Funding the Future What's the biggest secret about money?
Feb 27, 2026
A clear breakdown of how money is actually created and why that misunderstanding shapes bad policy. Short explanations cover banks creating deposits through lending, the central bank enabling government spending, and why taxes reclaim money rather than fund it. The conversation connects money mechanics to limits on public services and argues for reframing politics around resources and care.
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Money Is Always A Promise Not A Physical Thing
- Money is a network of promises and therefore is debt, not a physical object.
- Richard Murphy explains banknotes and deposits are IOUs and over 95% of money is electronic, visible only as records or balances.
Bank Lending Creates Deposits Not Uses Them
- Commercial banks create money when they issue loans by crediting deposit accounts, not by lending out existing deposits.
- Murphy describes double entry bookkeeping: a loan creates a matching deposit and loan-account entry, producing new money.
Central Bank Licensing Means Government Controls Money
- The Bank of England regulates and licenses all money creation, so money creation is under government control.
- Murphy stresses the Bank of England has been government-owned since 1946 and therefore money creation is subject to political oversight.