After everyone weighs in, I'll edit my response to something more informative... but I don't want to give away any freebies! I want to know how smart people really are!

GJ Bob, you are getting there, but I WANT TO SEE A THOROUGH ANSWER! LETS GO PEOPLE (I believe in you!)!

VERY NICE ANSWER TBD! But that's not even the tip of the iceburg....

the_divine_mrs_m... You're right on target! Will you marry me?

It gives me great strength of heart to see that there are good people out there who know what's going on! I hope that we can help everyone else understand this stuff ASAP, it's become my personal mission. I'll be part of a demonstration outside of my city's Federal Reserve bldg on the 15th with information and cameras!

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OK, as promised, here's my informative answer. The Federal Reserve doesn't "print" money, per se, since most of our currency these days really only exists in computer databases. But the Fed IS responsible for CREATING currency, or more accurately, limiting its creation by lower banks. I will elaborate...

It should be clear that the primary cause of inflation is an increase in the total amount of currency in circulation, which (until recently) was measured by a statistic called M3. But where does the new money come from? I know it seems complicated, but it's really not... let me explain....

There's an old trick called "fractional reserve banking."

Let's say you have a bank, and in your vault you have $1000 from all your depositors. Someone comes in to take out a loan for $10,000. Uh oh! You don't have that amount! Doesn't matter. Under a fractional reserve monetary system, you are allowed to issue credit for, say, 10 times the amount you actually have. This works because all the banks are in agreement to honor one anothers' credit.

So the person wishing to take a loan for $10,000 signs his house away as collateral. His house actually has value. In exchange, you, the banker, issue him a bank credit for $10,000. In the moment he signs his name, $9000 was just created out of THIN AIR. You have just robbed this man, and he is none the wiser because he fails to understand the trick. He has just traded his house for a slip of paper.

Many people think that money is created when printed by the Treasury. This could not be more wrong. Money is created every day, by the banks themselves, as liquid credit.

This is why it holds no value. It's an ongoing scheme to rob the American people of their property, and bury them under insurmountable debt. Between the taxes, the inflation (the devaluing of the dollar which is never accurately reported) and the interest on the debt, we have been made to be slaves to our creditors.

So where does the Fed come in? Well, the Fed determines the Fraction part of the Fractional Reserve System. It is the authority to which all the lower banks refer. It also determines the interest rate on new currency (which the Fed technically LOANS to the Treasury)... but I want to keep my answer short so I won't get into this aspect.

Still confused? Here, watch this documentary:

http://www.neithercorp.us/nforum/serious_videos/america_freedom_to_fascism-t347.0.html