TLDR at bottom
Lets dive right in. Most people believe that banks loan out deposits at interest and make money off the the interest spread. This is false and a myth. Banks do not lend out deposits. When a commercial bank like BofA, JPMorgan or Chase makes a loan, they are creating new money known as bank credit. This bank credit exchanges 1 for 1 with US dollars. When you repay a loan, the principle is destroyed and the bank keeps the interest. This is how banks can afford such huge office towers and branches everywhere. They are collecting interest off newly minted money. This system works great when the population is rapidly growing. See: Boomer Generation. Proofs at bottom direct from central bank websites.
Lets do a quick mental experiment. If there are 100 of us on a desert island. There is no medium of exchange. I create a bank. I loan each of you 100 “coconut dollars” at 10% interest per year. At first the system works fine. Year 1, there is equal amounts debt and money. Interest costs are manageable. Year 2 there is 90 dollars for every 100 debt. Year 3, 80:100. Now, new loans are created slowing the process down but ultimately after 40-50 years you end up in a situation like in the US today where debt is 5x larger than the M2 money supply. For reference, Iceland was 10:1 when their banking crisis kicked off.
So what does this actually mean when we cut down to the chase? For every dollar in circulation in the United States today interest is being paid to banks and creditors 5x over. Think about the effect this has on an economy. How much it saps away capital from the workers. At every level of the economy capital is being leached away by the rentier class.
So, how does this hurt you? For this I am going to reference rogue Marxist economist Professor Steve Keen. Watch this video from 17:00 to 20:20 to see him simulate the system.
How does this end? The GFC was a bit of a primer. Once you hit the point where the debt can no longer be serviced, stuff start to blow up in a deflationary collapse. Everyone needs dollars to service their debts but there is fewer and fewer dollars compared to the ever growing debt.
TLDR: Money is created out of thin air by commercial banks. The system as structured means that for every $1 in existence, interest is being paid on it 5x over to the banking class. This is crowding out capital for the working class and creating a neu-feudal system. Labor and capitalists are constantly fighting back and forth while the banks take over and own everything.
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…. I believe that banking institutions are more dangerous to our liberties than standing armies…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson
Proofs:
Bank of Canada document.
https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201551E#a3
Bank of England
https://www.bankofengland.co.uk/knowledgebank/how-is-money-created
Great Documentary for more info
https://www.youtube.com/watch?v=j7-FmAfxMmQ