The simple answer is: "from nothing." The more accurate answer is debt.

To explain this one, I will describe the Canadian Monetary system, which the basic principals can be transfered to pretty much every other nation's money system.

In an earlier post I talked about today's bank notes is called "money" only because the Government says it's money. Without the backing of the Government, Bank notes would simply be worthless pretty pieces of paper. But where does "money" come from? The Bank of Can...
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archived from December 9th, 2009

The Bank of Canada yesterday announced that they will keep it's overnight lending rate at 1/4 per cent and is expected to remain until end of second quarter 2010. The rate has remained unchanged since April 21 2009.

Have you ever stopped to think on why they change the overnight rate? What is the overnight lending rate anyway? One of the functions of the Bank of Canada is to set monitor and control certain economic conditions in order to promote growth and stabi...
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