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> banks lend out money that is NOT under deposit What do you mean? From that link: “banks lend out most of the deposits they have collected”, “keep a fraction
by kgwgk 8y ago
> banks lend out money that is NOT under deposit
What do you mean? From that link: “banks lend out most of the deposits they have collected”, “keep a fraction of their deposits in reserve and may loan out the rest”. Obviously they can not hold and lend the money at the same time.
- chimpburger 8y agoThey lend out MORE than was deposited. They literally create money out of nothing and lend it. That is how fiat money is created.
- kgwgk 8y agoThey don’t.
- chimpburger 8y agoBelieve it or not, this is an official, legal mechanism of money creation. https://en.wikipedia.org/wiki/Money_creation#Fractional_reserve_theory_of_money_creation https://en.wikipedia.org/wiki/Money_creation#Fractional_rese...