The trick is, centrifugal force is a **fictitious force**.

Centrifugal force exists! To everyone denying it, do this to them: [xkcd.com/123](http://xkcd.com/123).
However it is a [fictitious force](http://en.wikipedia.org/wiki/Fictitious_force). To quote wikipedia:

> A fictitious force is an apparent force that acts on all masses whose motion is described using a non-inertial frame of reference, such as a rotating reference frame.

So, if you sit in a merry-go-round, you can feel a force pulling you out. You can measure it. For you this force exists but for your mother standing outside the merry-go-round, watching you, there is no centrifugal force. She can see the merry-go-round applying a centripetal force to you, so you go along with the merry-go-round and do not fall off. If it didn't, your mass makes you go in a straight line and you fall off.

The reason why the two observers observe different forces is that the merry-go-round is not an inertial frame of reference whereas the ground, upon which your mother stands, is.

In an inertial frame of reference there is no centrifugal force but there can be in a non-inertial frame of reference.

So the centrifugal force appears to be there because an observer in a merry-go-round is not in an inertial frame of reference. By changing frames of reference you can eliminate it.