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I've been in debate with an ex CEO of a bank. He says banks lend out deposits and called me a conspiracy theorist.Anyway, two interesting articles Banks do not create money out of thin air, by Pontus Rendahl, Lukas B. Freund In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create private money by transforming an illiquid asset (the borrower’s future ability to repay) into a liquid one (bank deposits); they would quickly be insolvent otherwise. In addition to bank solvency representing a constraint on private money creation, banks require access to liquid reserves in order to be able to engage in money creation. Banks do not create money out of thin
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I've been in debate with an ex CEO of a bank. He says banks lend out deposits and called me a conspiracy theorist.I've been in debate with an ex CEO of a bank. He says banks lend out deposits and called me a conspiracy theorist.Anyway, two interesting articles Banks do not create money out of thin air, by Pontus Rendahl, Lukas B. Freund In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create private money by transforming an illiquid asset (the borrower’s future ability to repay) into a liquid one (bank deposits); they would quickly be insolvent otherwise. In addition to bank solvency representing a constraint on private money creation, banks require access to liquid reserves in order to be able to engage in money creation. Banks do not create money out of thin
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Mike Norman considers the following as important:
This could be interesting, too:
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Anyway, two interesting articles
Banks do not create money out of thin air, by Pontus Rendahl, Lukas B. Freund
In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create private money by transforming an illiquid asset (the borrower’s future ability to repay) into a liquid one (bank deposits); they would quickly be insolvent otherwise. In addition to bank solvency representing a constraint on private money creation, banks require access to liquid reserves in order to be able to engage in money creation.
Banks do not create money out of thin air
Pontus Rendhl and Lucas B. Friund debunked.
What answer can I give to this tweet below? Does anyone have a good article I can read on it.
Its a daft idea that banks lend out of reserves, because reserves are what retail banks lend to the central bank.
Banks lend out of deposits. If you don't agree then explain why deferred spending in the form of deposits is always slightly greater than loans granted.