From: Ellen Brown's -- http://www.webofdebt.com/articles/market-meltdown.php

" ... Among other problems with this system of money creation is that banks create the principal but not the interest necessary to pay back their loans (emphasis added by mrc); and that is where the Ponzi scheme comes in. Since loans from the Federal Reserve or commercial banks are the only source of new money in the economy, additional borrowers must continually be found to take out new loans to expand the money supply, in order to pay the interest creamed off by the bankers. New sources of debt are fanned into "bubbles" (rapidly rising asset prices), which expand until they "pop," when new bubbles are devised, until no more borrowers can be found and the pyramid finally collapses. ..."

Analysis by (mrc) -- This idea of banks creating money for loans -- but not creating money to pay the interest is a widespread myth that is destroyed at
http://www.michaeljournal.org/myth.htm

If a careless reader reads the first part of the link on the preceding line (before the myth is exposed), he or she may very well believe that such a lending practice may cause serious problems. Evidently lots of people have done just that -- as has, evidently Ellen Brown, in the quotation above.

We just Googled "create the principal but not the interest" and got 93 hits -- Ellen's link was #1.

Lots of people would obviously be led astray if they only read Ellen's article. (mrc)

Analysis continued -- Expecting the government to (a) create money and put it into our economic system as a loan and (b) also create the interest to pay off that loan is a little goofy. That is analogous to a graduating college student saying to his father -- "Thanks for giving me this new car, Dad, but you forgot to give me enough money to pay for the gas I will need." It is not up the father to give the student money for the gas and it is not up to the government to give someone a loan and give that someone the money to pay the interest on the loan. It is up to the debtor to work and make the money to pay the interest.