How is money put into the economy? ie how is wealth created?

Most answers to questions like mine beg the question of where the money actually comes from, how it actually enters the economy, and to whom is it actually distributed when more money needs to come into the system. This ties into the creation of wealth. No matter how big the system, 3 people or 3 billion people, it seems impossible to create wealth without creating more money. Otherwise you are just shuffling money around, but not creating new wealth. For example: Suppose there are 3 people, who have basic needs met (food, shelter), living on a desert island. They each have 10 $1 bills. Joe creates widget from coconuts, and sells it to Tom for $5. Tom makes a necklace and sells it to Bill for $5, and Bill creates a cup and sells it to Joe for $5. Although three new products have been added to this small (but growing!) economy, there is no creation of wealth without the creation of more money. (assuming you can't barter)
So for the economy to grow - they must agree to increase the money supply to reflect this growth. Now I know the federal reserve prints money, but how do they get it into the economy?

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kingjs avatar Life
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The only way true wealth is created is through manufacturing. Creating products through physical labor.
New money is created by debt. Every loan instantly creates new money. Hence inflation.
The bank doesn't lend money it has on deposit it creates it when it's borrowed so the money you borrow literally doesn't exist until you borrow it.

The reason the economy must expand is because the Fed charges interest on the currency it creates from thin air. The money to pay the interest is never created so we must acquire new debt to service the interest on the old debt.

Every dollar is owed by somebody to somebody so if all debts were paid including the govt. there wouldn't be a single dollar left in circulation.

It sounds weird but
Debt is money.

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