Where does money come from?
The answer to this question will almost never be found in grammar school-or even college. What we aren’t told in formal education is that money is created by central banks. Banks create money, not from their own earnings or from the funds deposited by customers, but from the borrowers’ promises to repay loans. Most importantly, borrowers not only promise to repay, but to repay with interest, and the bank writes the amount of money of both into the borrower’s account. Grignon opens with a story from antiquity. In the days before paper money, goldsmiths produced gold coins and kept them safe for the purchaser in the same way that banks hold deposits today. These goldsmiths soon noticed, however, that purchasers rarely came in for their actual gold and almost never all at the same time. So the gold merchants began issuing claim checks for the gold which made the exchange of gold in the marketplace easier and less cumbersome. Thus, paper money was born which made doing business much more c
Each country, including the United States, makes its own money. The factory where our money is manufactured is called the mint. It’s headquartered in Washington, D.C. There are also locations in Philadelphia, Denver, San Francisco and West Point, New York. You and your family are able to visit the mint any weekday for free. If you do, you’ll see how coins are cast and paper money is printed. You will also see how old bills are destroyed.
