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That’s not how it works, if you are the first ever client in the bank and deposit $100k the bank can go ahead an lend out $1m.
by drexlspivey 4y ago
That’s not how it works, if you are the first ever client in the bank and deposit $100k the bank can go ahead an lend out $1m.
- colinmhayes 4y agoThe bank only has 100k though. They can’t loan out 1m because they don’t have 1m to give out.
- drexlspivey 4y agoThat's the whole point, they just create $1m and give it out
- colinmhayes 4y agoWhat happens when the person withdraws the million dollars? The bank only has 100k.
- drexlspivey 4y agoAre you talking about physical paper currency? That’s totally a different issue. What happens if the original depositor deposited via a bank wire and you want to loan out $100 dollars in paper money? You just get some paper money from the FED. Same thing here.