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I don't think that's accurate. In our fractional reserve banking system, banks loan out 90% of their reserves. The net effect of that repeating itself is that y

I don't think that's accurate. In our fractional reserve banking system, banks loan out 90% of their reserves. The net effect of that repeating itself is that you end up with 10 times the amount of money in the system, which is maybe what you're referring to? That's just a side effect of our banking system though. Kind of wonder if there's a stat on how much banking has expanded the money supply at any given moment or if it hovers pretty close to the theoretical limit?

ZenoArrow 10y ago
Nope, I'm not referring to fractional reserve banking. I'm literally referring to banks creating loans out of nothing but the promise to pay them back. I realise this is fairly uncommon knowledge, and doesn't seem to make sense. I'd recommend watching this video for a brief synopsis of how it works. http://youtu.be/KvpbQlQwl0A http://youtu.be/KvpbQlQwl0A