Re: I just created 100 pennies.. and loaned them out, you owe me 101 pennies…..
I just created 100 pennies and I loaned them out to you + interest
How is it possible for you to pay me the 101 pennies you now legally owe me if only 100 pennies are in circulation?
Because that's not how it works. There are far more "pennies" in circulation. It's true that debts exceed the money supply but that's not neccissarily a problem since each "penny" can be spent more than once. In fact, if I remember correctly, the velocity of money in the US (how often each unit of currency is spent in a year) is around 4.
Change the 100 pennies to 100 trillion pennies, same principle applies
Velocity of money has nothing to do with money creation. You move a dollar one million times between your left pocket and your right pocket, and voila you are now a millionaire
