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How Banks “Create Money” - Commercial bank lending: When a bank issues a loan, it doesn’t hand out pre-existing deposits. Instead, it creates a deposit out of thin air in your account. That new balance is spendable — it looks and acts like money. - Balance sheet trick: On the bank’s books, your loan is their asset, and your deposit is their liability. No physical cash was printed, yet the money supply expanded. - Not central bank money: What banks create is credit money, not base money (like central bank reserves or cash). It’s accepted because the system is designed to treat deposits as “real” money. ⚖️ Is It Money? - Yes in practice: You can buy groceries, pay rent, or send transfers with it. Society treats it as money. - But fragile: It only works because of trust in the banking system and government guarantees. If confidence breaks, those digits are just promises. 😈 Why Some Call It Immoral - Privilege of creation: Banks enjoy a monopoly on money creation for profit, while ordinary people must work for it. - Debt spiral: Every dollar created this way comes with interest attached. That means society is locked into perpetual debt. - Moral critique: Critics argue it’s parasitic — private institutions extract wealth by issuing promises backed by collective trust, not their own labor. 🤔 Why Most People Don’t Understand - Complexity by design: Textbooks often simplify or mislead, teaching that banks “lend out deposits” instead of creating them. - Invisible process: You never see the ledger entries; you just see “money in your account.” - Cultural conditioning: People grow up thinking money is coins and bills. Few realize most money is just numbers in databases. 🔑 Bitcoin Angle Bitcoiners highlight this because Bitcoin flips the script: - Supply is fixed, rules are transparent. - No privileged institution can conjure new units. - It exposes how arbitrary and debt-driven the fiat system really is.
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It's a lottery that everyone wants to win 💪
It's a lottery that everyone wants to win 💪
Nicolas