How Money is REALLY Made

March 4, 2008 · Posted in news, personal 

Something always bothered me about how money went from bank to bank when you say, purchased something with a credit card or deposited money into a bank and then payed someone else who then deposited in their bank. Does your bank have to transfer cash to the bank being paid periodically?

As it turns out, the money that is transferred is imaginary. It is backed up by money that is owed to the bank by a borrower. So essentially, money is debt. Without debt, there is no money. Ok, so I can’t explain it very well, but here’s a video to explain it:

 Money As Debt

It’s 47 minutes long, but the first 10 minutes should give you a good idea. It’s a must watch. Meaning you have to watch it. It’s some crazy stuff.