$100 deposit from A to Bank; Bank now has $100
Bank deposits $10 with the FED, and loans out $90 to a borrower, "B"
Bank has $10 with the FED and no other money.
Borrower "B" has $90 of money to spend.
"A" has no money, but a slip.
B spends money with C
C has $90 of money; B has some goods; Bank has $10 and an obligation; A has an IOU for $100.
$90 deposit from C to Bank;
C now has an IOU for $90
Bank has $100 and two obligations
A has IOU for $100.
...and so on.
There is never any money created - it is the same $100 being moved about
Because of your intense confusion, you believe that *money is being created* but there is, as shown in this example, no more than what was manufactured.... in this case, $100
Which fact do you deny, therefore proving you are a crackpot:
1. Money is what is generally accepted in exchange.
2. Demand deposits are generally accepted in exchange, and are therefore money.
3. Under the current US monetary system -- the "Fed" -- commercial banks create demand deposits -- money -- when they lend.
Every competent economist is aware that commercial banks create the vast majority of our money as debt. That is a debt money system.[/QUOTE]