Most people think that when you go to a bank and take out a loan they’re giving you someone else’s savings. This is a myth and couldn’t be further from the truth.
When we go to a bank and take out a loan the bank simply create the money electronically out of nothing and deposits it in your account. 97% of all the money that exists was created in this way. Only 3% is actual notes and coins.
The loans people take out becomes debt and that that debt becomes money.(If no one went into debt there would be almost no money in the economy.) Our economy depends on the electronic money created by banks.
Because the money is created when people borrow, someone has to pay interest every dollar created. What does this mean? It means that we are effectively renting the money from the banks to run our economy.
To summarize, what a bank does is create money out of nothing by creating loans and then lending us the money with interest. If you or I attempted to create money out of nothing it would be called counterfeiting but if the bank does it it’s completely legal.