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If my company deposits a sun at a bank, my accountants will treat the deposit as an asset. If I then take out a loan from the same bank, that 'new' money is the
by astine 18y ago
If my company deposits a sun at a bank, my accountants will treat the deposit as an asset. If I then take out a loan from the same bank, that 'new' money is then treated as an asset. Companies and banks can trade on these 'assets,' in the form of stocks and bonds. In this way, the same money can be treated as an asset several times and the money supply, in the form of credit, can be effectively expanded. Reputable banks wouldn't allow this, but it's completely legal.
- cchooper 18y agoThe way your accountants record your assets makes no difference to the money supply. That is a completely separate issue.