[adastra]

This is the best explanation. What I think a lot of the public doesn't realize is where the money comes from when you walk into a bank and you get a loan from that bank (instead of depositing the money from somewhere else).

They basically are just creating new rows in their databases. Just like the names-on-paper example above, someone just types "+$X,000" into the row that represents the money in your account. And then someone types the equivalent of "adastra owes us $X,000" into a row in another database for their balance sheet. It really is money created out of thin air.

But then I suppose all money is actually IOU's created out of thin air... It's just that for some reason people think it's only the federal government that can create new IOU's.

[bubbleRefuge]

You are right. A bank loan is the borrower's liability and the bank's asset but the deposit resulting from the loan is bank's liability and the owner's asset. This is how most bank deposits come into existence. If all loans were paid off and no new loans were created, there would be a tiny bit of money left.