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Old 03-29-2010, 11:14 AM
raslaje raslaje is offline
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Join Date: Aug 2005
Posts: 192
Quote:
Originally Posted by okyoureabeast View Post
Money is created from interest rates in the form of loans.

Now how does money get created you may ask? Here's a simplified example. First National Bank decides to loan out 150$ to Suzy Q. Suzy uses that 150$ to purchase raw materials to make one couch. Suzy then takes couch and sells it at a mark up for 250$. That's a profit of 100$. She pays off the 5% interest. That extra cash she paid back to the bank is the money created.
This I don't understand. Suzy Q pays back $157.50. But if all the money involved is part of the current pool of money, how was any created?
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