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They lend out MORE than was deposited. They literally create money out of nothing and lend it. That is how fiat money is created.
by chimpburger 7y ago
They lend out MORE than was deposited. They literally create money out of nothing and lend it. That is how fiat money is created.
- kgwgk 7y agoThey don’t.
- chimpburger 7y 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...