• Does money truly DISAPPEAR due to a bankruptcy.?

    I've been studying the Federal Reserve System recently, and various beliefs about the Fed is that they create money out of thin air. A debt is exchanged for money created by the Fed. I also understand that that principal is due back with an interest payment. I also understand that through the bank system, money is multiplied by lending... show more
    I've been studying the Federal Reserve System recently, and various beliefs about the Fed is that they create money out of thin air. A debt is exchanged for money created by the Fed. I also understand that that principal is due back with an interest payment. I also understand that through the bank system, money is multiplied by lending out all but the reserve. My questions are about BANKRUPTCY. Is money actually destroyed by the process of Bankruptcy? i.e. the money is written off, and thereby goes away. Is that possibly disappeared money still due back to the Federal Reserve, or is their a write down to the Fed? So, if $1 Trillion is created and $100 Billion is "lost" / "disappeared" through the process of Bankruptcy, does that mean that the only place it wasn't lost/disappeared from is as Debt to the Fed, therefore making it completely impossible for the $100 Billion to ever be paid back, but interest would still be accruing upon it. Sorry, that's not more of a question, but I've been wanting to ask this for a while, but can only do so time with some distractions.
    1 answer · Other - Business & Finance · 9 years ago