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> Just like lending creates money, destruction of assets destroys money. Lending creates money? Banks can just, poof, will it into existence? Correpondingly,
by SeanLuke 3y ago
> Just like lending creates money, destruction of assets destroys money.
Lending creates money? Banks can just, poof, will it into existence?
Correpondingly, asset destruction destroys money? Like someone literally is setting fire to it? This is nonsense.
- zeroonetwothree 3y agoFractional reserve lending does create money.
- xw4002 3y agoI suppose when we say these things we should say, fractional reserve lending creates some money. Otherwise one can get the impression that banks can create as much money as they want, which they can’t.
- jgilias 3y agoNope, that’s exactly how it works. Here’s something to read on money creation: https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
- jacknews 3y agoyes, basically, they just poof it into existence, and then it poofs out again when the loan is repaid. of course there are details ...