One of the best explanations about all of this is in the book How an Economy Grows and Why it Doesn't by Irwin Schiff http://freedom-school.com/money/how-an-eco

One of the best explanations about all of this is in the book How an Economy Grows and Why it Doesn't by Irwin Schiff http://freedom-school.com/money/how-an-economy-grows.pdf http://freedom-school.com/money/how-an-economy-grows.pdf It seems this explanation is somewhat of a rehash of that book. The book is relatively short and well worth your time if you found this reddit answer interesting.