Steve 7150 wrote:I'll read your example Paidion but here in the USA the money supply increases every month because the Federal Reserve prints the money as it sees fit and distributes it to banks who may or may not lend it out. When loans are repaid the money does not go out of existence, it remains as part of the money supply and the money supply always grows. If it grows to fast it can create or exasperate inflation.
Here's some reading material that I just discovered 5 minutes ago that may help you to understand. The first one is dealing with the creation of money in England, but the same system exists in United States and Canada. Money comes into existence as a debt. It should come into existence as a credit. It is created through loans. Please listen to the short video that accompanies the first website. It affirms that money disappears when loans are repaid.
http://positivemoney.org/how-money-work ... ate-money/
http://www.pbs.org/newshour/rundown/why ... -not-evil/