fractional reserve banking in australia, page-25

I remember in economics 101 learning about "the magic of the money multiplier".

The problem now is that governments do not issue their own credit but buy credit off the private system and dumbly pay interest on it when if they did it themselves no interest would be payable. You don't think for example the Chinese are dumb enough to pay interest to third parties on their own credit creation...........the first Labour Govt in NZ in 1935 created money at zero cost and used some of this credit to build the tens of thousands of state houses for poorer folk - people still talk today about how great this Govt. was - legends. It's time governments took back this credit creation function from the private sector.