Money as Debt

1. Most money is created when loans are issued (e.g. a mortgage, credit line). The money is created out of thin air when you receive the loan (banks don't lend out deposits).

2. There is not enough money in existence to pay off all loans in existence today, due to future interest owing on those loans.

3. Money is backed by everyone's ability to pay back their loans, with interest.

4. Money does not have to be paper or gold to be considered a "deposit" by a bank. It can be electronic.


This is formally called "Fractional Reserve Banking".