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Cake day: March 1st, 2024

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  • Most money is not really created by central banks. It’s created by private banks when they make loans. They literally add a number to their assets, and to the borrowers liabilities - and the borrower can now go spend that new money.

    Central banks are supposed to try to regulate bank lending to try to stop the pyramid spiining out of control.

    Governments also take out loans though (by selling bills, gilts, bonds) - so they are also involved in money creation process, that money typically goes to pay public services and public servants.

    But the majority of money creation is typically private loans - and much of that goes ino property price bubbles , which does indeed benefit the rich.