Economists use the term "create" when speaking of the process by which money comes into existence. New "Creation" means making something which did not exist before. Lumber workers make boards from trees, workers build houses from lumber, and factories manufacture automobiles from metal, glass and other materials. But in all these they did not actually "create."

They only changed existing materials into a more usable and, therefore, more valuable form. This is not so with money. Here, and here alone, man actually "creates" something out of nothing.

A piece of paper of little value is printed so that it is worth a piece of lumber.

With different figures it can buy the automobile or even the house. It's value has been "created" in the truest sense of the word.

"Creating" money is very profitable!
 

As is seen by the above, money is very cheap to make, and whoever does the "creating" of money in a nation can make a tremendous profit. Builders work hard to make a profit of 5 % above their cost to build a house.  Auto makers sell their cars for 1 percent to 2 percent above the cost of manufacture and it is considered good business. But money "manufactures" have no limit on their profits, since a few cents will print a $1 bill or a $10,000 bill. That profit is part of our story, but first let consider another unique characteristic of the thing -- money, the love of which is the "root of all evil".

Adequate money supply needed

An adequate supply of money is indispensable to civilized society. We could forego many other things, but without money, industry would grind to a halt, farms would become only self-sustaining units, surplus food would disappear, jobs requiring the work of more than one man or one family would remain undone, shipping and large movement of goods would cease, hungry people would plunder and kill to remain alive, and all government except family or tribe would cease to function.

An overstatement, you say? Not at all. Money is the blood of civilized society, the means of all commercial trade except simple barter. It is the measure and the instrument by which one product is sold and another purchased. Remove money or even reduce the supply below that which is necessary to carry on current levels of trade, and the results are catastrophic.

For an example, we need only look at Canada's depression of the early 1930's.