Who Creates Money?

Most people assume governments print money. That’s partly true. But here’s what nobody mentions in school:

Most money isn’t printed at all. It’s typed.

When a bank gives someone a loan — say, a $200,000 mortgage — it doesn’t go into a vault and retrieve $200,000 in cash. It simply types that number into an account. The money didn’t exist before that moment. The loan itself created it.

This is called fractional reserve banking. Banks are allowed to lend out far more than they actually hold. For every $100 deposited, a bank might lend out $900 or more. The deposits are real. The loans are new money — created from nothing.

This isn’t a conspiracy theory. It’s how the system works. Central banks like the US Federal Reserve oversee this process, setting the rules for how much banks can create and at what interest rates.

The result? The total amount of money in existence grows constantly. More money, same amount of goods and services. And when that happens, each individual dollar quietly becomes worth a little less.

Think of it like a pizza. If you cut it into 8 slices, each slice is a decent size. Cut the same pizza into 80 slices and each slice becomes almost nothing. The pizza didn’t get bigger. The slices just got smaller.

Your savings are the slices.

Tomorrow: the history of money — from cows to coins to paper. It’s stranger than you think.