Hacker News Reader

Not really. Money is created but it is created by the fractional reserve baking model where banks borrow from people who are willing to lend for short periods of time (depositors) and lend to those who are looking to borrow in the long term. The fact that you tend to deposit in checking accounts is what creates the money.

View on HN

The private banking system can only multiply off of the monetary base up to a certain multiplier, it cannot expand that base. Only the government treasury can expand that monetary base.

If the private banks have conjured up 100x the monetary base in 1970, then when the population doubles by 2020, the banks cannot multiply further up to 200x. The treasury has to expand the base while the banks keep their multiplier fairly constant.

Reply on news.ycombinator.com