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by thunky 200 days ago
> If you borrow $100 USD from the bank, and pay it off immediately after, it's clear no money was "created" as such

The bank "printed" money by handing out cash that it didn't have. It only had a fraction of it. That new money went free into the world with the same respect any other cash gets. You and I can't pull that off.
1 comments
anonymars 200 days ago
> That new money went free into the world

Along with a "-$100" IOU on the books

That is different from merely "printing money"

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thunky 199 days ago
> Along with a "-$100" IOU on the books

Which they can use as an asset to create (lend out) even more money that they don't have.

Call it what you want, but the bank is adding money to the economy that wasn't there before.

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anonymars 199 days ago
The bank is essentially converting a short term IOU (liquid deposits) into a longer term IOU (the loan)

It's a function of time (mediated by interest rates, subject to market demand, namely liquidity preferences)

That's not the same as outright "printing money" which is not backed by any deposits (what does the balance sheet look like when "printing money"?)

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thunky 199 days ago
Ok fine I'll agree call it "creating money" rather than "printing money", because it's not the same mechanism the central bank uses to "print" permanent money (technically not printed either but whatever), but money is still created by the bank.
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