The National Debt , The Federal Reserve & the State of the Monetary System

I've had many conversations on Facebook about our government's spending and the indebtedness of Americans. The most common point people bring up is that the government should start spending less and reducing the debt. Unfortunately, this reflects a very superficial view of the how the economy operates. Most people think getting out of debt would solve the world's problems. The reality is no so simple to explain and I will barely scratch the surface here.

The real issue isn't what the government owes or how much money it spends. It is the fact that ALL money is created by creating debt. New money is created in the amount of the debt, but interest is still owed. Therefore, if every person & nation paid off all debt, the global economy would still be in the red by trillions, because the money to repay it doesn't exist. Even much of the debt would go unpaid as well, due to the "multiplier affect" (another topic). By design, new money—debt—must always be created so that interest can continue to be paid, ad infinitum. It's a trillion dollar Ponzi scheme conceived by a small group of influential men on Jekyll Island in 1910.

At the moment, the increased spending is keeping things somewhat stable—softening the blow for the entire world. The US dollar is the currency standard for the entire global economy, therefore, it is the US who must bear the burden of debt. Our consumer economy has created wealth (and poverty) around the globe at our own expense.

The gap between the wealthiest 10% and the rest of the world is increasing exponentially because of the debt-based system. The middle class is getting poorer and more indebted, while the rich are getting richer. This is a direct result of our debt-based economy. If you are wealthy, you have no need for debt. Instead (for example), the wealthy will put 1,000,000 in the bank to draw interest, making them even richer. Where does the money come from to pay the interest? Those of us who are not wealthy and must borrow money just to survive. When you get an auto loan, a mortgage, or a credit card, you pay interest on the debt. That interest pays the interest of the wealthy man's investment. The ones getting richer are the very same who control the global economy.

This Could Be You

You're an average man, with an average family and a comfortable income. You aren't extravagant and have worked hard to save money and live frugally. You have $1000 left to pay on the car and then it's yours. You have no other debt, save a credit card you pay off every month.
Then, things get bad very fast. You lose your union job due to massive cuts at the factory.  The family cuts back and lives off your wife's part time income of $600/mo. and savings. You do alright for awhile, but are totally unprepared for the events which follow.