but the concept is still relatively new to me.
Up until the 1970's the US monetary system was based on a gold standard. The US was supposed to have gold or other precious metals ( Fort Knox et al) representing the amount of money in circulation.
At some point, the people in power decided that was a big pain in the ass, especially when they just wanted to print up some money. So the gold standard was abandoned, and effectively all money ( international currency was based primarily on US dollars) then had an arbitrary value.
For alchemists, who had tried to turn lead and other worthless items into gold since the time of the Egyptian pyramids, this was Christmas, New Years and the 4th of July all rolled up into one.
Moving from the gold standard opened the door for fractal-reserve banking. fractal banking is simply the ability of a bank to lend the same dollar over and over again.
So you deposit $100
Bob borrows $80 from the bank. That $80 makes its way back into the bank either from Bob depositing it, or from whomever he gives it to depositing it.
Mary then comes in and borrows $60 based on the $80 that Bob deposited.
Joe then borrows $40 based on the $60 that Mary deposited.
Tom then borrows $20 based on Joe's $40.
So in the end, the bank has lent out ($20+40+60+80)= $200....but it really only ever took in your $100 deposit. The "other" $100 that it has lend out does not exis, its an imaginary promise on future labor.
Effectively this goes one step past having to actually print worthless money, now you can just make a mark in an accounting column and create imaginary money.
Even the alchemists couldn't have hoped for something that amazing.
So provided that people are willing to keep taking out loans, that most of the people pay at least the minimum payment on interest, and provided that people don't actually show up to the bank asking for the actual cash money that they deposited, then there's virtually no limit on the amount of fake money that the banks can keep conjuring up.
That might explain why new banks are outpacing 7-11s and McDonalds.
The more cynical of us might also consider that a system that uses high taxes and available credit to compel people into long term debt ( mortgages, car payments and school loans) would prime the pump and keep the bankers...and for that matter the car, oil, and housing companies fat as hogs. But that sounds too much indentured servitude to be democracy.