In a sensational interview  President Barack Obama provided some deep insight into the monetary system: "The dollar is just an illusion" - the US currency was actually not worth anything.

In the program "60 Minutes" of an US TV channel that is to be broadcast next sunday, the idea had actually been to put US President on the spot about the causes of the financial crisis and possible approaches to resolve it. But the assembled journalists were astonished to hear Obama tell them that the crisis was more deeply rooted than a lot of people thought.

 
Specifically, Obama explained that the trigger for the financial crisis - the subprime crisis - wasn't actually a US-specific problem, but was a problem of the monetary system itself. This system involved compound interest effects that caused more and more debt, which in turn made it necessary to search for ever more debtors. The logical consequence therefore was that even people who were not credit-worthy were being lent huge amounts of dollars. Literally, Obama said: "Our money is an illusion."

The group of journalists then asked him to elaborate. Obama did not hold back: "Money is nothing other than debt. The money that you carry in your pocket is other people's debt. Money only comes into existence through debt. And that is precisely the problem that we are having right now."

A senior economist amongst those present questioned this stance, asking whether this meant that paying back money would also destroy money. Obama said that that was the case.

Paying back debt destroyed money. That was also the reason why the dollar was running short and therefore increasing in value compared to other currencies: "Most loans are made in dollars. When these are paid back even in part, money is destroyed, and the dollar becomes scarce and expensive." That was the only reason why the greenback was rising against other currencies, because what was actually in people's interest was a weak dollar.

But in his view the fundamental problem was the fact that the monetary system was  reliant on ever-increasing debt levels. However, you could not take on debts without limitation. "That is precisely why we are in such a deep mess," were the US President's precise words.

"Are you saying that money doesn't really exist in its pure form?" one journalist wanted to know. Obama nodded and said that that was precisely the case. And because everybody was indebted up to their limit now, the money in your pocket was practically worthless, and that's why we were having a big problem now. However, this wasn't just a dollar-specific problem, but a problem affecting all currencies.

Another journalist wanted to know what the FED was up to, giving out billions of dollars via QE2. Obama responded to this by disclosing what was probably one of the best kept secrets: The FED actually did not have any money. It creates it out of fresh air - by the push of a button. Like a conjuror.

Obama admitted that he had spoken to the head of the central bank Bernanke on this issue beforehand. Bernanke had advised him that it would be best if he did not make the facts public. But he, Obama, represented the 'change' after all, and that therefore also meant a paradigm shift as far as money was concerned.

This prompted a reporter to respond angrily: "Are you saying that the FED creates money out of fresh air - while others have to work hard for it?"

"That's precisely the case," answered Obama. But he would do what he could to ensure that there would also be more honesty in the monetary system in future. It was just not on that banks or the central bank created money out of fresh air while others had to work hard for it.

The US President explicitly advocated a new type of monetary system, but said that one had to bear in mind that this was an extraordinarily difficult issue. The last president who tried to do this paid for it with his life. Obama: "I don't want to end up like Kennedy. I really want to make a change. We need to change the system. Yes, we can!"

Obama left the group of experts in the dark about the precise measures on the drawing board. But he suggested to the journalists to invite FED boss Bernanke next time; he was even better informed about the pitfalls of the monetary system. And he, Obama, was already looking forward to hearing what solution Bernanke would propose.