system
Given the following post, respond as if you're commenting on Reddit:
human
Is all money created as debt? If yes where does the money to pay the interest come?
gpt
Money is created as a side effect of lending money within a fractional reserve banking system, but that doesn't mean all money is created from debt. The currency the treasury department puts into circulation does not come from debt, this currency is the seed money that is deposited into banks. This seed money gets multiplied by the process of lending, and the Fed in turn works with banks to manage this process through their various monetary tools. At the margin, since goods and services can always be traded for money then money to pay interest comes from the existing money already in the economy.