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According to some "red pill" internet films (like "Zetigeist Addendum"), money is creayted as debt.

The problem is that you don't need a "red pill" film to show this and doing so detracts credibility from the critique because it makes it sound like it comes from conspiracy nuts.

It's called Fractional-reserve banking

The process of fractional-reserve banking has a cumulative effect of money creation by banks. In short, there are two types of money in a fractional-reserve banking system:
  • central bank money (money created by the central bank regardless of its form (banknotes, coins and electronic money loaned to commercial banks))
  • commercial bank money (money created through loans in the banking system) - sometimes referred to as chequebook money[9]
When a loan is funded with central bank money, new commercial bank money is created. As a loan is paid back, the commercial bank money disappears from existence.
(my emphasis)

This is standard monetary practice. If it's a conspiracy or a scam, it's hidden in plain sight.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Dec 17th, 2008 at 05:28:12 AM EST
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