Part of How Money Works – FAQ

The Bank of England finally admitted that it creates money from nothing. Gleaned from this article in the UK Guardian: The Guardian: The truth is out: money is just an IOU, and the banks are rolling in it

In this document, they explain the process: Money creation in the modern economy.

I’m not a fan of the term IOU, as it seems to imply DEBT, That the government has to borrow money to dorms it, but that’s completely false. Commercial banks create debt, in the firm of loans, but the government creates money outright. You are paid AFTER you do the work for the government, so that does not imply “debt.” So, even though the Bank of England came clean, they are still in the business of making LOANS, so they DO like to focus on the loans to the privatec sector as they make money from those loans.

 

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