Why your money is debt? 🤔
Modern money is not a commodity. It has no value by itself. It is a promise, a claim on future payment, backed only by law and trust. Modern money is a form of debt 💵
Most money today is created by banks. When they issue loans, they do not transfer existing funds. They create deposits from nothing by recording a borrower’s debt and treating it as money.
🏦 The central bank does something similar. It buys assets by crediting accounts with reserves, which are digital dollars that did not exist before. No taxes are collected, no production takes place. This is pure monetary expansion.
New money enters the economy through banks. They receive it first and invest it. Asset prices increase before wages do. Inflation eventually affects consumers rather than those who hold capital.
💲 Bank deposits are debts the bank owes to its clients. Cash is a liability of the central bank. Every dollar represents someone else's obligation, formalized and accepted as payment.
There is no gold or physical guarantee behind it. The system depends on accounting and mutual belief. Money functions only because people agree to treat it as real. This is why the system refers to itself. Loans create deposits, deposits are used as money, and money is used to repay loans. It is a closed cycle.
👉 Money is not earned into existence. It is borrowed. When loans are repaid, that money disappears. The supply grows and shrinks depending on credit, not production. The money in your account is not truly yours. It is someone else’s debt moving through a system that relies entirely on trust and coordination.
Think of it this way: holding money is like holding a signed note that says, “I promise to pay you.” If it’s cash, that note comes from the central bank. If it’s in your bank account, it comes from your bank. You are not holding value itself — you are holding someone’s promise. 😐