The Illusion of Wealth: How the Federal Reserve Creates Money out of Thin Air and Devalues the Dollar by 95%
Money creation in the United States is a complex and controversial topic. One of the most significant issues surrounding the topic is how the Federal Reserve (FED) creates money out of thin air. The FED can create money in two ways, by physically printing currency or by electronically adding money to bank accounts. This process is known as “monetizing the debt,” and it’s a significant factor in the creation of new money. However, the money created is backed by nothing since 1971, and it’s a fiat currency that is based on faith. This system has devalued the dollar by over 95% of its value since the FED was founded in 1913.
To make matters worse, all money that is created is immediately a debt, as the FED lends us the money and does not give it to us. The FED not only wants payment back, but interest on top of that, which makes this system unsustainable and impossible to pay back because for every dollar that is created, it will have to be paid back with interest. Since there’s not enough to pay for the interest, the borrowing will continue, and the national debt will continue to grow.
This system of fiat money is not a new concept and has been used throughout history. Fiat money is a currency that has no intrinsic value and is not backed by any commodity such as gold or silver. It has been used in various forms for centuries and has always led to its eventual collapse. The reason for this is because fiat money can be created out of thin air and has no physical backing, which leads to hyperinflation and the eventual devaluation of the currency.
The fractional reserve system is another factor in money creation. Fractional reserve lending is when banks lend out funds that have been deposited by customers. The banks only hold a fraction of the total deposits, while the rest is used to lend out to others. This system has been used for centuries and has led to financial crises, such as the Great Depression.
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The current national debt is caused by this entire system, and if we continue with this system, the dollar will continue its devaluation, and the world’s trust in the dollar will only decrease. However, the reason there’s still demand for the dollar is the petrodollar agreement. This agreement was made in the 1970s, where the largest oil producers, such as Saudi Arabia and the United Arab Emirates, agreed to only sell their oil for dollars. This agreement created a demand for the dollar, and it became the world’s reserve currency. However, with the BRIC nations moving away from the dollar, it remains to be seen how long the petrodollar agreement will last.
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The FED creates money out of thin air, and this system is unsustainable. All money created is immediately a debt, and the interest on top of that debt makes it impossible to pay back. This system has devalued the dollar and created a massive national debt. Fractional reserve lending and fiat money have also contributed to financial crises throughout history. The petrodollar agreement has created a demand for the dollar, but with the BRIC nations moving away from the dollar, it remains to be seen how long this demand will last. It is crucial that we explore alternative monetary systems to prevent the collapse of our economy and the devaluation of our currency.
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