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How do commercial banks “create money”? Is it money?
Why is it inmoral?
Why don't most people understand it?
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Most people think banks lend out existing money.
They don’t.
When commercial banks issue loans, they create new digital money through accounting entries. New debt = new money.
That money is “real” because society accepts it for payments, salaries, and taxes.
Critics call the system immoral because:
* private banks gain power to create purchasing power
* most money enters society as debt
* banks earn interest on money they created
* losses get socialized through bailouts
Most people don’t understand it because schools rarely teach how money is actually created — and the system is intentionally abstract.
“Money” today is mostly bank-created credit.
They don’t.
When commercial banks issue loans, they create new digital money through accounting entries. New debt = new money.
That money is “real” because society accepts it for payments, salaries, and taxes.
Critics call the system immoral because:
* private banks gain power to create purchasing power
* most money enters society as debt
* banks earn interest on money they created
* losses get socialized through bailouts
Most people don’t understand it because schools rarely teach how money is actually created — and the system is intentionally abstract.
“Money” today is mostly bank-created credit.