2 ms·
> Banks get to create the principal that they loan out of thin air[1] I’m not sure how you get this from your reference - people deposit money at a bank, and t
by hathathat 8y ago
> Banks get to create the principal that they loan out of thin air[1]
I’m not sure how you get this from your reference - people deposit money at a bank, and the bank lends (gives!) some of that money out to (e.g.) students. The “creation” comes from both the depositor and the borrower thinking they have the money.
- mhuffman 8y ago> people deposit money at a bank, and the bank lends (gives!) some of that money out to (e.g.) students People deposit money at a bank and the bank lends out 10 times as much! Granted the "new money" is destroyed as the principle is paid back, but its new money out of thin air -- and the interest is real money! Here is a more easy-to-read version[1] [1] https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp https://www.investopedia.com/articles/investing/022416/why-b...