Amidst the current financial crisis, and possibly heading towards a recession (if not already in one), it begs the question as to how did we get into this mess. Then, when one starts looking into the system, something seems a bit confusing.... if a recession means that the majority of ppl does not have the ability to spend or has very weak spending powers, in other words not enough cash around, then one may ask where does all the money goes? After all, not too long ago, the economy was booming, and given that the Federal Reserve does not over/under-print money, money are just circulating, and shouldn't "disappear" as such ... unless there is something we don't know about the system. And don't understand, I am, starting with this (let's ignore the Fractional Reserve System and interest rates for the moment): since Money is no longer back by gold or silver and it is totally fiat, based on what do the US Fed decide how much money to "create" out of nothing? Also, how much control does the govt. have? I know I am over-simplifying the situation, but I want to start by fully understand where money comes from first, before tackling the issues of growth, debt and interest rates.