Money Creation

creation of money

Real money is created after the banks have lent these new assets to the economy as a whole. In order to analyze the process of money creation, we must first examine the nature of money and the reason for its existence. All of us need and use money almost every day in our lives, but do you know where it comes from? It also means that when the loan is repaid, the electronic money created by your bank is "deleted" - it no longer exists. Money is created by banks and is owed in one form or another to the banks with interest.

Creating money - how to do it

New loans that a particular institution receives create new money. Back in March 2014, the British Government published a Money Creation in the Modern Economy paper, in which it commented: "The Money Creation in the Modern Economy is a new way of creating the modern economy: The Governor of the EIB for 2003-2013, Sir Mervyn King, recently raised this issue at a business conference:

"Today the nature of the currency system is the creation of money out of nothing by the often stupid granting of credit by commercial banks" (Article). As a result of this kind of money creation, in the last 40 years the amount of money in the banking sector has grown by an annual 11.5% on averaging.

The downside of this money creation is, of course, that every new credit creates a new liability. It is the origin of our mountains of debts: not the taking out of credit of the saving of another, but money that has been generated by the bank from nothing. Finally, the load of debts became too high, leading to a surge of losses triggering the onset of the global economic downturn.

Creating money - how to do it

New loans that a particular institution receives create new money. Back in March 2014, the British Government published a Money Creation in the Modern Economy paper, in which it commented: "The Money Creation in the Modern Economy is a new way of creating the modern economy: The Governor of the EIB for 2003-2013, Sir Mervyn King, recently raised this issue at a business conference:

"Today the nature of the currency system is the creation of money out of nothing by the often stupid granting of credit by commercial banks" (Article). As a result of this kind of money creation, in the last 40 years the amount of money in the banking sector has grown by an annual 11.5% on averaging.

The downside of this money creation is, of course, that every new credit creates a new liability. It is the origin of our mountains of debts: not the taking out of credit of the saving of another, but money that has been generated by the bank from nothing. Finally, the load of debts became too high, leading to a surge of losses triggering the onset of the global economic downturn.

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