Debt money is a form of fiat currency and is created through fractional reserve banking techniques, using the private banking system. Debt money is created when a new loan is approved and issued; it is destroyed when a loan is repaid. As stated by John B. Henderson, Senior Specialist in Price Economics, Congressional Research Service of the Library of Congress: “Money is created when loans are issued and debts incurred, money is extinguished when loans are repaid.”<ref> References in relation to debt money</ref>

Debt money is, therefore, an inherently temporary and volatile form of money supply.<ref> </ref> <ref> </ref>


If this is the predominant way of injecting money into the money supply, the economy becomes dominated by the debt-based monetary system and has the features and characteristics of this system of money supply.

It is often referred to as "credit" or "credit money".<ref> Cracks in Credit</ref> <ref> U.S. Banks Brace for Storm Surge as Dollar and Credit System Reel, by Mike Whitney</ref>

References

External Links

Money As Debt

Extract from The Grip of Death, Michael Rowbotham (Jon Carpenter Publishing, 1998)

Web of Debt