How Money Is Actually Made
Core idea: most money isn't printed. It's created when banks make loans, which is why debt sits at the center of the system.
The Lesson
Ask most people where money comes from and they'll say "the government prints it." Some does get printed. But physical cash is only a small slice of the money in a modern economy. In the UK, for example, notes and coins are only about 3 percent of it. The rest is numbers in bank accounts.
So where do those numbers come from? In 2014, the Bank of England published a plain-language paper called "Money creation in the modern economy." It explained that when a commercial bank makes a loan, it creates a matching deposit in the borrower's account, and that deposit is new money. The bank doesn't hand over someone else's savings. It types the money into existence, with the loan on one side and the deposit on the other.
The Economic Matrix & the Economics of Life
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