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That's because they're mistaken. In traditional banking only the central authority can print money, not the individual banks. If someone stole a trillion dolla
by malfist 2y ago
That's because they're mistaken. In traditional banking only the central authority can print money, not the individual banks.
If someone stole a trillion dollars from JP Morgan, JP Morgan can't make themselves whole by creating a new trillion dollars.
The central authority might guarantee the customers of JP Morgan that their money is protected, but they won't print money to make the bank whole.
- lxgr 2y agoThat's one model/theory for how modern money creation works. Another is modern monetary theory (MMT), and in that, commercial banks are indeed the primary creators of money, with the central bank playing a technically more passive role. Still, in either model of money creation (i.e. classical "money multiplier" and MMT), governmental regulators (which can be the central bank or others) do ultimately control the rate of money creation via various mechanisms.
- killerstorm 2y agoFalse. Banks create money. https://en.wikipedia.org/wiki/Money_creation https://en.wikipedia.org/wiki/Money_creation