Is the world broke?...

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Is the World Broke? FBN Special - News and Videos - FOXBusiness.com thats the headlines on this fox news article.

If we are broke, where did the money go? Did it just disapear? Or did it just all consolidate into the hands of those who are not broke? And who is not broke, and how did they get all they money? And does governments being highly in debt just indicate that they have not taxed enough to pay for the services that they have provided?

 

[Lord Tammerlain]

Is the World Broke? FBN Special - News and Videos - FOXBusiness.com thats the headlines on this fox news article.

If we are broke, where did the money go? Did it just disapear? Or did it just all consolidate into the hands of those who are not broke? And who is not broke, and how did they get all they money? And does governments being highly in debt just indicate that they have not taxed enough to pay for the services that they have provided?

With fractional banking money is created when it is lent out.

For example.

You put your $1000 in the bank in a savings account. The bank will take that $1000 and use it to lend out $9000, leaving $100 in cash ready for you to take out should you want it back (reserves). $8000 dollars have been "created". Now when borrowers default that extra money dissappears, the bank does not have it, nor does the borrowerer.