Your on an island.
On that island are ten seashells.
A man on the island sells coconuts for 1 seashell per coconut.
Being the morally onerous islander that you are, you cleverly create 10 more seashells.
You go to coconut man in the morning, but today, he’s asking for 2 seashells.
His comment, “You’re quite the sculptor, you should go into business for yourself, but stay away from seashells.”
Those 10 seashells are created, but by the Fed, not you. You have to pay the Fed back those seashells eventually, with interest. In our case its the bank that got the new seashells, who lent it to you. And the bank has to pay the Fed back in seashells with interest. The bank does that by charging you a higher interest rate and you pay the bank back interest and principal. they Thats why the seashell are called a “Federal Reserve NOTE
If all debts were paid, there would be no money in circulation.
Quite intersting process...Its been said that this whole process should be dont without the repayment and interest obligation, hence the term “debt free money”