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How Commercial Banks Really Create Money (the Money Multiplier is a MYTH).

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Thanks for this explanation Comment from : Titus Ojar

Great video! Thank you! Somehow the last point of this wasn't clear to mebrbrbut that ultimatley translates to "the people feelings about the future" from the Johnny Harris, that you commented on ->brlet me explain:brIf not reserve requirements is the limit to the money creation (but still - in the countries with bigger requirements it might be? -> could you confirm/deny that that could ever happen that the teoretical limit from the Money Multipilier Story was ever hit?) than all the individual decisions of the people (if people feel like they want to go for run-bank -> the banks are forced to limit their creation, lowering amount of the money in the economy -> eventually lowering prices/firing people etc), same with "loan Demand" -> if people (or institutions) doesn't feel like the investment is worth their money - they would not lend money and ultimatley the amount of money in the economy would fall as wellbrbrbrSomehow I just got entirely new light on "economic news" -> they have MUCH more power than I ever thought that they actually have Going against the flow is in fact much harder than I tought (on a macro scale at least, for small average Joes there's still a lot of room to exploit any situation) Comment from : Radoslaw S

I have watched your video a few times, you do not discredit that banks create money You just explain some extra steps involved in the money creation, but they do create money still Comment from : Didier Modica

Fed made the fractional reserve percentage from 10 to 0 ,banks can now actually print infinite money 🙂 Comment from : Md Sohail Haque

I don't understand this part: if a customer takes a loan from the bank, bank borrows money from customer and customer borrows from a bank at the same time? Comment from : Marko Ciprijanović

Hasn’t QE put enough money in the system ? So banks don’t look for funding after the loans most big banks have the reserves to meet payment obligations How does Fed add more reserves ? Comment from : Jay Mills

🎯 Key Takeaways for quick navigation:brbr00:00 💰 Understanding Money Creationbr02:04 💵 How Banks Create Moneybr05:26 🕒 Timing and Money Creationbr07:15 💳 Constraints on Money Creationbr11:20 📚 Further Reading and RecapbrbrMade with HARPA AI Comment from : Keneth Chua

Your incorrect Comment from : Alex Marcon

the link to the blog is broken! Comment from : mio nome

I have a question -brAre banks in the United States under the control of the Gov or can it interveen!! as we know 567 banks have failed since 1974 its a disaster brbrMalpracticing banks:br1Wells Fargo: In 2016, for opening millions of unauthorized accounts on behalf of customers without their consent br2Bank of America:Its role in the subprime mortgage crisis br3JPMorgan Chase: The London Whale trading scandal br4Goldman Sachs: Its role in the 208 financial crisis br5HSBC:2012 for money laundering and other financial crimesbrbrWhy havent the Gov not canceled their licences ? Comment from : Ashish Karumbiah

We the People is securities! You must explain that to plus all other assets in the land! Comment from : Dan Söderström

What is the difference with a full reserve or let's say 90 reserve system? Comment from : Eskiriatai

This video is correct but is incompletebrbrBanks create money - indeedbrBanks create RISK b*/bbrbrThis means that we need to associate each change in the money supply with a change in total economic riskbrbrBankers create Risk Comment from : Robert Blandford

I don't understand the point about how reserve requirements DO NOT constrain money creation You say that almost all central banks facilitate reserve creation on demand Why is that? Why DO central banks "almost always" lend money to banks? Comment from : Gabi S

The money multiplier theory doesn't assume the bank simply "has" assets it can use as a backing for potentially defaulted loans That's the step which is being missed in this new theory They're using the fed model on a commercial level, except the fed has the faith and trust of US taxpayers as its backing Do commercial banks? Apparently that's the new status quobrbrSo, the money multiplier isn't a myth; it's nothing more than a sane way to view economics; ithis new status quo is fully divested from reality/i I guess we really are headed for another 1929 Comment from : Mavendow

If people accept your checks at par to cash, you can technically create money Comment from : Dr Azimov

Essentially, banks create money because they manipulate their ledger When they give a loan, they change a few numbers on the bank account statements, and record on their spreadsheet that they owe bank account A $1M, and Bank Account A owes them $1M When you want to spend your money, the bank debits a few digits off your end of the spreadsheet, and credits the account you pay Since people accepts bank obligations at par to cash, the bank can create money by changing their spreadsheet to add points to someones account Comment from : Dr Azimov

Huh To be honest I thought I was being taught something fundamentally different But what is the difference with the ''other youtube videos''? I've watched this video 3 times but have to admit I can't tell the difference Banks just create money, right? Isn't this also told in other videos? Comment from : G Dor

The amount they lend us, the bank gets 10x the credit…… Comment from : Doug Billman

Research public law 73-10 … government will pay your debt, dollar for dollar… Comment from : Doug Billman

It’s against the law for banks to lend money… Comment from : Doug Billman

Banks steal our credit…… Comment from : Doug Billman

focusing on the fractional reserve element hoodwinks people to not see the elephant in the room, which is private entity's having the extreme privilege of money creation and receiving the interest payments on that newly created money which of course is the primary cause of inequality and poverty on a global scale Comment from : Dan

So your video admits/confirms most economists and bankers do not understand how money creation and the economy works Doesn't seem much original research has been done over the decades to find proof about how the economy works - so much for economics being called a science Comment from : Sue Ferreira

commercial banks do not pay interest? Comment from : WhoIs Abdalle

I don't understand how there can be a myth, and needing "research" to disprove something like this? brEither the banks loan money they don't have, or they don't brSo all this time economists and bankers have thought banks loan money they don't have, but in reality they've had the money all the time? brHow can thousands of banks exist, who's main mission and expertise are loans, money, and ledger, been surviving without even knowing how much money they have and how mush they have lended out? brIf I Gonnaga Bank have 1 million, and I loan out 2 million, I've done the Money Multiplier trick But I haven't? I've actually earned my money by loaning 1 million and getting 1,2 back over the course of 20 years brHOW has this NOT been common knowledge if that's the case? HOW can you run a company that only needs to know plus and minus, and not knowing basic plus and minus? HOW can tens of thousands of companies whos only criteria is knowing plus and minus not knowing plus and minus, at the same time?? Comment from : gonna ga

Love a good throwback to see humble origins Comment from : Nicolas Correa

Svb failed cuz it couldnt fund customer deposit demand What did they do with that deposit money ? use to buy securities that lost value with interest rate rising? Comment from : Mike Mcdonnell

So its just fractional reserve banking but the reserve requirement is 0😂😂😂😂 Comment from : Bilal Baig

Tbe fed has eliminated reserve requirements now so that leads to what? Comment from : Mike Mcdonnell

Why when explaining this sort of things there are no clear numbers involved in simple form, "explain it like I am between 5 and 15 years old" or are they scared people will find it easy to point out their errors or/and maybe it would be just a lot of very hard work to make it clear? as always it is best starting at the beginning Comment from : Ricky Ardo

not healpfull Comment from : ALiens money

I didn't get it Comment from : ALiens money

As per my understanding, reserve requirements are based on the capital or equity of a bank If a bank is valued high, it needs to have more reserves Deposits have no role in reserve requirements Comment from : HARIOMHARI

It's not a myth, it's a lie Comment from : Jeffrey Chongsathien

So basically a Ponzi scheme Comment from : Fiery Fire

While I comprehend the information, there is a question which comes to mind after watching twice to examine carefully With regards to the “other side” of the banking operation as a depository for customer savings, why does the bank not have the required reserves on hand to offset a bank run in the first place?brbrIf loans are solely “created by federal allowance” as you’ve demonstrated, that would suggest there would be an excess of reserves available for depositors, which we know for a fact is not the casebrbrIt seems default is inevitable and the system is wired to bust no matter what occurs Comment from : Bee Brown Universal

Good video title Joeri 😮 Comment from : Luxus Häuser

Money is created with debts You go at the bank for a mortgage etc… They will lend you money that doesn’t even exist but it will when you will be done paying it That’s how they create money Simple as that Comment from : francis bilodeau

How timely Comment from : Clem Farley

Coming here to hear "Bank run still take place" right after the SVB falling due to a bank run is just incredible 😂 Comment from : Luís Henrique

they publicized the G20 Nations banking definitions for savings accounts so you have no excuse Comment from : Ophiuchus 67

it was never there money you are the money the ENERGY currency ????? the cash flow Comment from : Ophiuchus 67

Banks is not stealing money you see because when you deposit or sign (your)money by your (signature) you transfer title of that money over to the bank you become an unsecured creditor ?? Comment from : Ophiuchus 67

I watched the movie "ECONOMIA" more recently IT is interesting Oeconomia - ZDFmediathek br wwwzdfde/filme/dokumentarfilm-in-3sat/oeconomia-104html Comment from : Anja Seidl

What is the difference between reserve requirements and capitol requirements/liquidity? Comment from : bgriffin317

What is being obfuscated by our very language is: banks create credit, not currency Credit is a claim on currency, not the currency itself When a bank loans me $200k to buy a house, a real claim on real central bank currency must be transferred from me to the seller, either in the form of hard cash, or a claim on hard cash in a checking account In exchange, I must retrieve $200k plus interest over the term of the loan by working for it, and giving the money I receive to the bank In this way, banks don't really create money insofar as they create currency, banks create money insofar as they create future claims on currency: the central bank is still the one who creates the actual currency Comment from : Million Dollar Rabies

That is not how fractional reserve works! Banks lend money over long periods even after the interest is collected the value of the interest would be diminished by inflation and devaluation depending on the currency and the time All banks would go bankrupt by this logic Comment from : Seeker

I have a question, what stops people of starting their own bank and doing dumb loans to their friends if the money doesn't exist at the beginning? Or simply starting your own bank to finance yourself? Comment from : Grafh

A hard thank you! I am not an econ major so the original money multiplier theory has puzzled me for years -- it just doesn't make sense to me! Comment from : Caleb The Ragdoll

This is the only guy who looks for the truth and tells the truth Comment from : Adam D

Really interesting to see this video in 2022 with this hyperinflationary environment I don't get something, in Romania banks are now giving a better rate on your deposit, than they receive on a credit for housing purposes This contradicts what this video states Comment from : Valentin Daniel Bara

how do you even start with an incorrect premise here if not for disinformation, we’d assume that the people who run the system knows how it works… Comment from : Rick James

Can and/or does a bank create new money to pay their own employees? Comment from : Dank Audio Stash

Dank voor de heldere uitleg Btw, je lijkt op Elon Musk 😄 Comment from : random archives

He did his post-doc at UCT?❤❤❤ Comment from : no name

What is the difference between the 7-8 loan/cash requirement, and the fractional reserve requirement? seems the same Comment from : HarfTimer

On the 7-8 capital requirement, even that is now out of the window thanks to capital vehicles such as Capitolis, lol Comment from : Maddie

Great video Was the UK banking bailout funded by taxpayers or was the money created ? In the US The Head of The Federal Reserve confirmed the money for the bailout of AIG came from the Federal Reserve not US taxpayers Was it the same in the UK ? Comment from : NFFC2256

So the banks still create money out of thin air and demand more of it back from the borrower Comment from : prolarka

Is that still the case here in the US & that’s super interesting? Comment from : SD P

The federal reserve which there is nothing federal about it and above the US congress creates money from nothing, lends it to the US Government and we the people pay the interest for generations to come Printing money from nothing devalues the currency and creates inflation There not you know more than 10 seconds ago Comment from : Kevin

@MoneyMacro Brilliant video Thank you so much for your hard work! Comment from : Kamil O

as an undergrad studying to enroll on a master's, this video is most welcome (although it won't be used for ANPEC, but it's still cool to learn about it before getting into a program) what model describes this idea? would you have any studying recs for it? I ask this because I'm never fully comfortable with a theory before learning its formalization I tried going to your in-depth discussion, but the blog link is broken 😭brbredit: I know there are other recs (besides the blog post) on the description, but what I'm excited about is to learn about a formal model, not necessarily the (informal) ideas that surround this theory Comment from : Uriel da Boamorte

wow just found out the truth about money creation and it's crazy I don't know why I took so long to watch your videos even after subscribing your channel long ago thanks for the video! looking forward to your other videos also your reference about the CORE is fantastic The Comment from : Malith Dissanayake

нле⁸ Comment from : Майя Шурдумова

that's not really much different than double entry accounting brbrDebit your cash, credit your liability, money is created from nothing (and gets destroyed when you remove cash to pay liabilities) Comment from : Serif Sans Serif

i love how this incorporates the facts of accounting in regards of bank and customer creating "debt" to each other Comment from : Artonox

So Banks do not create money, but rather the Central Bank providing money to banks through repos Central Banks are creating money, not private banks Comment from : Gold_d_lion

ok you talked me into dropping a like, you owe us a new video like you promised !!! Comment from : fred smith

Maybe sompary tell us why we have no money except for food and rent it seems like , in modern age we so have triple Comment from : Periklis Spanos

Improve the microphone, please it makes easier to understand for non native English speakers :) Comment from : Hellnato V

One thing I'd like to clear up is if you have deposits at a bank but no loan, does this count as a loan to the bank or not? If not, what does the bank do with the 'money'? I understand that your deposits are technically the property of the bank, although you can call on it at any time Comment from : Joe Curran

It's clear BS Comment from : leonil chachona

суперпраграма 👍👍👍👍👍👌👌👌👌👌👌 Comment from : Гульжамига Алибекова

Thank you for making this video! Have you done a video about (debt) deflation yet? In my opinion is deflation only a problem in the current system, because money is based on debtbrWhat's your take on that? Is money as debt sustainable? Comment from : Johan Zijlstra

loving these videos Thank you! Comment from : SuprBestFriends

Fantastic content! What a weird concept Comment from : BuckeTV

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