why beat ourselves up any worse.

        Something needs to be done. Ron Paul suggested allowing competition. That would do it. He also had a plan to drop some of the capital gains on the false profits created by inflation.

  • dlbermes

    Who specificaly owns the federal reserve? Name the names and nationalities/race of these fiends.

  • William

    The US Constitution, a document upon which our system of governance is established, requires the US Congress to create money, and to regulate the value of that money. The FEDERAL RESERVE is UNCONSTITUTIONAL. Why has the Federal Reserve existed for 100 years?? The answer lies in the plan that was developed in the late 18th Century for the domination of the world. If you do not know the names of Adam Weishaupt, or Albert Pike, you know NOTHING. Be sure to reelect your representatives in the US Congress. They continue this farce gleefully.

  • Syrin

    Liberals think it grows in the pockets of the rich over night, isn’t that right GARY ?!?!?

    By the way, we lost 37,000 businesses in 2010, and Obamanomics was just getting started!

    MORONS ! Just wait until Taxmageddon comes along. There won’t be a business left in the US. We had 8,000 rich leave the country last year. That’s a HUGE number compared to the past, and since we have the most regressive tax system on the planet, that means that for each individual rich guy that left (permanently), 40 other people are somehow going to have to make up the tax load. WHOOPS !! Didn’t think of that one, did you GARY ?!?!?

  • Rowell

    Thank you. I’ve been trying to wrap my head around exactly how it all works, and the clear concise way you explained it hit home. It’s impossible to repay the debt, because the amount of money (principle + interest + money loaned out against deposits) simply does not even exist. It’s mind boggling.

    Question now is, how feasible would it be to tell the Federal Reserve to go blow, and switch back to the government backed greenback, instead of using fake magic money reserve notes?

  • Tim – Gabz

    Excellent commentary on a complex system that uses a bubble ponzi system. I was skinned in the Zimbabwe melt down. It wasn’t the land issue that was itself a result of a collapsing financial system. Money supply has been grown to suit the politicians and to the hell with Keynesian or any other model.

    I have been hustled over this more than a few times, however if one sifts through the adages, wisdom of our grandfathers they fall foul of those as well. There are no free lunches – someone pays sometime,,,, Day’s work for a day’s pay,,,,, a man’s home is his castle (property rights)

  • Tim – Gabz

    Sorry – I found one old adage that fits perfectly:- “Tomorrow never comes”.

  • jerome ennis

    When you are in debt, you are a slave to the lender. The international banking system and the federal reserve has enslaved this nation and this must be reversed by whatever means necessary to stop this tyranny.

  • Quiver


    What is your objection to the fractional reserve system? Banks make money by lending to people at intrest. People who deposit money in a bank are investing in that bank. That is the reason you earn intrest on your savings. You are loaning money to the bank. The problem is that the fed is also in charge of intrest rates to an extent. By creating so much money banks don’t need to attract more deposits by increasing intrest rates. They just get the money from the fed at 0% intrest. This works for the fed since they want people spending money not saving. If people save money the wheels come off and the bubble pops. This explains why banks aren’t sharing their profits as they should be and the insane intrest rates of them and the fed.

    Things have changed quite a bit since my grandfather was VP of loans at the local bank! I honestly think that he would have quit before implementing these policies.

  • Cinderella Man

    Hey that was a good radio broadcast Michael! Way to go man I think you should start doing guest appearances on Infowars or Prison Planet Alex likes you. Its important for your voice to be heard and reach bigger audiences. Pray for us brother my grandmas town of Colorado Springs is burning down as well as my old hometown of Helena Mt. I hope you guys in ID will be spared from this wrath!

    • Michael

      I didn’t know you had relatives out in Colorado. We will definitely pray for those affected by these wildfires.


  • Lennie Pike

    If the Federal Reserve did not exist, there would not be a huge difference in the level of U.S. debt.

    It would require sound money for that to be possible.

    At least a large group of satan worshipers would be out of here – but I’m afraid they’ve already left their mark on this country.

  • Eric

    The time for a balanced budget amendment was 40 years ago.

    The next 20 years is going to be one hell of a road rash.

    Although this was 3 years ago, Chis is still worth watching:

  • DeBased

    Maybe the Bible was correct all along on it’s teaching on the evils of usury.
    Its too bad that hardly anyone listened to it.
    Now the bulk of the world’s wealth has been transfered (or given) to the globalist luciferians.
    Lord have mercy!

  • a lot more trouble…

    You by know Michael all this financial stress, Economic pain and burden that is taking its toll on everyone doesn’t have to be. We (Mankind) have made this debt mess and we can undue it.

    There is one simple solution to undue this insanity it is called “the of the year of Jubilee”.
    A once every 7 years all world debt can be forgiven, and then we start from scratch.

    A very frightening web site many of you know of already and should take a look at every now and then is the world debt clock.

  • markthetruth

    Michael (good radio interview)

    Is it sunny or cloudy prior
    these weather man are driving me crazy

    Jun 27 7:00 AM MBA Mortgage Index 06/23 -7.1% NA NA -0.8%
    “the mortgage application purchase index is a leading indicator of future home sale activities and is an early gauge of economy.

    Jun 27 10:00 AM Pending Home Sales May 5.9% 1.0% 0.5% -5.5

    The pending home sales index is a leading indicator of future existing home sales.

    To me it’s all foggy ……

    The end…………..

  • Justin Case

    I have been reading up on this issue and have a question or two. Is the concenses replacement for fiat currency gold? How will enough growth be possible with a fixed value currency to keep up with need for employment? Without a fractional reserve lending system, will there be enough capital in the system to provide growth? IOW, if you have an expanding economy but a fixed currency, how can you not have constant issues with a ‘credit crunch’?

    • Dave in TN

      Technically, there would be deflation in prices for everything as the economy grows, but that would be somewhat offset by mining and the gold we steal during our imperial wars. A better solution would be to issue currency backed by gold as well as other assets of the government that might include land, mineral rights, lumber rights, oil leases, other precious metals, etc. That’s my big problem with Ron Paul: that he demands a gold standard but doesn’t show how it would work or how we could transition to it.

  • bruce2288

    An absolute absurdity to pay interest on money created from nothing. If Ron Paul’s call to abolish the Fed ever gains traction I hope he has his funeral expenses paid. I don’t expect this gold egg laying goose will be allowed to dissapear. Turning dollar creation over to the treasury may not curtail the creation of money and devaluation of the dollar , maybe it would be worse with government addiction to spending, but at least we would not be paying interest.

  • Matt W

    Who owns the Fed? Why dont the masses go after these people. It is obvious that they control whomever is in the White House. So let’s go to the root of the problem. Why has no one discussed this? When SHTF, that is whom I would be pointing my fingers at. Both the Republicans and Democrats are puppets for whomever this is…..please enlighten me!

  • Fred

    For those of us awakened and aware this is basic common knowledge. But the fact that millions of Americans have no knowledge of the reality of The Federal Reserve and fractional reserve banking, shows just how successful the propaganda and programming of TV, newspapers and our lamestream dinosaur news media has been.

    To date the only country on the planet who has dealt effectively, appropriately, and decisively with this corruption is Iceland. They repudiated their debt, rounded up and arrested most of the bankers, fired and replaced their government, wrote a new constitution – and their economy has already started to rebound.

    Oh that this would happen in the USA – that would be a joyous day indeed! Of course due to the rampant ignorance and apathy of the typical America, that is just a fantasy dream. But hey – I can dream, can’t I?

  • Old Man

    Let me make a few things clearer:

    1) Fiat money is backed by something, otherwise it is truly worthless. It is not backed by gold or other precious substance. But it is backed by the worth of the economy (the talents of its people, its infrastructure, its defense, etc.). Therefore, fiat money is far more flexible than gold-backed money, but its value is much harder to quantify.

    2) What is the actual, real value of a fiat currency? Well, one has to sum up everything in an economy to get a correct answer. Which is just about impossible and this is never quoted. But there is another way, an ‘operational approximation’. It’s value can be found by how much other currencies can buy it – an exchange rate. That exchange rate is largely depended on the amount of trade, and thus the supply-demand of the respective currencies. THIS TRADE-DERIVED APPROXIMATION is what we hear all the time on the value of a fiat currency.

    3) While most of the world’s economies have adopted fiat-based currency with fractional reserve style banking, just about every country has its own way on running them. It is how these currency systems are organized and run that controls overall effectiveness – which can range from healthy, reasonably sustainable, all the way to insane self-destruction.

    4) To illustrate 3) look no further than two tightly connected neighboring countries – USA and Canada. The troubles of the former is painfully clear. The latter boost world’s healthiest banking system, a robust economy, low unemployment and sound federal budgets. While both employs fiat currency and fractional banking, the difference is organization.

    US Fed is privately owned with its for-profit balance sheet. It has a legal mandate to grow the economy (i.e. issue debt) and employment. But it is not controlled by Congress, not supervised by anybody, and reports to no one. The Fed chair cannot be fired and he can do as he sees fit.

    In contrast, the Bank of Canada is 100% owned by the federal government (the finance department owns it). Its mandate is legally specified by law – maintain inflation (i.e. growth of debt) no more than 3%-4%. Failure to do so will see the governor replaced in short order. The central bank supports the banking system via money supply management but has no power to regulate them unlike the Fed. Regulating the banks is done by a separate body. Also, the government maintains all necessary powers to issue currency and credit itself, outside of the Bank of Canada.

    In short, the Canadian central bank has only one mandate – issue fiat currency to the fractional banking system with tight legal restriction on inflation. It has no other mandates such as ‘growing’ the economy or employment. The economy grow or not grow by its own accord and actions of other policy makers – not by the artificial printing of debt by the central bank.

    Oh yes, one more thing. The US Fed is now the biggest holder of US government debt, almost $10 trillion dollars. I.e. the Fed printed $10T out of nothing to finance government deficit. How much the Bank of Canada is holding on government bonds, to finance operations that it refuses to collect from taxation? Zilch. How’s that for being responsible?


    A lot of your readers Michael are very familiar with the bibles stance on usury. Both New and Old Testaments.
    I am sure you had that on your mind when you wrote this article which is excellent by the way.
    A must read for all who are familiar with the insanity of usury.

    “Must Americans and Congress remain passive while we await financial Armageddon? Will American and Congress continue the insanity of forever reacting to the damages caused by the Federal Reserve? A plan for the future prosperity of America must be in place now, before financial Armageddon, in order to counter the Global Elites plan of crashing the dollar (FRN) and instituting a mandatory One World Currency. Both Lincoln and Kennedy showed Americans the power of the “Usury-Free” Monetary System. Will the American people, congress and the president dishonor the memory and ultimate sacrifices of these two great presidents by being forever intimidated by “the Beast”?

  • Rodster

    At least these jokers are finally admitting it !!! 😉

    “Biden: “It’s A Depression For Millions And Millions Of Americans”

  • Jackie D

    Thank you Michael for all the time you spend on your research and putting your amazing articles together. I found your site about a month ago via a link to another article. Although I live in England, much of what you say resonates over this side of the pond – our great political leaders, heads of finance, banking and industry are leading the trusting and ignorant masses right down the swanny. Ordinary people are frightened and confused because the standard news sites don’t explain what’s going or why – they’re just interested in sound bites and celebrity nonsense. I’ve recommended your site to several friends and work colleagues as your easy style with words really helps the reader understand the bones of the issue. With thanks to you and blessings – Maranatha !!

    • Michael


      Your words made me smile. This morning I was reviewing the site statistics, and I noticed that there have been visitors to this site from literally almost every single nation on earth over the last 30 days.

      It is humbling that there has been such an overwhelming response to this site from all over the world. I spend so many hours working on these articles, and it means so much that so many of you really enjoy them.

      May you and everyone else that visits this site be incredibly blessed.


      • Voice of Tehran

        Micheal ,

        in order to complete your ‘list’, I thought I write a few sentences from Iran.
        I am regulary following up on your website and I have learned a lot from your very comprehensive articles in The Economic Collapse.
        There is little I could add here , as I went through almost all comments and found them to be very interesting and valuable.
        I am happy to see that Americans are getting more aware and ‘awakened’ of what evil was brought to them in 1913 , by the creation of the Federal Reserve Bank , which is as ‘Federal’ as the Federal Express.
        I think it was the third attempt by the Khazar banking families around the Rothschilds to control the money creation in the US , after they had already gained full control of the Bank of England around 2 centuries back.
        A few quotes , which shows that wise men in the US saw the desaster coming:

        “I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson.

        “I have two great enemies, the southern army in front of me and the financial institutions, in the rear. Of the two, the one in the rear is the greatest enemy….. I see in the future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of the war.” – Abraham Lincoln

        “If the American people ever allow private banks to control the issue of their currency, first by inflation then by deflation, the banks and the corporations will grow up around them, will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” -Thomas Jefferson, The Debate Over The Recharter Of The Bank Bill, (1809). This prophesy has come true.

        It is high time for the people in the US to wake up from this nightmare , or else the Cabals will destroy what is left of this proud nation.
        BTW , the Central Bank of Iran is the only CB in the world , not controlled by the ‘Illuminati’ and you always have to see the warmongering of the Cabals against Iran from this perspective.
        Heinrich Heine a famous German poet once said said in 1848(?) :

        Money is the god of our times, and Rothschild is his prophet.”


        Amsel (Amschel) Bauer Mayer Rothschild, 1838:

        “Let me issue and control a Nation’s money and I care not who makes its laws”.

        Thanks again for your great article.

  • Antonio Gonzalez

    An we can’t do nothing, because we are living american democracy.

    • davidmpark

      Technically, we’re a Constitutional Representative Republic illegally acting like a Fascist/Corporatist Democracy. There’s plenty we can do, but it requires hard work and toil – something that is frightening to most people.

  • I do watch world events and I listen to what people are saying and I do know our major banks are in trouble especially with derivatives to the tune of 200 trillion dollars and we have the debt to worry about and not just the 200 trillion dollars we have committed/promised to pay but also the 16 trillion dollars we currently owe to lenders and bond holders of our National debt and State debt, city debt, county debt and the consumer debt we all have been living way beyond our means and one day we will pay the ultimate price.
    And we have not even mentioned Europe which is ready to implode economically. With Europe it’s been a slow motion train wreck and it’s a preview of what’s in store for the USA.
    You made it to 2012 congratulations now you are on borrowed time, use it wisely. PREPARE for what’s about to come –

  • Zeitgeist

    Resource-Based Economy – Jacque Fresco

  • Shane


    This is great. It should be a handout given to every kid in school. (not going to happen I know).

    Is the end result hyperinflation? What is one to do – buy silver/gold? land? cows???

    Where is all going?


  • Mad Max

    Good post! Wake up Suckers!

    OsiXs (Revolution 2.0 – The Smart Revolution)

  • Dan

    Look up Executive Order 11110.

    JFK wanted to “bypass” the FED by printing Silver Certificates in 1963, which was to be backed by the silver held in the Treasury.

    The silver certificates never made it into circulation and 5 months later… uh, well, JFK ran into some trouble in Dallas…

    This is what happens when you try to undermine the FED’s ponzi scheme…


    • GaryToo

      refusing to start or expand wars didnt help his cause much either

  • Colin

    I learned today that the first time that our nation enacted a federal income tax was in 1862. The tax raised money to pay for expenditures incurred by the federal government in the Civil War. This tax was dropped in 1872.

    I think it would be an interesting and enlightening study to probe why our federal government decided it needed to create a permanent income tax in 1913. As our nation wasn’t at war, and wouldn’t be until 1917, I think there had to be another reason why this tax was imposed on Americans.

  • Saffron

    I have been trying to explain this kind of thing to people without understanding it myself. I’m not simple or stupid but financial stuff is so convoluted it really causes my brain to cramp up when I try to make it make sense. After reading this I definitely understand it better and I think I can make others understand now as well. I have read other articles about this but they’re either in banker-ese or so obviously condescending I just get frustrated and go away but this is written in a very helpful and comprehensive manner, and I appreciate that 🙂

  • TMurphy

    Modern Money Mechanics. Bank reserves and deposit expansion as explained, published, and removed from circulation by the Federal Reserve in the 1990s. Download and enjoy 39 pages of BS:

  • TtT Engine

    A balanced budget, even on the eve of total financial destruction, is possible in the new Constitutional States of America. It is ONLY possible with elected officials, that have the freedom to REPRESENT the WILL of THE PEOPLE. It is only possible if they posess the conviction and courage to RUN the government on the $2 trillion or less that it taxes in every year, rather than the $3.5 trillion we print, borrow and spend every year currently. Give all workers paying into SSI a 75% lump sum buyout and start winding this bankrupt program down. Put the entire government on emergency bankruptcy status. End all the useless agencies like the fraudulent Dept of Energy, Dept of Education, EPA, Dept of the Interior,Dept of Transportation, etc. Tell South Korea, Germany, Iraq, Afghanistan, Pakistan, Saudia Arabia, et. als. we are broke, see you later or in the alternative, charge cost plus 25% for their protection. NO MORE FOREIGN AID. Send Iraq/Afghanistan a bill [payable in Oil if they like] for their freedom. Cancel all funding of Planned Abortionhood. Cancel all government subsidies and the endowment for the pornography frauding as art. Get the gov. the hell out of the rip off student loan industry [ponzi scheme]. Privitize it and let the colleges figure it out. Federal plus state employees total 20 million employees, ARE YOU KIDDING ME ? Sell off the thousands of government buildings sitting idle costing us an arm and a leg. Any departments not eliminated would be cut down by 25 %[baseline], including entitlements. The age of growing government would be over. People will starve, no they will not. Every household/Church that is not burdened in debt will be asked to privately donate to atleast one household that is struggling or in poverty in a Christian matching program. Yes, I said Christian because in the new America, the majority will not have to hide like it does in the current Socialist States of America. Able bodied recipients of charity will have to perform American service projects in order to earn their aid. Immediately start the construction to harvest our American God-given natural resources that will greatly lower the price of oil/gas and put many American workers back to work. Add a constitutional amendment for an across the board 10% Flat Income tax for all working Americans. No deductions, no exceptions, a tax return the size of a postcard. States will follow with a 4% state income tax and a 2% municipal property tax. Sales/users tax would only be aplicable to non-filers of income tax. All other governmental taxes/fees would be eliminated. The average worker would have thousands more dollars per year to save and spend at one’s own discretion. The days of being strangled by the insatiable tax/spend monster aka government would be over. Congratulations North Dakota, you are moving in the right direction ! Christi Fidelis !!

  • Fred

    I liked this article.

  • Tim – Nairobi, Kenya

    Great, informative article.
    Assuming everything collapsed today, the economy, financial system and we had to begin afresh, how would you advise we do it?
    And what is preventing us from doing it today?
    Gaddafi suggested the introduction of a gold standard as a unit of exchange instead of dollars, euros etc.
    Is that a solution?

    • GaryToo

      Tim, I know nairobi well, the corrupt feather-nesting fatcat class will feel it well enough when foreign aid which is meant to help your country stops flowing (into the pockets of the cronies), The masai and other dirt floor dirt poor farmers will carry on much the same as always.

  • Graham

    Full Audit:-

    Full audit of the Federal Reserve Governors and 12 associated FR banks gets a unanimous approval from the House Oversight Committee for the bill to move to the House of Representatives.

  • SidDavis

    This article implies that it would be perfectly fine for the federal government to print up money and spend it into circulation to pay its bills. Such money would be classified as bills of credit.

    In the first draft of the US Constitution Article 1, Section 8 authorized Congress to COIN money and to print bills of credit. After debate the authority to print bills of credit was removed. They had seen the devastation that printing bills of credit to finance the Revolutionary War had caused. They knew the damage that occurred when some of the Colonies printed and spent bills of credit, and decided they did not want the federal or State governments to have this authority. The suggestion that the federal government could just print and spend is clearly not provided for in the Constitution.

    When new money is created out of thin air and spent into circulation it at first causes boom as the new money is spent, but this drives up prices and higher prices end the boom as not as much can be bought at higher prices. The addition of the new money to the money supply diminishes its value. When the expansion effect of new money runs out, economic contraction follows. So a system of paper money created out of thin air is the cause of the boom / bust cycle that would not be present if gold and silver coins were our money. Gold and silver money keeps money supply growth at a very low rate because mining is expensive and requires much work.

    Think about it a second. If the government taxes you directly, you know how much it is costing. But if they transfer wealth from you by printing and spending, you still are impoverished, but you don’t see the money going out of your pocket like you do with taxes. You can’t get something for nothing even if the government attempts to make their extracting you wealth invisible to you by printing money and making your money worth less. What you get is little restraint on government when they can print and spend, and eventually everything becomes government instead of private, and when this happens it destroys the economy and productivity.

    It is a fools paradise to think government printing and spending is somehow superior to banks printing and lending. Both are evil systems of theft because they both transfer wealth from the those who create it, those in the free market, to those who control the issue of money. Both systems cause boom / bust, so I can only surmise that advocates of either system enjoy periodic depressions and the suffering they cause.

    Yes we need to end the Federal Reserve and end fractional reserve banking. But to substitute an equally evil system is not the answer. The answer is to follow the Constitution where in Article 1, Section 8 Congress is authorized to COIN money and Section 10 where States are prohibited from making anything but gold and silver coins legal tender. Economic stability and government limited to what it can visibly and openly tax without causing rebellion would be the result of the honest monetary system of gold and silver coinage.

    • StillLearning

      The same scenario happens when you borrow too much money under the present system.

      Let’s say you borrow $30,000 for a new car . For the moment, you become a big spender and your standard of living goes up until it’s gone. Your future standard of living has been reduced by the amount of interest you pay every month. The money you pay in interest goes to someone else, which is money that is now unavailable to spend in your community. This causes a slight downward hump in the local economy. If enough people do this, it could result in jobs being lost. Hence, the boom and bust you mentioned.

      If we all used gold and silver as money, then the economy would crash and poverty would be the word of the day. This would eliminate the banking system because we would all have to live within our means. The only growth would come from new sources of gold or silver. As the population grows, the amount of gold and silver would have to be divided between more sand more people, hence eventually creating poverty.

      Frankly, I’m at a loss to suggest a better system, but basing the entire economy on gold, silver and future earnings is a recipe for disaster, because it will always lead to an eventual economic crash when the economy re-adjusts to compensate for overspending.

      • TheAmerican

        It’s funny to see that gold and silver has always been so valuable. Even now when it is not the established currencies and although there are many who accept gold as a method of payment you cannot pay your taxes in gold or silver. Why is it that gold has retained such value? higher than many natural resources? Scarcity is a very core concept in Economics, and of course gold and silver are both scarce resources on Earth. Right now the vast majority of gold is held by a select few. Yes, you might have some jewelry you inherited from your family but do you have enough to support yourself? Going back to a gold standard or silver would lead the Government on a new (old) quest for gold, so that we can use it has money. In a country with a population of 300+ million, there is simply not enough gold or silver to go around. Especially right now in the uncertainty in the world where people are hoarding gold and bidding it’s price and value, in hopes that in the worse case scenario their gold will be worth something.

      • glaz

        There is always a resource-based economy where the input of science is usexdto keep track of all the planets resources and distribute them equally between everyone

    • Thank you! It’s nice to read from somebody who knows what they’re talking about.

  • Fred K

    Bankers control the world and politicians.

    There is a good reason why schools hardly cover subject of personal finance, that is, of course, to keep most people in dark and stupid. Sadly, it has been working for years. Of you go to college and start your life with student loan and credit card debts.

    If you made some money selling drugs, the government will come after you with everything it got. But when bankers stole billions and crash the world economy, no one goes to jail. Instead, they get trillions as bonuses at the expense of tax payers – the
    Yes, the solution is to have the government print is own money and get rid of the Fed. However, if you look behind the history curtain, every president or important figures who had tried to stop the bankers all were assassinated or died mysteriously.

  • Fred K

    Bankers control the world – its medias and politicians.

    There is a good reason why schools hardly cover the subject of personal finance, that is, of course, to keep most people in dark and stupid. Sadly, it has been working for years. Of you go to college and start your life with student loan and credit card debts.

    If you made some money selling drugs, the government will come after you with everything it got. But when bankers stole billions and crash the world’s economy, no one goes to jail. “Oh it’s too complicated”. Instead, they get trillions as bonuses at the expense of tax payers – the very same people they just ripe off! Another name for politician should be “professional licensed crooks”.

    I doubt that bringing the gold standard back will solve the problem. Guess who got most of the gold – Central Banks. They will just manipulate the hack out of that with paper gold ETF.

    Yes, the real solution IS to have the government print is own money, interest free, and get rid of the Fed (AKA Goldman Sachs / Morgan Stanley). However, if you ever look behind the history curtain since the founding of our country, every president or important figures who had tried to stop the bankers all were assassinated or died mysteriously. They are sure powerful indeed. We really need a president who got the balls to tell the people the real truth.

    We all have been slaves to this systems all our lives. So let’s hope that this economy do crash soon so everyone can wake up and we can use this opportunity to get rid of this debt system once and for all. Debt base monetary system does not work. It’s time to start over.

  • TexasMarine

    The financial collapse is coming and every single American will be deeply effected. You’ll have to be able to protect what is yours. If Europe falls we will quickly be behind them. Our society has evolved into two groups, 48% are entitlement addicts and the other 52% pay for it all. This can’t continue and when it falls it will fall hard. I suggest you have plenty of guns, ammo, food and a damned good plan. I just pity those that live in the city because you are doomed.

  • StokeyBob

    When I started looking into where the money was coming from to buy off the politicians and subvert the immigration laws of the world, I came across what may be the root of many of our problems. Fiat Money.

    No matter how much real money people can put together to build their countries the way they want there are those that can print up what ever it takes to get their way.

    Maybe this will help make the danger of fiat money clear.
    Imagine you and me are setting across from each other. We create enough money to represent all of the world’s wealth. Each one of us has one SUPER Dollar in front of him.
    You own half of everything and so do I.
    I’m the government though. I get bribed into creating a Central Bank.
    You’re not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with.
    All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world!
    That isn’t the only thing though. You need to get busy and get to work because YOU’VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.
    That to me represents what has been happening to the economy, and us, and why so many of our occupations just can’t keep up with the fake money presses.

    • Mark

      Yes that’s conventional wisdom; however, not printing money does not solved our problem. How would you like to break free from the established system? No way. Why not give the paper the same value as the gold standard?
      All theories will fall far short of the ideal. This article inadvertently articulates “why” biblical prophecy is the bedrock of truth. Because we have abandoned God; He left us to our own devices; and the rest is history. No one can escape this system which is fueled by hell.

  • StokeyBob

    P.S. Once you’ve got the basics some other things should start becoming clear.

    ~No matter where you aunt Martha hid the sugar jar with here savings in it others are able to slither in like vampires in the night and suck the strength out of it.

    ~Sure if the double the money supply your Uncle Phil gets twice as much when he sells his stocks but he is getting twice as many of something worth half as much. Plus some of the very people that counterfeited the money supply have now cut themselves in on his stuff with capital gains taxes.

    ~ No matter how much hard earned money the “we the people” can come up with to build their world the way they want, others have the ability to fire up the fake money presses and dictate their will.

  • Graham


    “Big banks craft “living wills” in case they fail”

    NEW YORK/WASHINGTON (Reuters) – Five of the biggest banks in the United States are putting finishing touches on plans for going out of business as part of government-mandated contingency planning that could push them to untangle their complex operations………

    (Sorry, going a bit “off topic” as usual)

  • 007

    God help us when the world finds something it feels safer to invest in than our currency and debt. That will be when the game is over. If China backed it’s currency with gold, it could crush our country like an empty beer can.

  • CIJ

    the global supply of dollars is taxed through FED inflation – they force others to hold dollars then inflate the bejabbers out of them; can’t lose really, use the invisible global tribute system to build your war machine in order to flatten any one who bucks the system.

  • monk

    Most of total money supply isn’t created by central banks but by commercial banks, with “shadow” derivatives being the largest component.

  • David

    A WOMAN HAD A VISION: She saw one group from the government giving away what one might call “stimulus” money. She said the money had funny numbering and red ink. Then a short time later, she saw a second group from the government come to take the money back.

    Anyway, funny thing about collapses, they never seem to occur when we expect them. Believer, just enjoy your prosperity. Also, beware the scribes and pharisees (church leaders and office holders), they will ask for your money. Be careful, and you don’t have to give it them. Give if and when the Holy Spirit directs. We are in a new day and new rules do apply. Enjoy your blessings without license.

    If you are not enjoying peace in your finances, please stop trying to do this in the flesh. Please consider an alternative view: While i believe in New Testament giving, I don’t tithe as I see it as not being for us today. The evidence for this will mount (an opinion), the old church system is coming down (very hard and very soon). A new age is dawning. Please dont confuse it with the new ager’s new age. They are going to have something very different and very unpleasant. Just consider that their false flag freedom will be enslavement to sin. Believers see the coming millenial kingdom age. A new kind of Christian soldier will emerge having AUTHORITY with CONSEQUENCE. Take no prisoners…..and let the dead bury their own dead.

  • Have you ever wondered why the government of your nation has such a large debt; and why it has to pay so much interest on this debt? Well! Wonder no more! Your nation has a debt money system. Meaning that all newly created money is issued as interest bearing debt. For there to be money there has to be debt; by your government; or by your people; (No debt! No money!). The solution to this is very simple. It is to institute a debt free money system, in which all newly created money is issued debt free. This debt free money would be issued only for needed public goods and needed public services. Instituting a debt free money system would be very easy to do. All that you would have to do is to create a public central bank for your nation. If your nation already has a central bank, then you could nationalize it if need be, and use it, if you would wish to do so. You would now have to have the creation and issuance of all new money to be done by your public central bank exclusively. Your public central bank would issue all new money in amounts calculated to maintain a stable general price level, meaning that inflation or deflation would be 0% +/- 0.5%. An annual national dividend could be given to every adult citizen; or some form of “social credit compensated price discount” could be instituted. Your public central bank would operate at “arms length” from government. Its management directors would be elected by your public. The suggested time period to increase to the 100% level of exclusive money creation and issuance by your public central bank, from your present minimal level of near 0%, would be 10 years. During this 10 year period, that the money creation function of your public central bank would be being increased to the 100% level, your government would be transferring its debt to your public central bank, and would be paying off its debt, so as to be debt free at the end of this 10 year period. Note: Some penalties may have to be paid for paying off longer term debts ahead of time. Also, during this 10 year period, as the money creation function of your public central bank would be being increased to the 100% level, the statutory reserve requirements of your private banks would be being increased at the same time, and at the same rate, so as to attain the ultimate 100% statutory reserve requirement level at the conclusion of this 10 year period. In this way, at the end of this 10 year period, your public central bank would be creating all of the new money for your nation, and the government of your nation would be debt free. All of this would be without any inflation, or deflation, at any time during this 10 year period.

  • ScoutMotto

    I’ve known about the Fed and its skulduggery since 1993. I’ve been an advocate of their abolition ever since. If we go back on a commodity-based money system, many of the nation’s current ills will take care of themselves.

  • Loop Garoo

    This makes my teeth hurt. Very hard to understand. Hell, I still can’t balance my checkbook. Ha. Just kidding…but seriously, why can’t the media cover this stuff?

  • Marooooo

    The media DOES NOT cover that stuff because they do not want you to know the truth. They keep you in the dark, busy with football, baseball, UFO’s, HBO, etc. They create a distraction so they keep playing that same game while we’re busy looking the other way. The media is owned by the same people/group that runs the financial institutions i.e. Federal Reserve!
    Figure it out!!!


    The banking deal was a very typical “made to fail” contract. Dishonest and greedy people have used such a tactic to bust out people for a millennium or longer. We can easily surmise that it was at that point in 1913 that the collusion of those in govt at the time, and the bankers to usurp the govt of the United States, no matter how long a process, was installed. You see, those in power at the time, don’t care if the system fails, someday. They reap the rewards during the time frame that it exists, which is why they will strip you of everything you have in order to keep their system up and running, because when it stops, they all go broke.

    Getting back to the way the deals like this are structured to fail goes like this: I admit having done this exact thing, some time ago, to a pseudo business partner who refused to buy me out, and locked up the company’s assets, refusing to liquidate, and ALL of the money in the business was MINE. So, I went to the District Attorney, and explained the situation. She told me what my options were. 1) Ask him for it and he returns it, or 2) Sue him. Well… Suing would take too long, kicking his ass would create a legal situation I didn’t want to deal with, so, instead I tell him “I will give you a lease on ALL of the gear so you can go out and make a living and you can pay me back as you go.” He agreed. I drafted a contract that only the best scenario would allow him to repay it. There was no way he would ever bail himself out of it. So, he defaulted, still refused to return it, I threatened him with a theft charge and/or something else, went with two old buddies of mine, and went and got my stuff.

    The same type of thing was applied to the U.S. when they sold out the nation to the banks, in 1913. The banks KNEW then and KNOW now that, in the end, they will own us, lock stock and barrel. Greece is privately owned by those who last bought their shitty bonds. Their only real problem is our Military. Contrary to popular belief, they don’t own the military. You’ve all heard the rumors about the president declaring martial law, sending troops into the streets. That might happen, but only to a certain degree to stop looting and the like when the financial system collapses, but there will be no military take-over like you might see in Russia, e.g. The military would tell any president to stand down in such a situation. And, we’d probably be better off with them in charge than what we have, now.

    Because the govt doesn’t produce ANYTHING, they MUST get their money from YOU. So, the tax us to death, and now the Supreme Court has upheld that the government can shove any program down your throat and MAKE you pay for it by simply calling it a “tax”. They will continue down this path, and continue to bail out banks and nations who have squandered theirs. It is precisely WHY the world’s economic system is collapsing, under its own weight, as we speak.

  • Robert McKee

    Just finished reading “Secrets of the Federal Reserve” by Eustace Mullins. It states that at the time of the installment of the system the Government of the USA was totally debt free! How the hell did this happen?

  • Are you familiar with the traditional Catholic website and YouTube channel of Most Holy Family Monastery?

    Lots of eye-openers there! Would warmly recommend.

  • Washington

    Woman Sues City Of Tulsa For Cutting Down Her Edible Garden   Posted: Jun 15, 2012

  • Passer-by

    Very good article

  • Har

    Enjoy all of your FED reserve debt articles…helps me understand the issue more.

    • Michael

      I will try to write about the Fed more often. 🙂


  • Snake Pliskin

    OH Well, Let it all collapse
    Cant find a job anyway
    and greedy buisiness owners trying to pay low wages can feel the hurt aH ah ah

  • Snake Pliskin

    Can you heeeeaaaaar it calling EMPIRE
    nwo bring it on

  • Scott

    Two movies that explain the Federal Reserve System:

    “The Creature From Jekyll Island” – Ed Griffin

    “The End of the American Dream”

  • Scooter

    Excellent article as usual. More and more people are catching on, but too little, too late. Keep in mind that there is an end game. The elite do nothing by accident. This system will fail just as it has been designed to. Be on the alert for the most heinous false flag event you can imagine. It will be used to tip the financial scales into global collapse, or vice versa. Either way, it will be ugly. They do not want your money. They knew from the start that the money was worth nothing, it was their idea after all. What they do want is your soul.

  • Cash Snowden

    Loop asks above “but seriously, why can’t the media cover this stuff?” Once you realize what’s been going on with the media, things like Anderson Cooper’s college internship at the CIA will start to pop out at you. Here’s the video, pay close attention. –>

    When you research Irving Kristol (well worth it and I suggest you look into him deeply. Start by googling him) you can see the Republican party was hijacked through deceit by Trotsky followers, neoliberals called neomarxists. You can also find that Kristol’s magazine was published with money from the CIA. Kristol claimed when a reporter broke the story that he didn’t know who his investor was, which is utterly laughable. You can see he has close ties with the Council on Foreign Relations, the Rockefeller think tank. The Federal Reserves BRANCHES are privately own by the big corporate banks, and this is how they control the Fed. These banks are all corporate members and founders of the Council on Foreign Relations. The more you research, the more you will see that the CIA works in lockstep with the CFR and the banksters.

  • Excellent points made by “Cash Snowden”, about the CIA, CFR, Rockefellers and other Banksters.

    These financial scandals, and the ‘Fed’ won’t be going away anytime soon, UNLESS YOU GET UP OFF YOUR FAT, LAZY A**ES, and DO SOMETHING!

    HR 459 passed by an overwhelming majority in the House, by a vote of 327-98!
    Now, this bill (S.202) needs a vote in the Senate!



    End the Fed! Whether Congress Wants Us To or Not!

    • Russell Naylor

      Thank you, Anon.

  • Bill

    We have an option people. Ron Paul 2012!

  • ron paul 2012! I wish it were possible.

    • Masterlock2020

      If only. But that would have required an informed citizenry. Ron Paul was probably our last hope too, which makes it especially sad.

      And even when the country collapses, most will not have the slightest understanding of why.

      It especially sucks to know it’s coming but to be powerless to stop it.

      A majority of Americans are now unfit to govern themselves due to ignorance and apathy.

      The whole system is corrupt.

      • cohones

        Yes because the govt. has made millions dependent on it,lots believe they can’t make it without them.

  • Trailoftears

    The Federal Reserve/Vampire promises you easy money/eternal life.
    The one thing neither one says is the thirst that they both inflict on you. The Fed thirst means DEDT and the Vampire thirst means hunger, both detrimental to a good life. Neither the FED nor the Vampire will ever allow you to see a “Sunrise or Sunset” just debt or hunger until you DIE!!!!
    America is now Enslaved to the international Bankers how IRONIC !!!!

  • usurykills

    Your conclusion that “debt-based” money has to fail is not supported by the evidence you give.

    You say yourself the debt grows because of interest — that the money to pay the interest is never created.

    Therefore, the problem is not debt but interest.

    Of course, you have been taught that interest is necessary by people with a vested “interest.”

    Bernanke doesn’t charge his pals interest. Those guys know what’s going on.

  • Joe Pijanowski

    There are two white papers which verify how the fed works AND proposes and proves the solution. One is by Michael Kumhof and Jaromir Benes from the IMF. Google the “The Chicago Plan revisited”. The other is by Kaoru Yamaguchi. The bill is HR2990….. short and to the point.

  • Danbo

    This is possibly the silliest article I’ve read in years, pandering to the silliest of people.

  • stanfrommarietta

    This book is based on a fallacy. It overlooks the fact that all those securities held by the Fed, which it bought from banks, who got them from Treasury in return for money for deficit spending, were bought by the Fed with money it created out of thin air, effectively redeeming the debt to the banks. The Fed is a government entity in such purchases, and functions as an agent of government. Hence we do not owe the Fed anything except a 6%-of-the- interest transaction fee on the purchase of the securities. Otherwise just who is owed for the securities at the Fed? No one. So, the so-called debt is not really a debt. The Fed can redeem all securities bought by investors and foreign countries as safe investments (like CD’s) with US dollars. These investments do not fund government spending. The Fed can always create whatever money it needs to return the money plus interest to the investors. In the meantime the Fed likely destroyed the money of the investors while recording the amount.

  • Gunzo

    I honestly think that the common man is swindled. There was a reason why income taxes were higher and much higher. Ordinary people do not know how to “rake” money. Rich could do that easily. As this article says, our govt has been made a slave to the rich and we are all working to satisfy the rich. Well, in a way, that is how the societies worked through out history. But the way tax are levied, common man ends up paying all the taxes and the rich just to get to “rake: the money as Warren Buffett said about Mitt Romney!

  • pacman925

    YES !

  • Eric Lee

    um, 10 dollar bills are still around..

    • Nate

      If I am correct GT Horvat did not just mean 10 dollar bills but bills that were not Federal Reserve notes. If they were not Fed notes theu did not add to the debt just as minting coins does not add to the debt.

    • DS

      Um, he’s talking about ten dollar United States notes, NOT ten dollar Federal Reserve Notes.

    • Ame rica jones

      10 dollar gold certificate is what was issued. You could go to the bank and exchange it for physical gold.


  • Time to republish this one Michael.


  • PLJ

    As I understand it the private banks that own the fed only receive a fixed return on capital, so any surplus above a 6% return (made by the fed system) is actually returned to the treasury, this sort of changes the picture somewhat. There is no method to profit by the Fed (or its private members) using this rational. The perpetual debt model falls over in this respect, this pattern was only used in the past when the central bank was fully private and unregulated.

    Most central banks including the Fed are not allowed to monetise debt directly by buying Government debt from the treasury (under normal conditions). They can only issue new money indirectly for Government debt held by private sector institutions (which admittedly can then allow the private institutions to buy debt directly from the Gov). The US treasury raises money when it has a PSBR by selling treasuries usually to private sector banks. it does not pay interest to the Fed for “thin air money” but it does to pay interest to the holders of the treasuries which may be the private sector banks, pension funds, foreign governments. In the case of private banks they may well have created money from nothing subject to fractional reserve capabilities and will be receive a return.

    With regards the QE program at present (post 2008) though Fed lending is no doubt benefitting the banking sector. Both quantitative and qualitative easing are being used – this is to benefit them by design. This involves the fed buying back both normal debt and toxic assets from private banks (longer term maturity assets). The private banks get liquidity in return for their normal debt holdings but also an opportunity to clear up their balance sheets with cash being exchanged for in some cases worthless assets like some of the subprime “assets” (this is qualitative easing). What is more to keep this money from entering back into circulation (inflationary) these reserves can be re-invested with the fed at 0.25% (roughly). Alternatively it can be invested in stocks and other assets hence the rise in prices/indexes for a number of assets above fundamental justifications. Given the low return on debt (high prices) these portfolio adjustments will push asset prices up until their respective asset class returns are equalised (depressed) net of risk premiums. On the whole this money is being used in a number of ways but most fundamentally is providing liquidity to the system (reserves are well re-charged), it isn’t as you might expect being lent to non financial businesses or consumers in the most part.

    With the level of problems caused by the financial collapse of 2007/8 some argue that unprecedented and possibly illegal measures are being employed and it might actually be the case that money is being injected into the economy by direct debt monetisation and even possibly straight forward money printing. Some also suggest that money might be being used by the Fed for its member own benefit in more questionably ways.

    The other benefits the private member banks get is an influence over policy and forewarning of policy timing which can equate to a competitive advantage of non member institutions.

    The separation of Government fiscal responsibility and money creation capability is to build market credibility and to control expectations as a result of this credibility. By controlling expectations using rule based approaches it allows economic effects to be transmitted with less effort. QE is a particularly aggressive, last resort type intervention used when interest rate policy ceases to be effective (when rates are effectively zero or low in nominal terms or possibly negative in real terms). The space has been called the liquidity trap.

    In summary the policy the US has taken is to retire toxic assets by issuing new money so as to essentially reset the banking system, as if the toxic debt debacle never really happened. The effects are likely to be very low interest rates for US assets and/or inflation which will tax wealth already invested in US denominated assets by either higher prices or lower returns. In regards of the Fed it is very powerful no doubt and its operations opaque but it does not benefit its members in the ways suggested.

    • pimlico

      I wouldn’t mind 6% return on MY capital.

  • Someone

    This article is incorrect. The net earnings gained by the Federal Reserve are sent directly to the treasury.

  • Kishan

    Can someone link me to some sources that back this up? It’s not that I don’t believe this, I believe this 100% and am extremely angered by it and just the whole way our capitalist system is being run today. This is why I am doing my senior project in high school on capitalism and one of the topics I want to cover is the banking system and the federal reserve and this is the type of stuff I want to talk about but I can’t do that unless they are “peer reviewed” or “scholarly articles”. So someone pleaseeeee link me to some sources that substantiate the information in this post.

  • Boot

    Hello everyone!! I have a question for those that arw clearly aware of the problem. Well first off, thanks for the deep researches it must have taken to gather all of this content. My question is what is the solution. Rasing awareness is one thing, but does anyone have a solution to the problem? Thanks

Finca Bayano

Panama Relocation Tours



Facebook Twitter More...