5 Facts: Why Banks Are Richer Than Billionaires — Money Is Created Out of Thin Air
October 13, 2026
Mo Gawdat presents a provocative thesis: "The world's richest are not Elon Musk or Jeff Bezos — the richest are the people who print the money." This sounds like a conspiracy theory. It is elementary monetary theory. And once you understand the system, you see gold in a different light.
Fractional reserve banking is the foundation of the modern monetary system. Banks only need to hold a fraction of their deposits as a reserve and can lend out a multiple of that as credit. Every loan granted creates new money — literally out of thin air. This principle is called money creation through lending.
Mo Gawdat puts it this way: When a bank gives you a loan, it doesn't pay out another customer's money. It types an amount into a system, and that amount exists from that moment on as a real means of payment. Central banks and commercial banks together create trillions of dollars anew every year.
Using Elon Musk as an example, Mo Gawdat describes how the system works in practice: Musk doesn't take out a student loan and pay it back. He builds companies that build equity. He then pledges this equity to banks as collateral — and receives massive loans in return.
The takeover of Twitter cost around 44 billion US dollars. Musk did not pay in cash. He pledged Tesla shares as collateral for bank loans. Then he pledged Twitter shares for further loans. The system depends on itself — provided the assets maintain their value.
Gawdat's punchline: "People think Elon Musk is the richest man in the world. That is, by far, a lie." What Musk owns is not liquidity — it is equity that he uses as leverage for bank credit. The actual wealth lies with the institutions that create this money.
In July 2026, the US money supply M2 — i.e., cash in circulation plus demand deposits and short-term money market instruments — stood at 23.2 trillion US dollars. For comparison: at the beginning of 2020, it was around 15 trillion US dollars.
This expansion of around 8 trillion US dollars in six years is no coincidence. It follows the logic of the system: in times of crisis, money is created to stabilize banks, finance government deficits, and stimulate the economy. Each of these expansions dilutes the value of already existing money.
Gawdat makes a distinction that rarely appears in public discussion: between those who hold wealth in equity (entrepreneurs, investors) and those who create money (central bankers, owners of commercial banks).
"The richest people in the world are the people who print that money that Elon and others borrow," says Gawdat. This statement is not meant ideologically — it is a description of how the system works. Whoever controls the right to create money controls the basis of all other wealth.
Gold is the structural opposite of the system described. It is not created through lending, cannot be expanded by political decision, and has no counterparty. When a central bank doubles the money supply, the value of each unit of currency is halved in terms of purchasing power. The earth's gold stock remains unchanged.
Gold price October 2026: 4,225 US dollars per troy ounce. The price development does not reflect the "value" of gold — it reflects the purchasing power of the US dollar. Gold is the same raw material; only the money around it has changed.
| Characteristic | Fiat Money (USD, EUR) | Gold (physical) |
|---|---|---|
| Creation | Through bank lending | Through geological processes / mining |
| Supply limit | None — politically controllable | Yes — finite resource |
| Counterparty risk | Yes — sovereign creditworthiness | No |
| Freezable through sanctions | Yes — as shown in 2022 | No (physically stored) |
| Reaction to money supply expansion | Loss of purchasing power | Historically: preservation of purchasing power |
If money is created literally out of thin air and the money supply grows structurally, buying fiat money is not an investment — it is holding a resource that is systematically diluted. Gold offers what fiat money structurally cannot: a fixed amount, no political controllability, and no dependence on the solvency of a third party.
How central banks react to this knowledge in practice is shown in our article Central Bank Gold 2026: 289 Tons. Mo Gawdat's analysis is not a call to panic. It is a sober description of how the system has functioned for decades — and why central banks worldwide are buying gold instead of building up fiat reserves.
When a bank grants a loan, it credits the amount to the borrower's account — without real savings having to stand behind it. This process creates new money in the system. Central banks can also create base money directly by purchasing government bonds (Quantitative Easing).
Selling large blocks of shares would massively depress the price and trigger significant capital gains taxes. Bank loans against pledges are tax-neutral and maintain control over the company. This is the mechanism Gawdat describes: the rich don't "pay" — they pledge.
The modern system developed over centuries. The decisive turning point was 1971, when US President Nixon abolished the gold backing of the US dollar. Since then, the money supply has no longer been limited by physical gold. This began the era of pure fiat money — and unlimited money supply growth.
Legal Notice: This article is for informational purposes only and does not constitute investment advice. All information is provided without guarantee. Investments in precious metals and securities involve risks. Please consult an independent financial advisor before making investment decisions.
