Fascinating video that explains 'how banks magically create money' leaves everyone with the same realization

A fascinating video explains the origins of money and exactly ‘how banks magically create’ it.

And the interesting breakdown has left a lot of people all having the same realization.

The explanation was uploaded to YouTube by the channel Primal Space.

In the video description, it read: “Have you ever wondered where money really comes from and how it flows through our economy? Every hour, the US government produces hundreds of millions of dollars in cash, but most of that money exists only as digital numbers.

“In this video, we dive into the history of money, from ancient bartering systems to gold coins and paper notes, and explore how the invention of loans and digital banking has transformed the global economy.”

Delving into a world before money as we know it, people would use food produce and livestock as a form of payment but eventually, people ‘settled on using metal coins like gold and silver since they were small, extremely valuable, and would last forever unlike cattle or grain’.

However, gold coins weren’t the easiest to carry around.

The channel explained: “Traveling with so much gold became heavy and dangerous. This was when the whole idea of money started to change.

“In 17th century London, trusted goldsmiths started to take in people's gold coins, promising to look after them for a small fee.

“In return, they would give the customer a piece of paper, a promise note that allowed them to retrieve their gold at any time.

The concept of money stems from promise notes in 17th century London (Matias Baglietto/NurPhoto via Getty Images)

“The key to this piece of paper was that the customer could go to any goldsmith in any town and claim back that exact amount of gold. The paper itself had no intrinsic value but it became as good as gold.

“The notes were so convenient that people started simply exchanging them

to buy and sell things.”

This worked out so well that the goldsmiths were able to offer out ‘fake promise notes’ to customers for them to receive instant money, with the promise that it would be paid back with interest.

Viewers were shocked by the video, with many coming to the same realization.

Taking to the YouTube comment section, one user wrote: “Wow, I just learned more about how money actually works in 10 minutes than from 3 years of economics classes.”

Another said: “The most shocking thing in world's economy is that so little amount of people actually know how it works, and at the same time all of them are using money everyday!”

And a third person wrote: “This video explained the system so fluently and helped me understand economics so much more… amazing video!”