[Mempho]

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2) If so, who gets the benefit of this extra money printed?

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People who receive loans.

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What do you mean? If I could print money and you needed to borrow $10,000 to enter the WSOP ME, I could give you the $10,000 loan at little risk (actually, just the cost of my time and materials used to print the money) and it wouldn't effectively matter if you paid me back. If you pay me back the $10,000 with interest, then I, the lender, end up gaining. Sure, you get the benefit of capital financing (dictated by the time value of money), but I get the principal and it's time value, so, once I'm repaid, I get to spend the principal and the juice and every bit of what I get is gain (save the materials and time of printing).

Better stated, you ask me for $10,000, and you agree to pay me $10,000 in one year's time plus 20% juice. Let's say it costs me $200 in labor/supplies/equipment to print the $10,000.

My risk is only $200. When you repay me in full, I gain $11,800. If I threaten to start breaking things and only am able to suck $1,500 out of you, I still gain $1,300. If this "business" was legally sanctioned, why wouldn't I want to be in this line of work. It's still free money...for the lender. I was more than willing to give a gambler a below-market interest rate because my risk is almost nil and, effectively, my EV is extremely high on every such loan I make. Even if 80% of my customers never pay me a dime, I get filthy rich just by getting business. Don't you mean to say, then, that the lender gets the benefit?

Sure, maybe the borrower gets a below-market interest rate, but that's only a very small part of the benefit. Most of it goes to the lender in this situation.

It's entirely possible that I've completely misinterpreted your reply, though and that it has to do with some other effect.