As for the arbitrary creation of money, it's extremely important.
When you can't create capital, it's a problem- that's deflation, which is extremely dangerous to an economy, much moreso than inflation. My favorite quote from the US fed chairmen: "I will throw hundred dollar bills from a helicopter if it's needed to avoid deflation"
When you can't create currency, you have only existing currency- so look at Gold or Bitcoins, which are both examples of finite currency.
However, because they're finite, as more people come into the world, there's less Gold or Bitcoins for each. The price of each therefore is continually rising. And you'll see this fact espoused by gold enthusiasts, such as the video creator. "You can't make more gold, so the price never fluctuates from inflation!" That'd be awesome, if inflation weren't the only threat. Instead, you get deflation.
Deflation occurs when the currency constantly increases in value because you can't make more.
For a person with a deflating currency, you don't want to spend it, because just HAVING it is making more money. 1 ounce of gold now becomes MUCH more valuable in 10 years, and 20 years, and so on and so forth. The result is that gold isn't being spent, it's being hordes, because spending it is a waste, much better to save it and use it when it's more valuable.
And that decreased tendency to spend is catastrophic, as it discourages people from participating in the economy. In the worst case scenario (hyper deflation), people don't need to work at all. The value of their currency actually increases at a rate that is stronger than the income generated by a wage. That's the nightmare scenario because you no longer have people working and creating economic activity, in addition to not spending much.
So the creation of currency is often a way to say "Hey, spend your money while it's still worth something" when you aren't seeing the economic activity you want given the amount of currency in the system. Money is only useful if it's being spent. So that's why it's so normal for banks to create currency- the bond, or IOU is useful, because it can ONLY exist in an example where someone needs money, and it's being spent. It's not something that is hoarded. Money in circulation is more valuable than money that is stored, at least from a macro-economic perspective. So the idea of "creating money" is not crazy, because the money created is often the type of money that circulates, whereas money that isn't created (such as gold) often stagnates. Gold might be worth a lot to you, but in terms of economic activity, it's almost useless because of deflation.
**Edit**
And having gone to the website of the guy that made this video, unsurprisingly, they are a Gold and Silver advocate. These people benefit off the uncertainty of government backed currency. So that "instructional video" that purported that the currency system is a scam, is actually a scam itself. It's not there to teach you, it's a 30 minute advertisement for gold. "Hey! Your money might become worthless! Buy gold!"
And remember what I said about deflation? It's bad because people hoard money and this hurts the economy. Well people buy gold based on the speculation that government backed currency will drop, thus they hoard it until this event happens. Thus, the "buy gold!" scam is kept up, because gold continually increases in value, because people keep hoarding it on the idea a major currency will become unstable and collapse- a idea that is conveniently invented and circulated by them.
