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When a private bank makes a loan, the dollars are not created out of thin air, no. They loan out depositor's cash.
by wavemode 3y ago
When a private bank makes a loan, the dollars are not created out of thin air, no. They loan out depositor's cash.
- pwg 3y agoThat is not how things work in the US with banks and loans, they (banks) do actually create "money out of thin air" when they make loans: https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp https://www.investopedia.com/articles/investing/022416/why-b... Read the section under the heading: "How Banks Make Loans in the Real World".
- subsistence234 3y agocreating money in the sense of lending on margin is very different from the sense in which the Fed creates money.