@Perry Chase Money is created everyday by private entities — stocks, debts, options, contracts, etc… Those are tradable and convertible into legal tender cash.
Not Correct. Money is in exchange for these items. They do not create money.
Stocks – partial ownership in company, on bankruptcy, 2nd/3rd succession on remains.
Options – ownership on a put/call that allows a person to sell or buy at a specific price. Allows time based arbitrage on a stock issue. The risk is that it will expire out of the money.
debt – you are exchanging your money which becomes the principal on the loan in exchange for a regular return and return on principal.
None of these ‘create’ money. The are all exchanges of form. You give up your money to get these, or if you originate these, you gain money in exchange for giving up specified rights or required payments. They are transformation in asset types. If the market was truly efficient, these transfers would result in exchanges of 0 net gain… but the market is not efficient in the short term.
