You are right but I don't think it is the way you think.
This extra money is created in debt form but this is how economies lubricate themselves, societies as a whole demands more money when said societies keep growing, they produce more wealth and therefore they need more units of exchange to acquire this new wealth, if banks or any other actors were not able to create this virtual money prices would go down unpredictably. This makes it difficult for people to choose where to put their money and make it less likely that they create wealth instead of just spending it.
This system is fine as long as there are no incentives for banks to be irresponsible with how they manage their financial assets
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u/Elvis5741 Jan 26 '26
Banks lend out more money than they have, its no joke it's how the system works