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>If a bank just writes £5 in your bank account, they've created that £5. There is no corresponding £5 that has been removed from somewhere else, unlike when you
by OscarCunningham 8y ago
>If a bank just writes £5 in your bank account, they've created that £5. There is no corresponding £5 that has been removed from somewhere else, unlike when you or I extend a loan.
If they loan me £5, but I leave the £5 in my account, then it counts as loan, but it also counts as a deposit. So their loans can never exceed their deposits.
- kgwgk 8y agoThe proposal is to prevent money in current accounts from being lent. If you had £5 in your current account, this money would be effectively yours. However, if you had £5 in your savings account, you would be effectively lending the money to the bank who would in turn extend a loan to another client.
- jstanley 8y agoI still don't think you get it. Nobody is saying their books don't balance. We're saying the money they lend to you is conjured out of thin air. I wouldn't be able to give you £5 that I don't have just because I also write myself a note saying you owe me £5. For me to lend it to you, it would have to come from somewhere. With banks that's not the case.