The money the banks are creating doesn't really exist. This money doesn't really have the backing of our government past the set limits on the
insurance program. The Stock Market also creates fake money that doesn't really exist. Boy, we are a gullible society
Let''s say I design and manufacture a car, and it costs me $10,000 to do so, all expenses included. I then market this car, and sell it you for
$15,000. Did I just create $5,000 out of thin air, or did I just earn $5,000 in profit?
If a bank lends $10,000 to a borrower, and over the course of the year, gets repaid $15,000, did the bank just magically create $5,000 out of thin
air, or did it just earn a $5,000 profit?
The conspiracy nutcases that believe in the "money out of thin air" conspiracy would have to lump any company that earns a profit into the category
of conjuring money out of thin air.
Interest earned is profit for the bank. It is no different than GMAC lending you money to purchase a car, or GE Capital lending you money to buy a
refrigerator. Profits derived from interest income are not magical, and are not "created out of thin air".
If you buy a bond for $5,000 on the stock market, and earn back $7,000 over the course of the time limit of the bond, did you just conjure $2,000 out
of thin air? No, the $2,000 in profit is your investment income earned and profit from taking the risk in that particular bond.
Banks are no different. They take calculated risks when lending money to borrowers. If the banks could magically create money out of thin air, then
why are they so picky about lending money to borrowers that don't fit their credit criteria? Why? Because when banks invest by lending money, there
is always a distinct possibility that the borrower will not repay, and that their principal investment will be lost.
I have a mortgage for say $100,000. Over the next 30 years, I will repay the bank interest every single year of that loan, and the interest paid is
higher towards the beginning of the loan than the latter part of the loan. I pay this interest from my personal income, by providing services to my
The conspiracy nutcases seem to forget that money is fluid, and that money changes hands every day. We don't operate banks and the economy in some
static, closed wind tunnel.