A bank writes you a mortgage for $600,000.
Here’s the bit they don’t want you thinking about. They didn’t have the money.
They typed it.
How the Trick Works
When the bank approves your loan, nobody goes to the vault. Nobody calls a saver and says, “Hand over your deposit, mate, we need it for Tamhas’s house.”
They make an accounting entry. Your loan shows up as an asset on their books. A fresh new deposit shows up as a liability. Both sides balance. Both were created in the same click.
The money didn’t exist five seconds ago. Now it does.
Their cost? Basically zero. A keystroke and a bit of server power.
Your cost? Thirty years of real labour.
The Numbers On a Normal Aussie Mortgage
$600,000 mortgage. 6.5% interest. 30-year term.
You pay back around $1,367,000.
The bank keeps roughly $767,000 in interest — for money they typed into existence.
That’s more than the house cost. You don’t just buy the house. You buy the house and you buy the bank a second house worth more than yours, for typing some numbers.
Read that line again.
This Isn’t Capitalism
Capitalism is simple. You make something. I make something. We swap. Both richer.
Banks don’t make anything. They create credit with a keystroke and demand to be paid back with real work. That’s not trade. That’s not capitalism. That’s a tax you never voted for.
Real capitalism and usury can’t share a room. One always eats the other. Right now, usury’s eating.
“But The Government Can’t Print Money — Inflation!”
You’ll hear this everywhere. From the economists on the telly. From the papers. From every politician who’s ever shaken a bank’s hand.
The government printing money would wreck the economy, they say. So the government borrows instead. It sells bonds.
Ask the obvious question. Who buys the bonds?
The Reserve Bank of Australia holds about a third. Commercial banks hold another big chunk.
Where does the RBA get the money to buy those bonds?
They create it from nothing.
Where do the commercial banks get the money to buy those bonds?
They create it from nothing.
So the government can’t create money — but it can borrow money that the banks created from nothing, and pay them interest on it forever, and stick the bill to every Australian taxpayer.
You pay the interest. For money that never existed. On a debt that need never have been a debt.
That’s not inflation policy. That’s a shakedown.
We Used To Do It Differently. Then Menzies Changed the Rules.
Before 1959, Australia had the Commonwealth Bank — government-owned, doing both commercial and central bank jobs. When the nation needed money, it created it through its own bank. Any interest went to the nation, not to private shareholders.
Robert Menzies passed the Reserve Bank Act in 1959. That split the central bank off. From then on, Australia paid interest to private institutions for money those institutions created from nothing.
Look what happened next.
The House Price Timeline — the One They’d Rather You Didn’t See
Sydney median house price, roughly, through the decades:
- 1901: £1,000 (about $2,000)
- 1950s: around $7,150
- 1960: around $12,700
- 1970: around $18,700
- 1980: around $76,500
- 1990: around $184,600
- 2000: around $312,000
- 2010: around $575,900
- 2020s: around $1.4 million
From 1901 to 1950 — fifty years — the real price barely moved. People who worked hard could buy a house. One wage. No drama.
Then the 1980s hit. Financial deregulation. Private banks could create as much mortgage credit as they liked. And they liked a lot.
House prices go vertical. A young couple in 2026 looks at a $1.4 million Sydney terrace and thinks the world’s gone mad. The world hasn’t gone mad. The banks have been allowed to print their own winning lottery ticket.
It’s not a population problem. It’s not a shortage. Ask the bank-friendly experts for decade-by-decade house-price-to-income data going back to 1900. Watch the excuses flow. Nobody was counting back then, mate. Records are fragmentary.
Funny how the data gap is exactly where the crime scene is.
The Boom-and-Bust is a Feature
Banks create money. Prices go up. They call that growth. Rates rise. Things crash. Rates drop. The banks’ mates — the big institutional investors, armed with more cheap credit — buy up houses at fire-sale prices.
Each cycle, more homes move from Australian families to BlackRock, super funds, and overseas money. Australia quietly turns into a nation of renters.
When a bank overreaches and nearly blows up, the government bails it out. With what money? Money the bank itself — or its mates — created from nothing. Which taxpayers then pay interest on.
Heads they win. Tails you lose. Every time.
Why Nobody Says This Out Loud
Find me a mainstream Australian newspaper headline questioning whether central banks should exist. Not “should they raise rates” — should they exist.
You won’t. Not one.
Not because it’s a grand secret. Because every institution that would normally ask the question is plugged into the same tap.
Politicians need the banks. Newspapers run on bank advertising. Universities take bank grants. Think tanks take bank money. Super funds hold bank shares. Economists need banks to hire them next time they get sacked.
None of those blokes are lying because they’re evil. Most of them are lying because if they said what they actually think, they’d lose the mortgage, the job, the column, and the invitations. They read the same four-page briefing everyone else reads. They repeat it. They go home.
That’s the Bullshit Rule. Not a conspiracy. A thousand nervous blokes, all scared of being the first to say the emperor’s naked.
The Whole System on a Beer Coaster
Banks type money into existence.
They lend it to you.
You pay it back with real work.
Prices go up, you borrow more.
Governments borrow from the same banks and charge you taxes to pay the interest.
The banks bail themselves out with more money they typed.
The papers don’t ask questions because the banks pay the papers.
That’s the whole system.
It calls itself capitalism. It isn’t. Capitalism pays you for what you produce. This pays the bank for what it types.
The fix isn’t complicated. Honest money. No lending of money that doesn’t exist. Interest paid to the people of a country on money their own country created — the way Australia used to run it, before 1959.
Until then, you’re working half your life to pay a keystroke.
This post is part of the Money & Banks thread on Common Sense Australia — where we work out how modern money actually gets made, and what honest money would look like.
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