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mulmenyesterday at 12:42 AM2 repliesview on HN

How does interest fit in here? Isn’t that what creates money AKA inflation?


Replies

mitthrowaway2yesterday at 5:37 AM

No, interest is a typical zero-sum transaction where the borrower spends and the lender earns. The loan itself represents a temporary net increase in the money supply, appearing from nothing and then vanishing when it is paid back.

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bfg_9kyesterday at 5:32 AM

What the poster you're replying to is talking about is called fractional reserve banking. That's how they "create" money.