#9213896, By Jazzassin This is starting to get a little scary

  • Jazzassin 9 Dec 2012 16:46:52 75 posts
    Seen 5 years ago
    Registered 6 years ago
    LeoliansBro wrote:
    Either I don't understand banking and money or that article doesn't. Banks don't create money out of thin air.

    But they do create money out of thin air, that's the entire point of the cash-to-loan ratio.

    If a bank has 100 million worth of deposits, and they hold onto 10 mil of that, and lend out the remaining 90 mil, they've created 90 mil of new money because both the depositors and the borrowers will think they have 90 mil worth of money and will behave accordingly. And the new money's not just in their minds, it does "exist" digitally.

    That's just as real as new money created by governments. No one actually goes and prints out new bills these days, except to replace worn out ones,
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