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by MichaelConlon 1367 days ago
While it is not technically "creating" new money it is expanding the supply of money (credit) in the economy. In the above example you still have $1000 owed to you and the company/person receiving that loan now has $900. That's a total of $1900 of "real" money generated from your $1000 deposit. The balance sheets net out to zero but there is in effect an extra $900 now in the economy.
1 comments

You’re splitting hairs that can’t be split. Increasing the money supply is creating new money.

Money is created and destroyed all the time.