How Banks Create Money - Macro Topic 4.4

solid fundamentals explainer, but the 10% reserve requirement framing is outdated - fed eliminated reserve requirements in march 2020, so banks aren't actually constrained by that ratio anymore.

Isn’t the rrr 0

This is one of the clearest explanations of fractional reserve banking I’ve seen. The step-by-step breakdown of how deposits turn into multiple rounds of lending really makes the money multiplier intuitive instead of abstract. Great reminder that banks don’t literally “print” money — they expand it through lending.

Test in 20 minutes am I cooked?

Guy you are too fast. I cannot comprehend you😠😠👿👿

So today, the money multiplier formula would give a result of infinity! The required reserve is now 0%. That means that the multiplier = 1/0, which is undefined because it's infinity.

this is how a currency is devalued btw

Kaiser wise

Janice Brooks

Money is NOT REAL

NEVER WAS

the "banking system" is in reality a counterfeit ENERGY SYSTEM

converting energy

YOU give into the system your ENERGY from what u put in thru "work"

And in return, the banks give u dirt 😂

That energy u deposited is then used for something else

Energy can't be created or destroyed

But it can be transferred. Transformed. Or transmuted

Gold isn't valuable.because it's a precious metal

It's valued because it's highly conducive of ENERGY

Energy - is the capacity to do work

Work - is to create

The idea of money is created from keeping the people WORKING

Money is created from promissory notes

A promise , is your guaranteed word

IN THE BEGINNING WAS THE WORD

ALL THINGS WERE MADE BY HIM !

WITHOUT HIM NOTHING IS MADE THAT HAS BEEN MADE

the wages of sin is death
The higher your wage - the more you're in debt to DEATH

You're only living on borrowed time -

Borrowed ENERGY

Loaned to you, thru "the bank"



Understand ????




If u have seen the matrix, relate to the scene when Neo woke up

He and everyone else was in energy capsules, hooked up to a system where the robots were draining them for their energy

By keeping them asleep in an ILLUSION

THE MATRIX

same concept !!!!

There's a big difference between time deposits and demand deposits (also known as current accounts). The first group is out of circulation. By putting that money back, you have an exact same amount you started with. No multiplication. Regarding demand deposits, that money is always available to clients, in digital form, of course. Again, no multiplication is possible. If someone has deposited coins and banknotes, that money is no longer in circulation. It doesn't belong to the client anymore (he now has a digital form of that sum in his current account), and certainly it doesn't belong to the bank, because it's just a byproduct of his conversion. It should be held outside the bank's balance sheet. To summarize, money has either been issued or not. It's not a living being that can be multiplied.

In the days when gold was held in trust, banks could lend out gold that wasn't used. But to lend money that banks don't have sounds like fiction to me. If it is the truth, our governments and banks are responsible for the economic troubles of our world where most nations are in deep debt.

completely lost you about a minute in.
by the time started speaking about Bonds you might as well have been speaking chinese if i'm being honest.

Great video, except all the wrong information was delivered

As en economist he doesn't know the existence of settlement. If bank create money out of thin air, how settlement works?

😀Excellent lesson video! The creator certainly has the best teaching principles down. Thoroughly enjoyed it& will definitely check out his other videos.

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False. Banks do not lend out depositor money directly. When you deposit money in a bank, it becomes an unsecured loan to the bank — a liability on their books. The bank then creates new loans by issuing new deposits, effectively creating money through credit. Only a small portion is held as reserves to meet withdrawal demands, but the majority is used to expand the bank’s lending capacity. Bank Deposits are liabilities to the bank, not assets they can can lend. The money for loans is created out of thin air, backed by borrower IOUs, not by prior savings.. This is how money is created in a modern fractional reserve or capital adequacy system.

Thanks sir 🎉

💬It’s crazy how banks can create money just by lending it. Most people don’t realize their deposits are being multiplied behind the scenes! I’m breaking this down in simple animations on my channel ExplainFi – this topic needs more attention!

i was always stuck and didnt understand this topic. even after 10 years later you post this video. this helps me so so so much and thank you.

All gone upto my head 😓

On March 15, 2020, the Federal Reserve announced it would eliminate reserve requirements for all deposit accounts — including transaction accounts (like checking accounts). The change took effect on March 26, 2020. This is because now we understand that Reserves are a poor way to combat bank runs. Instead of Reserves, the five active measures to deal with bank runs are based on the Basel Accords. 1) Robust supervision and stress testing, 2) Deposit insurance schemes (FDIC), 3) Transparent capital adequacy ratios (Bank owners equity level), 4) Emergency central bank liquidity (discount window, BTFP, etc.), 5) Living wills and resolution planning for systemically important banks.

Isn't the total circulation still the same?

i want to understand where u got 0.2 from

Made that really easy to understand, thank you!

And this way the banks keeps you in the bank is to take loans and charge you interests on it while they make money from your saved money.

How does this multiplier account for the money paid back to the bank by the borrowers and the interest rate that the bank earns from that loan?

This is a lie

what is FED?

I got a doubt, do we generally have to consider the initial round or not ?? as we are getting two different answers if we include or exclud it.

Smash

the only real money is capital in reserve

This is not how banks currently work

bro reminds me of johnny lawrence

really well explained, thank you so much sir !!

and where did people who put money in the bank get the money when money is being created in the bank ?

best vid i edged to this