assuming bank A, it give money to some poor credit people .
they use this mortgage to sell CDO, then they get money back in (proceeds of cdo sales)
they use the new proceeds to issue more mortgage, and use new mortage to issue cdo,
they have new proceeds,
so the whole process, you can see, nothing is really created , i.e. no real values there, but the money is more and more created, why?
root of all,
they securitized "CREDIT". credit , previously was some virtual invisible stuff, now become the real money, they are now same as the house, the factory, the gold, they can sell for money.
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