Fractional Reserve Banking System

We saw a movie in class called "Zeitgeist Addendum" and it talked about many aspects of the US economy. One interesting part we saw was the one about the creation of money. They say that the federal reserve banking system is the system in charge of the creation of money. The process is basically an exchange of  bonds and notes between the US government and the federal reserve. The government gives the amount they want in bonds and the reserve gives the same amount but in notes. Then this note are placed in a bank and just like that money is created.

One Interesting fact that is mention in the movie is that only 3% of the US government money is physical leaving the 97%  of their money in a computer. Also most of their transactions are virtual so it is really weird to know that their money is maybe on a file and that file may contain lots and lots of millions of dollars. In my opinion I think that this method is safe because the money cannot be stolen that easy because it is not physical. Basically they apply loans as the way of getting money constantly. The movie also states that if loans did not existed, then there will be no money at all in the world.

Link to the movie: https://www.youtube.com/watch?v=HbvCxMfcKv4