1. The creation of money profit by means of credit money By Renée Menéndez

2. The basic setting Unlike before we have five sectors: Central Bank, Commercial Banks, Entrepreneurs and Households with say labor input and capital input (landlords) It does not matter which input exists, every example will fit.

3. The money creation step We have the chain from CB to E where two loans were granted from CB to B (C-B) with liability (D-CB) and from B to E (C-E) with liability (D-B). The amount of money equals 800 units.

4. The attraction of resources Equipped with money M the entrepreneur is able to buy the means of production from the households. Note that total investment is shared between the labor HH and the capital selling household CS.

5. The production step Production results in creation of output, where a third of capital is used up. Therefore the output G causes costs of 400 money units.

6. The market step E sells the output G with a mark-up of 25%, therefore he gets back a money amount of 500 units, which he must share with the bank, because interest payments fall due of 10%, so he has to pay 80 for interest and 200 for used capital, i.e. 280. Note that money revenues equal M+C/I where C/I is interest payment plus capital repayment = 80 + 200 = 280. S marks gross profit, so it includes interest payments.

7. The debt consolidation step E pays interest and capital liabilities and ends up with income P = 20. CB and B end up with lower credit / debt balances but earned 40 units of income, which must not be consolidated, because they come from income flows (80). E has additional 200 money units to continue production, so the fund for paying labor is sufficient.

8. The next production step E buys another time labor power 200 and generates another 400 output. E ends up with 200 capital left M 20 left but with 400 output.

9. The next market step E sells his output as bevor for 500. This time CB, B and E can consume as well (40+40+20). HH pays 200, CS pays 200 and CB, B and E pay another 100. Income positions vanish therefore from the balance sheets at CB, B and E, leaving room for net wealth.

10. The next consolidation step As bevor E pays 260, 60 interest and 200 loan repayment. E ends up with P 40, B with Y 30 and CB with Y 30. HH got goods 200 and CS as well.

11. The next production step As bevor E pays 200 for labor and produces 400 in goods. Note, that the G 20 refers to net wealth and not to the amount of newly produced goods.

12. The final demand As bevor E tries to have a revenue of 500 but now will end up with sales of only 400. HH spends all 200, CS all remaining 100 and CB, B and E 30+30+40 which sum up to 400 only. L is the stock of unsold goods, that is no inventory investment, it means loss. Capital is used up and has no value any more.

13. The final outcome The final result can not be different as in any other environment, where someone has to pay more money he ever got. That is not surprising. What is interesting here is the market and consolidation process. This will be further discussed in the paper.