Credit money

The commercial banks are mediators between the depositor and the clients that want to take the loan. Banks pay the certain interest to depositors and use their money to give the loan with higher interest getting profits from this operation. But the difference in interests is only one of profits the bank gets and is not the main one. The main profits banks get from so called "new money".

Imagine that the country has only one bank and only 1000 dollars in circulation and that all owners of this money deposited it into the bank. In such way the bank has 1000 dollars in cash and this is the financial base of the bank. In fact the money circulation of the country and the financial base of the bank coincide and make 1000 dollars. And imagine the person wants to take 100 dollars in the bank and the bank sets up the account for him/her giving the client check book. The money base is 1000 dollars and the client got 100 dollars more on his deposit. So at first the volume of deposit money increased in 100 new dollars and the general money quantity also increased in 100 dollars and makes 1100 dollars. And 100 dollars were made when the bank gave the loan to the client and when the client got the possibility to give check to people and receive certain goods.

Before the first loan bank used the money as resource in the case if depositors asked to return them the money. But the loan ruined the balance provoking the appearance of new money that influences the volume of the money number. And more the bank makes the new money, more profits it gets. And the number of new money depends on the bank system of the country.