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How Banks CREATE MONEY From Nothing | Money Multiplier Effect Explained | Think Econ

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Wow, and this is legal
Comment from : @MicahBanks-m4t

Well explained!
Comment from : @keamogetswesetshedi9602

The money multiplier is reverse causation Banks don’t collect deposits first, lend a fraction out and keep the rest as reserves They issue loans first, and in doing so they create electronic accounts with positive numbers matching the loan amount in them We call these accounts “deposits” even though the entity for whom they are liabilites (banks) created them, and did not “collect” them from anyone If there is a reserve requirement, banks will meet it after the fact by a) borrowing from other banks b) borrowing from the central bank at the discount window, or c) receiving them from the central bank through open market operations Reserves are only important insofar as they enable banks to clear cheque transfers between each other, NOT to lend them out Loans create deposits, not the other way around The money multiplier is a credit divisor, because the amount of base money is endogenously determined by the lending activities of banks, with central banks accommodating the amount of reserves necessary ex-post
Comment from : @pure_the0ry

Good video, but isn't the current reserve ratio actually 0? Meaning banks are actually required to keep 0 of your deposit on hand?
Comment from : @danquinn83

if you watched this video you just have wasted your precious time because what is explained here is a lie Go to a search engine and type " THE MYTH OF THE MONEY MULTIPLIER" for better information
Comment from : @se7ensnakes

I'm not a student and won't go to schoolbrI've never studied economics But recently I've found it very interestingbrbrI don't want to become an economist I just want to get more knowledge and insights about economics so I can make better decisions in my personal life and understand the world better!!!brbrCould you recommend any economics book for a complete beginner that is useful and easy to understand? brbrThank you 😊 brbrI
Comment from : @leopard6554

So when banks get greedy and put less in the reserve and loan out more, they fail!!!brbrOf course my assumption is over simplified!!!😉
Comment from : @leopard6554