Does anyone really know how the economy works now?

How do we know who or what to listen to if we don't understand how an economy works to begin with?

I believe this is the number one reason why economies don't work well. We the people don't know how they work.

I am interested in the United States economy since I am from the US and it seems this global economy is headed a similar direction.

I want to start with this premise though;

1) I don't want a social restructuring.

2) I want to keep a non-electronic currency that I can use freely, such as the dollar.

Why?!?

Because I want to live free. I want to be able to travel and buy whatever I want without being traced electronically. I don't want my living and/or purchasing habits monitored or studied.

So, let's try to understand how the US economy works.

First things first; Where does the economy begin?

This should be easy, but, no one wants to teach the people how the economy works so it's hard to understand where to start. It has taken a lot of people decades to put the pieces together of understanding an economy and we are only now coming to understanding it.

According to the Constitution, the economy starts with the Federal Government. But, with the Federal Reserve Act of 1913, the Central Bank now starts the economy. Since the Federal Reserve Act of 1913 is a law and not a Constitution Amendment, the Federal Government still has the power to start the economy, but, allows the Federal Reserve to do it anyway. A really stupid set-up!

You see, the Federal Government is supposed to maintain the public welfare and hold the public interest as their highest priority. The Federal Reserve, which is a mostly foreign owned private banking system, holds stock holders first in priority.

How is the economy started? Through cash and credit, credit being debt. And the US economy is a debt based economy. The economy is driven or stalled by throttling debt. More debt in the economy and the economy grows. Cutting back on the debt in the economy and the economy shrinks. And it is just that simple.

Interest rates are used as the sales pitch to either encourage or discourage borrowing. Personally, I don't believe there is any need for usury. But, interest sure can add a lot to the debt load.

I'll stop here for now.

I mentioned before that the US economy, as well as this global economy, is a debt based economy. Cash, so-called, is created through debt. That is why the US dollar is simply a bank note. Our cash is actually debt. A Federal Reserve bank note to be exact.

Bizarre.

Consequently, there isn't any real mechanism in the US economy to pay down or pay off the debt. Now, under the Clinton administration in the 1990's, they actually figured out a way to create a budget surplus. And that was destroyed by the second Bush administration. So, now we struggle to slow ourselves down this slippery slope we are on.

I would like to ask a question here; What does it take to pay down or pay off any debt?

Print, baby, print!

I assume you mean print more money. Well, that is part of the solution, but, why and how this money is counted for are the answers to our economic problems, I believe.

The next point I want to touch on is that the US dollar isn't backed up by any commodities. For instance; The US dollar isn't backed up by gold or silver. I don't believe this is a problem at all. I disagree with Ron Paul on this point. The US dollar is our currency and our faith and support for it is all we need.

The problem here is "globalism"! Our dollar is part of this huge global network where the rules are made on the fly on a case by case basis. There is a three part documentary from PBS, or The Public Broadcasting System, called Commanding Heights where the economy of globalism is covered rather thoroughly.

At about 1:06:07 of the third doc, the issue of a hedge fund company called Long Term Capital Management, or LTCM, was on the verge of bankruptcy. Supposedly, this one company going down could have crashed the entire global market all by itself. This was in 1998 when the US economy was turning white hot by financial standards. How could this be? I see globalism threatening all nations through their currencies and economies.

To protect our currency, we will need to completely get out of the global economy. We can have our own separate trade bills with any country we possibly can, but, not as part of a global economy.

So, assuming we get out of the global economy. What then? How do we transition into a cash based economy and what does a cash based economy look like?

First; Using the present debt based system, the Federal Government, (yes, I know we normally expect the central bank to do this function and work, but, it is better if the Federal Government does it) can simply buy back whatever debt it sees fit to buy back at face value. All the debt is accounted for responsibly and all the banks are solvent. It is the Federal Government that creates the cash and credit, so, it is their responsibility to buy it back and fix the problem.

In a book and youtube movie called "Princes of the Yen", I learned that the central bank in Japan, the Bank of Japan, did exactly this after World War II. Even banks that may have been destroyed in the war were made solvent. Everyone's money was safe.

Remember, the United States Government watched and monitored all this in Japan after the war, so, we have known about this since then for sure. I don't really know how long our government has known about this function.

After this, adopting a cash based economy is easy without any sacrifice from anybody. We simply use cash, or print cash to back up our own debt! No fear of any collapse when there is money available to cover any bad debts that may develope.

I agree!!! Under your system, the cash will be worthless, no chance for any collapse!

(bold emphasis mine)

Why will the cash be worthless?