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People imply that banks are allowed to just create as much new money as they want out of nowhere, when it just means lending some of the money that they've rece
by EliRivers 8y ago
People imply that banks are allowed to just create as much new money as they want out of nowhere, when it just means lending some of the money that they've received in deposits
I disagree. They are not simply lending out money that other people deposited. They created new money, out of nowhere. There is a limit on how much of this they can do, but they are not simply lending out money that other people deposited. The bank of England is pretty clear that this money is magiced up out of nowhere; that it is money that did not exist before.
"Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account."
https://www.bankofengland.co.uk/knowledgebank/how-is-money-created https://www.bankofengland.co.uk/knowledgebank/how-is-money-c...
- ascorbic 8y agoIt's magiced out of nowhere because even though they need to take a deposit before they lend it, the original deposit remains as a line in the customer's account after it's been lent. It works because people don't normally all try to withdraw their money at the same time.
- EliRivers 8y agoI don't disagree with that; I disagreed with the assertion that they weren't magicing it out of nowhere, but I see that you do actually state that it is magiced out of nowhere.