5 ms·

Is there a good reason why the new money doesn't just get sent by mail to every individual citizen equally, rather than being handed out only to large banks?

• reedjosh 5y ago
  Well, I don't think there's even a good reason for the system to begin with, but generally I think the reasoning posited is something like: Debt is issued to those that are believed can pay it back. Giant low interest loans are given to the member banks and they due diligence on smaller banks. The whole thing is a tree of larger institutions lending to smaller ones, and eventually the money makes it to markets that interact with actual customers -- mortgages and credit lines. In this way debt is limited to those that are expected to largely pay it back. Over time, more and more of the dollars in the system are owed to someone else. Our dollars literally come into existence as debt. This is the true source of inflation, but some make arguments about velocity of money and whatnot. The defaulting of debts and subsequent vacuum where debt based dollars used to be is also the actual cause of the so call 'business cycle'.