Almost all banks create money as debt, with the poor people paying most for credit.
If you’re unlucky enough to fall into deep debt and you can’t pay any more then you are creating a product that is just as valuable to someone else.
Should your debt default, it will be traded as a product by banks on the secondary market just like gold or oil.
The big banks offload debt that may be worth hundreds or thousands to you and sell it in bulk to debt collectors at just a fraction of the price.
If that seems unfair, it reveals a wider system where banks create money as debt and the poor pay most for credit.
Most Kenyans believe that money is magically created by Central Bank of Kenya printing thousands of notes with our former president’s face on them to meet booming business needs and regulate interest rates.
This may be far from the truth since the modern economy is just a series of IOUs. Money held by the public is in the form of deposits with banks rather than hard cash or central bank reserves, and the very reason most people see money as debt.
When a private bank types a loan figure into a computer screen when giving you a loan, money as debt has been created. This is a practice by most banks in Kenya and all over the world.
However if it is that easy to create money as debt, is it so simple to make the debt go away?