How do banks create money out of thin air?

Published in: Wealth
Date: 03 / 05 / 18

In an age of 'fake smiles', 'fake food', 'fake news', did you expect our monetary system to be immune from this fakeness? Well no, its not!

The way money is created today is such a simple process that most people cannot believe that the entire world with all of its wealth and debt owes its origin to few taps on the computer keypad. A Bank creates money almost 'magically' when it loans out some of its reserves. So if someone has deposited $100 in a bank, it is authorized by law to loan out $90. This loan of $90 is absolutely 'new money' that was created out of thin air. And guess what ! Then the bank has the audacity of charging interest on this bogus money it created magically. This is called Fractional Reserve Banking and doesn't it sound like the biggest Ponzi scheme ever? The Bankers are getter richer and richer by the day by creating this monopoly money, whereas the world is getting poorer and poorer by accumulating debt and compound interest on the money that sometime back didn't exist.

Now connect it with the Ecological Crisis and things will get clearer. Life on the planet is on the verge of extinction because of Climate Change. Climate change is perpetuated by the increase in industrial growth. Industrial growth has been sustained by the Banking sector that makes money magically when it issues loans. There is no limit to this money creation and hence we will not be seeing any decrease in industrial growth and fossil fuel consumption. Only God can save us.

Sabreen Syeed

About the author

A Mechanical engineer seeking to understand the fabric of reality

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