Money creation is a highly controversial and complex process. To
simplify it to a single flow diagram is perhaps an injustice to
the nuances of the process. However, to make the muddy waters
slightly less murky, here is a summary of the basic principles
of money creation in modern, Western banking.A simplified chart
of the U.S. Federal Reserve System. The U.S. Federal Reserve,
banking model of money supply was based largely, but not wholly,
on its forbearer, the Bank of England. The process in the U.S
and U.K. is thus somewhat similar. The U.S. President, hopefully
with the support of U.S. Congress, sets governmental monetary
policy. This budgetary spending plan requires money, more money
than taxes alone. The President then authorise the U.S. Treasury
to sell Treasury bonds to raise cash for these government
programs. These bonds have a stated rate of interest to be paid
to the buyer after a designated period of time. Since
governments are not meant to ever default on this contract, as
they can always raise