>> A bank loan is merely an exchange of 2 IOUs Wow. This is a flat out lie. Banks operate on a fractional reserve system and they are allowed to loan out more

>> A bank loan is merely an exchange of 2 IOUs Wow. This is a flat out lie. Banks operate on a fractional reserve system and they are allowed to loan out more money than they have. It's not just about swapping an IOU between a depositor and a borrower. With the recent COVID-19 regulations, banks don't need any reserves at all anymore. The Fed had been constantly lowering the reserve requirement over the years, effectively causing an infinite but controlled supply of money to enter the economy with financial firms being the biggest beneficiaries.