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by rashkov
1198 days ago
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Also been thinking about this. If you look at this article, read section titled “money creation process” https://en.m.wikipedia.org/wiki/Fractional-reserve_banking If I deposit $5 in my bank account, and then the bank keeps $1 in reserve and lends out $4, then they just added $4 to the money supply. I can withdraw my $5, and the loan-taker can withdraw their $4. This is possible because there’s a reserve pool of money which is not loaned out, and because people tend to just leave the money in their account. At least that’s my understanding. Happy to be corrected |
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