Abstract

The creation and annihilation of money and its economic effects are reviewed. Economic values appear “in the mind ” of the market participants; e.g., by pretending, maintaining and achieving a particular price for a certain asset. Upon its creation by banks, this kind of “value phantasy ” is converted into “real money ” often in terms of buyer’s debt accompanied by a simultaneous payment of fiat money to the seller. This money is then multiplied on the money market and is competing against other money supplies for the traded assets, goods and services, where it may cause dilution, inflation and reallocation of resources. PACS numbers: 01.60.+q

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