- Ward Williams
- Bettendorf, IA
- United States
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.