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Yes, money is debt and debt is money. That’s clear. But banks do like to attract new deposits cause it has an effect on how much credit they can create. They ca
by perfunctory 6y ago
Yes, money is debt and debt is money. That’s clear. But banks do like to attract new deposits cause it has an effect on how much credit they can create. They can’t just create infinite amount.
- noxer 6y agoThat's wrong. Read it again especially the last part "Nowhere does the bank need someone else's money to give you that credit." They cant credit infinite amount because there is no infinite no-risk demand for credit. Banks dont give credit where there is a risk to lose. That's why startups need VC and not a bank credit. Banks attract certain deposit holders because they are future house builder or otherwise customers of something the bank actually makes profit with. They dont care about the money deposited but if its more its more likely to be a customer they can make profit with. So yes they are interested in you as a customer if you have money but not because you store it there and they want to use it for something. Its one of the most taught lies about how money and banks work.
- perfunctory 6y agowhat about the reserve requirement?