When a commercial bank issues a loan, it doesn’t lend out existing deposits. It types the loan amount into the borrower’s account, creating a new asset (the loan) and a new liability (the deposit) at the same time. The Bank of England confirmed this in its 2014 paper Money creation in the modern economy. Around 97% of money in circulation is created this way by private banks. Functionally it spends like money, but technically it’s a claim on the bank rather than base money, which is why bank runs exist. It fails Rawls’ test of justice. Behind the veil of ignorance, not knowing whether you’d be born a wage earner, a saver, or a bank shareholder, no one would choose a system where new money systematically transfers purchasing power upward through the Cantillon effect. Rawls’ difference principle says inequalities are only just if they benefit the least advantaged; bank money creation does the opposite. Most people miss this because schools still teach the “money multiplier” model, which is wrong: banks aren’t intermediaries between savers and borrowers, they are money creators, and the jargon hides how simple that reality actually is.​​​​​​​​​​​​​​​​