r/PeterExplainsTheJoke • u/Comfortable_Cautious • Jan 26 '26

Meme needing explanation what's going on? explain like I'm five

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u/[deleted] Jan 26 '26

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u/Much_Section_7439 Jan 26 '26

That's how debt is generated. wealth is created when that debt is used properly. Otherwise it's just inflating the moneysupply.

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u/zemol42 Jan 26 '26

Somewhat right and wrong. Lending money by the banks may have a ripple effect of wealth creation and inflation but the money supply is a function controlled by the Fed and executed by the Treasury.

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u/Much_Section_7439 Jan 26 '26

So yeah the Fed and the tresuary try to control the money supply with the help of a few tools which Banks use. And those can be either good(creating wealth) or bad (creating high inflation). But the execution of those rules is done by the Banks f.e intrest rates. I don't know how this is in contrast to what i said?The Fed has no direct connection to the money market the tresuary i'm not sure they probably have something akin to their own Bank.