- Ward Williams
- Bettendorf, IA
- United States
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Why would the world or even the US economy crash if we stopped paying back the Federal Reserve?
I need help understanding what I think is basic economics. I'm a simple man so if someone could help me understand in simple language what I'm missing, maybe I could have an intelligent thought about how all this works.
The Federal Reserve (non government entity) creates money out of thin air (fiat money). If that's true, it's really just imaginary money. They loan this money to banks, and governments at interest. This interest is paid to them through interest paid by the end user, if borrowed at a bank, or in the form of taxes when used by the gov?
If the money is imaginary the debt must be too? This seems like a scheme to create a steady income stream for the principles of the Federal Reserve. Why would it cause a crash is we decide to not pay back the interest or even the debt itself? It seems to me that the only people who lose are the people who imagined the money into existence, and the interest with it. Might be a crash for them, but why for the rest of us?
My understanding flawed, or my logic is flawed, or something. I need help with this.
edward long 100+
Man to hotel owner:
Here is $100 cash. Hold a room for me. I will be back later.
The hotel owner takes the $100 next door to the Bakery and pays-off an IOU of equal value held by the baker.
The baker takes the $100 across the street to pay-off an IOU of equal value held by the tailor.
The tailor takes the cash next door to pay-off an IOU for $100 held by the doctor.
The doctor goes to the hotel to pay-off a $100 IOU he owes the owner of the hotel. The lobby is empty so he leaves it on the counter.
The owner returns and puts the money in the register. He then issues a key and change to the guest who has now returned.
A total of $400 in debts have been paid-off, and a room has been rented, all with a single $100 bill.
Random Chance 30+
each still owes phantom money to the bank and there is not enough to pay it off.
If one were able to, or all were able to pay off their loans (that created the debt in the first place),
there would be no money in circulation to pay off the phantom interest, which would continue to grow.
Also, I suppose this might be how a free-market system is supposed to work but doesn't, because of the unfair, malicious manipulation of the money system and the value of money, that only increases for the Banks (Fed) and not those who try and fail at keeping it vital and free. It isn't.
There is no hidden, phantom interest in your parable example.
It is a just system, not an unjust one and is functioning on honesty, decency and other good qualities that only a truly free market can function on when it is for the masses.
edward long 100+
Random Chance 30+
"We should return to such a system."
I understand that Congress has been asked to return to such a system whereby Congress prints the money that they were and are set up to do, without debt to the nation's citizens.
They have refused to do so, yet they (yeah, right), represent the People and not the other way around; their own interests.
Some have demanded they do so. They refuse to.
Some have pleaded with them. They refuse to.
This is a reality that can only be overcome by throwing them out, with force if necessary.
If one continues to think, believe and opine that we should continue pleading with them, with an expectation they will finally "wake up", it will never happen.
They already are awake and know exactly what they are doing.
They need to go, thus this system needs to go.
It only attracts those who will use it in the methods and ways in which it is used,
which is to abused, not used.
edward long 100+
We have the system in-place to see our will done but most of us (the American people) are not using it. It is called voting. The average American is apathetic and therefore ignorant about matters of politics. If people would wake-up and exercise their rights as citizens of a free nation things could change.Politicians have one goal. . . election/re-election. Whatever they believe will acheive that goal they will do. If enough of their constituents (you and me) contacted them and said"Balance the budget!", or "Return to the gold standard!" they would vote accordingly. But there is another formidable obstacle to the exercise of rule by the people. That obstacle is Socialism represented in America by the Federal Reserve System, the Council on Foreign Relations (which most elected officials support), the United Nations, the International Monetary Fund, the World Bank, and others. Those two problems have just about destroyed our nation, but not quite. There is hope if people will get concerned and involved things can get better, but time is short.
Random Chance 30+
Voting doesn't work.
That was proven in 2000.
Plus, whomever we vote for doesn't do the job, either what they promised and have reneged on, or are continually blocked by opposing forces, and neither side really considers the will and needs of the people.
We have let too much slide and be taken over by those in power. Like the media.
Ralph Nader used to run for President. He was always belittled by the media and other candidates, so much so that it would always overflow into the public mind and the kinds of conversations one would over-hear would just be repeats of what had been broadcast, printed up or televised. He was quickly marginalized and dismissed as a viable candidate.
One thing I always noticed about these past elections was this: each candidate talked at length about what they could do, would do, and what they had done, as means of qualifying themselves. Ralph tried to also, but one thing was not only for sure, it was something everyone in the country knew to be fact.
That was exactly what Mr. Nader had been doing for the last 25, 35, or 40 years of his life, and successfully achieving. He worked for the people. He lived in a tiny, one room apartment for over 25 years, eluding the money promised and tossed his way, if he would stop what he was doing and join the forces of evil.(what else should they be called?)
But he didn't. If anything, when he said what he had done, what he could do and what he would do, the entire country knew he was telling the truth. Not so with any other candidate. Was he perfect? No. But he worked "for the people" as public servants have always vowed to do. He is a millionaire, true but so what. It wasn't stolen money, skimmed money or paid-off money but what he earned, honestly.
Did we put him in office? No. Voting doesn't work. It can't work Edward. The game is completely rigged against it and you should fess up to that truth and not hold to the lie, which they want you to keep holding to.
"Did'cha vote?"
Well vote!
edward long 100+
Random Chance 30+
Your system works on corruption, not honesty, integrity, ethics, decency or compassion.
It works on pitting people against one another not working together. The only things that work that way are corporations, the military and those limited number of powerful people who are dedicated in controlling everything at the expense of everything.
It isn't a system that has been working for a long time. It is a system that has been failing and falling apart for a long time, revealing its innards to be rotten to the core with corruption and evil.
When things are this evil and this bad and this monstrous of a hill to climb or sort out, it is always better to simplify it rather than complicate it more by giving credence to its entangled netting of deceit. Doing so always plays into the hand of those who are corrupt and benefit from this system. In fact, when you do so, you are playing their cards, for them, against you!
You said it's a good system but we aren't using it correctly. How true. Your Declaration of Independence tells you, compels you, commands you and beseeches you in what to do when it has come to where it is now at. And that same document tells you what a successful culmination of that action it authorizes you to carry out, will produce.
"Ya damned right you're not using it correctly. You're still trying to use the broken tools that once were for the job, but won't work now. They're broken and the bolts and nuts they once fitted, are broken too. Non-fixable, irreparable and non-refundable. And you cannot continue to fool yourself about this and wish it away with a simple, "old optimist".
Perhaps you and many others of your nation should say, "blind."
No personal offense meant to you by the way. I am just sickened by what is happening. I hate seeing poverty, homelessness, starving, in need and want and all while trying to walk upright.
It bothers me day and night. I would rather it does than it not doing so.
Ward Williams
Fritzie Reisner 100+
Ward Williams
Fritzie Reisner 100+
You can check by seeing if your comment is indented under the person's to whom you replied.
Random Chance 30+
I believe this is one of the threats they like to terrorize the people with so they will continue to believe they need money and the Fed. They will collapse but we will not. Our great illusion we love so much will die too and that may affect many of us/US with feelings of panic, terror and impending doom.
But, we will still be here, the factories and companies will still be here, the resources we need, use and create from, will still be here and so on, right on down the line.
We will still have our wants, needs, desires and problems we need to take care of and without money and the slavery it survives on, humans can then go about solving their problems, see to their desires, and so on. We will not lose motivation simply because the Fed and money die. That is another lie. There are many and they are worshipped, like, like, well, like the truth!
They have been using fiat thoughts, ideas and beliefs to fool us/US, and that game is about to crash.
So the fiat threats are just that: fiat threats. Imaginary
But, I am as interested as you to see what those much smarter than I come up with here.
Each one will more than likely be joined at the psyche with the idea of money, the Fed, inflation, and all those other terms that validate the lies the people worship.
george lockwood 30+
pat gilbert 100+
Since a lot of people world wide have confidence in the dollar and will accept it is a lot how the U.S. can get away with spending so much.
The more that they print the more it dilutes the value of the dollar.
If they default the credit rating gets changed (admittedly dubious) which means the U.S. has to pay more interest on bonds. This means that the current rate of 250 billion a year to pay interest on debt (bonds) could easily balloon up to 750 billion or 1/3 of the annual revenue
Since at least a modicum of this money is borrowed from investors the interest rates have to be high enough to get them to invest.
If you think this scenario is unlikely consider Argentina, USSR, Germany before WW2, Hungary, and about 20 other countries and you will see what happens when the debt is paid by printing money.
Ward Williams
Why do care about credit ratings if we imagine our own money? See above Q. If I could just decide how much money I have, credit ratings are moot.
Why do we care about investors if we imagine our own money?
I understand and really have no problem with the whole fiat money thing. What I'm not getting at all is why we are paying a middle man (Federal Reserve) the interest. Money in my world is exchanged for something of value, whatever that means to me. Where's value in what the Fed does?
pat gilbert 100+
Ward Williams
pat gilbert 100+
Much of this is determined by supply and demand as illustrated by the aluminum example where it sold for $1200 per kilo in the 1800's but when an inventor came up with a way to make it cheaply the price went down to 18 cents per pound.
When too much money is printed the value of the dollar goes down and can buy less goods. Gold is now selling for $1600 per ounce 10 years ago it was $400 or so. It is not that gold has gone up that much in value it is that the dollar has gone down that much in value.
People determine what commodity they have the most confidence in. If the economy collapses they will have more confidence in guns and food.
Clear as mud?