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But then how do you get the multiplicative effect described in the article without any debt ??
by BlueTemplar 5y ago
But then how do you get the multiplicative effect described in the article without any debt ??
- lottin 5y agoYou get a multiplicative effect because when banks lend they create new deposits (=new money) in the process. That doesn't mean that the deposits created in this way are debt. They are not, the deposits are money. The loan is debt. The loan is an asset in the bank's balance sheet, whereas the deposit is a liability. They explain it in more detail here: https://www.core-econ.org/the-economy/book/text/10.html#108-banks-money-and-the-central-bank https://www.core-econ.org/the-economy/book/text/10.html#108-...