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No, and if the video says that then it's wrong. Please explain to me how a bank can create base money, which is exclusively issued by the central bank. * The
by cchooper 18y ago
No, and if the video says that then it's wrong.
Please explain to me how a bank can create base money, which is exclusively issued by the central bank.
* The bank is allowed, to lend a multiple of that $10.
False! The bank can lend only a fraction of that $10. However, if the borrower deposits that money back in the bank (i.e. makes a loan) then the bank can lend the money again, just like with normal borrowing.
- axod 18y agohttp://en.wikipedia.org/wiki/Fractional-reserve_banking http://en.wikipedia.org/wiki/Fractional-reserve_banking You should at least watch the video so you can see what we're discussing...
- cchooper 18y agoBanks cannot create base money. That link doesn't say that they do. Creating base money is forgery and is illegal.