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I believe the parent poster was mentioning the modern ability of commercial banks to actually create money through loans. There are many places to read about it
by ithkuil 9y ago
I believe the parent poster was mentioning the modern ability of commercial banks to actually create money through loans. There are many places to read about it, I quickly found http://positivemoney.org/how-money-works/advanced/how-commercial-banks-create-money/ http://positivemoney.org/how-money-works/advanced/how-commer... but there might be better sources
- hashkb 9y agoThat article seems like an oversimplification. Isn't the bank is still on the hook for its liabilities? It might be playing a dangerous game, but it's betting against a bank run (which are rare) and on itself having enough liquid cash on hand to handle withdrawals during reasonable circumstances. We all know banks invest our cash (in loans and tons of other vehicles) in order to earn their profits (and our interest.)