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Nope. If I sell you my (fully owned) house for $300k, no additional money has been created. There's still only $300k of money. It's the act of lending out some
by tonyarkles 9y ago
Nope. If I sell you my (fully owned) house for $300k, no additional money has been created. There's still only $300k of money. It's the act of lending out some fraction of your deposits/loans from the central bank that allows commercial banks to "create" money.
And yes, the banks are controlling the money supply. See https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking for more detail.
- perl4ever 9y agoIt seems to me the loans are assets, and the deposits are liabilities, so the loans don't create any money in the economy. Edit: why do you say withdrawing money destroys it? It removes it from a bank's balance sheet, but not from the economy...