If you want to permanently fix America's economy, there really is no other choice.  Even before Ron Paul's rallying cry of "End The Fed" shook America during the peak of the Tea Party movement, I was a huge advocate of shutting down the Federal Reserve.  Because no matter how hard we try to patch it up otherwise, the truth is that our debt-based financial system has been fundamentally flawed from the very beginning, and the Federal Reserve is the very heart of that system.  The following is a free preview of an upcoming book that I am working on about how to turn this country is a more positive direction…

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As the publisher of The Economic Collapse Blog, there have been times when I have been criticized for focusing too much on our economic problems and not enough on the solutions.  But I believe that in order to be willing to accept the solutions that are necessary, people need to have a full understanding of the true severity of our problems.  It isn't by accident that we ended up 20 trillion dollars in debt.  In 1913, a bill was rushed through Congress right before Christmas that was based on a plan that had been secretly developed by very powerful Wall Street bankers.  G. Edward Griffin did an amazing job of documenting the development of this plan in his groundbreaking book "The Creature from Jekyll Island: A Second Look at the Federal Reserve".  At that time, most Americans had no idea what a central bank does or what one would mean for the U.S. economy.  Sadly, even though more than a century has passed since that time, most Americans still do not understand the Federal Reserve.

The Federal Reserve was designed to create debt, and of course the Wall Street bankers were very excited about such a system because it would make them even wealthier.  Since the Fed was created in 1913, the U.S. national debt has gotten more than 5000 times larger and the value of the U.S. dollar has declined by about 98 percent.  So the Federal Reserve is doing what it was originally designed to do.  In fact, it has probably worked better than the original designers ever dreamed possible.

There is often a lot of confusion about the Federal Reserve, because a lot of people think that it is simply an agency of the federal government.  But of course that is not true at all.  In fact, as Ron Paul likes to say, the Federal Reserve is about as "federal" as Federal Express is.

The Fed is an independent central bank that has even argued in court that it is not an agency of the federal government.  Yes, the president appoints the leadership of the Fed, but the Fed and other central banks around the world have always fiercely guarded their "independence".  On the official Fed website, it is admitted that the 12 regional Federal Reserve banks are organized "much like private corporations", and they very much operate like private entities.  They even issue shares of stock to the private banks that own them.

In case you were wondering, the federal government has zero shares.

The American people are constantly being told that Fed decisions must be "above politics" because they are "too important" to be politicized.  So even though everything else in our society is up for political debate, somehow we have become convinced that the Federal Reserve should be off limits.

Today, the Federal Reserve has more power over the performance of the U.S. economy than anyone else does, and that includes the president.  The Fed has become known as "the fourth branch of government", and a single statement from the chairman of the Fed can send global financial markets soaring or tumbling.

So even though presidents tend to get most of the credit or most of the blame for how the U.S. economy is doing, the truth is that the Fed is actually the one pulling most of the strings.  In conjunction with Congress, presidents can monkey around with regulations and tax rates, but at the end of the day their influence over the economy pales in comparison to what the Fed is able to do.

For those that have never encountered this material before, this can be difficult to grasp at first, so let's start with something very simple.

Go to your wallet or purse and pull out a dollar bill.

At the very top, you will notice that it says "Federal Reserve Note" in big, bold letters.

If you ask 99 percent of the people in the United States where money comes from, they will not be able to tell you.  Our money is actually created and issued by the Federal Reserve, but that is not what our founders intended.  According to Article I, Section 8 of the U.S. Constitution, Congress was expressly given the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".

So why is the Federal Reserve doing it?

Many Americans are still operating under the assumption that the federal government has a "printing press" and that if we ever get into too much debt trouble the government could simply create and spend lots more money into circulation.

But that is not the way that our system currently operates.

Instead, it is the Federal Reserve that creates all new money.  Once that new money is created, the federal government then borrows it and spends it into circulation.