You are viewing a single comment's thread from:
RE: Bounty 10 Steem: Who creates the fiat money
Ok, everything is pretty simple, who is making money and how, fed or bank?
Answer is: both, how?
Well, example:
- I need 100 $ and I'm going take 100$ credit in bank
2.Commercial bank do not have it and it sends request to fed
3.fed runs printer and makes $$$
4.fed gives 100$ to commercial bank at 5%interest - bank gives me 100$ at 10%
6.I agree with it and it means I Promise return 110 $ (100 +10$ created by my Promise) and it also means bank can not create 10$ if you just give them your 1$, because they are created from your Promise you will return them with interest,in other way 1$ still peace of paper (I mean without your Promise) so $ created by fed is only your promise (and nothing more) which turns in dollar only after you return them with interest, literally fed is making $ by you (not for you)
This was my assumption and also make sense. As now the bank owes all of the money to the fed. So now if i default the bank still owes the money to the fed. If I pay it off the bank earns the interest.
So now the bank is responsible. This will assure that the system does not get abused.
exactly, also dont forget that fed is printing theyr green paper only because that there is demand from commercial bank (which is only backed by your promise) and it means fed is allowed create $$$ from air + interest and then commercial bank multiplies it (interest), whih also increases quantity of ''money'' from air