My first job out of college was at a small high-tech company--call it Crystal--that was bought by a French multinational corporation. I was surprised at how the purchase was financed because it seemed improbable--a loan was used to buy the company and the debt was transferred to Crystal, which paid it off over a number of years. The company's intellectual property, developed by scientists and engineers over a couple decades, its land and equipment, and its profits became the French company's property essentially at no real cost to them, because the company paid for the purchase on behalf of the French company. Really, it was like a magic trick.
A similar procedure is performed on a daily basis with land and houses. A home buyer puts a deposit down and obtains a mortgage and a deed for some property. In the simplest analysis the bank uses the buyer's deposit, and through fractional reserve lending creates the rest of the purchase price with nothing but a flourish of paper and pens writing signatures.
The items of value in the transaction are: the buyer's deposit, the mortgage payments (which are really the time and effort of the buyer), and the property. What the bank provides is as substantial as smoke or symbols and numbers. However, in the bank receives payments of the principal and interest for years, or gets the property in the event of a default.
This truly remarkable arrangement between bank, buyer, and property is made possible by laws, customs, and most importantly by beliefs and ideas that are widely held. These ideas, in fact, have a near complete monopoly on people's minds.
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