How is money created, and what role does the Federal Reserve and its member banks play?
Lets start with some common misconceptions about money, and why they are not true: Misconception 1: You make money by going to work, or by selling something. FALSE: Nobody can make money except commercial banks (also called depository institutions) and the Federal Reserve, which is owned by the commercial banking industry. When you get paid for work it is merely a transfer of money that already exists. It was, at some time in the past, created by the banking industry for a purpose for which they saw fit to create (or really lend) money. The main reason people get a job is to get a transfer of money from people who already have some. When we talk about money here we mean money that can be used in all transactions and in the repayment of all debts. This is what we are calling bank-money. However many non-bank types of so-called “money” raising instruments are increasingly being used by non-bank corporations to avoid direct contact with the bank money creating process. This includes thing
