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Actually the banks do just create the money. They put an entry on the balance sheet "they owe us this much" and call it an asset.
by nicky0 7y ago
Actually the banks do just create the money. They put an entry on the balance sheet "they owe us this much" and call it an asset.
- afiori 7y agoThat is creating liquidity, what they are doing is essentially selling debt. It is different from just creating money.
- qubex 7y agoIn our modern system of endogenous money, money is circulated debt.
- phaemon 7y agoIt is not different from just creating money, it is exactly how money is created. Please read the PDF linked by yrro upthread.
- afiori 7y agoIt is not creating money, it is turning credit into money.
- phaemon 7y agoSure, because you know more about money creation than the central bank for the UK. Read the damn pdf and learn something.
- afiori 7y agoFor sure I don't know more, but I am trying to make sense of what is being said in common terms: if banks can get free magical loans it is still a loan, if banks can just make money out of nothing then that is creating money. I don't doubt that the financial effect is what they say it is, but that does not look like what I would call creating money.