The Nomad Economist: 97% of the Money in America is Created by the Banks


The Nomad Economist
Feb 4, 2022

Because 97% of the money in America is created by banks, someone must pay interest on nearly every dollar in the circulation.

This interest redistributes money from the bottom 90% of the population to the very top 10%. The bottom 90% of the US pays more interest to banks that they ever receive from them, which results in a redistribution of income from the bottom 90% of the population to the top 10%.

Collectively we pay 500 Million Dollars every day in interest on personal loans alone , not including mortgages, and a total of 2 trillion Dollars a year in interest on all our debts.

The entire money supply is effectively ‘on loan’ from the banks. This means that interest must be paid on most of the money in the economy. This interest transfers income and wealth from the bottom 90% of the population to the very top 10%.

By allowing our money to be created by banks as debt, we have created a system that guarantees that inequality will get worse. Money created by banks pushes up house prices. But it’s the wealthiest who benefit most from these rising prices.

 For those on lower incomes, or younger people who haven’t bought their first house, rising house prices push up the cost of living, leaving them with less disposable income and a lower standard of living. So rising house prices, fueled by money created by banks, makes the gap between the richest and the rest of us even bigger.

A similar thing happens in the stock market. Money created by banks can fuel stock market bubbles, but because the wealthiest 5% of households own 40% of the assets in the financial markets, this benefits the very richest, and has limited benefit for everybody else. The gap gets even bigger. \

It is a transfer of money from the real economy to the banks Businesses are also in a similar situation. The ‘real’ (non-financial), productive economy needs money to function, but because all money is created as debt, that sector also has to pay interest to the banks in order to function.


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