Debt Money - Money created as a liability. A debt-based monetary system is an economic system where money is created as a liability. Debt money can be created in three different ways. It can be created as a liability to:
This form of money is called debt-based money or debt money because someone must incur a debt in order for the money to exist or before the money can move into circulation.
An example of money that puts both the issuer and the user into debt is the checkbook(demand deposit) money that we use today. As stated by the Federal Reserve below, all checkbook money is created as a numerical promise to pay (a liability) by the banks.
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Sourced from Modern Money Secrets
- The party issuing the money
- The party receiving the money
- Both the issuing party and the receiving party.
This form of money is called debt-based money or debt money because someone must incur a debt in order for the money to exist or before the money can move into circulation.
An example of money that puts both the issuer and the user into debt is the checkbook(demand deposit) money that we use today. As stated by the Federal Reserve below, all checkbook money is created as a numerical promise to pay (a liability) by the banks.
All bank deposits are a form of credit. Basically, they represent amounts owed by banks to depositors. They come into existence by an exchange of bank promises to pay customers for the various assets which banks aquire - currency, promissory notes of business, consumers and other customers, mortgages on real estate, and Government and other securities." The Third Edition of the Rederal Reserve System Purposes and Functions page 6. (emphasis added)
To learn more please visit WealthMoney.org
Sourced from Modern Money Secrets