In the last couple of weeks we’ve seen that banks create money when they make loans, and that the only limitation on their ability to…
Tag: clearing
If banks create money simply by typing numbers into a computer, why can’t they create limitless money for themselves, and how can they go bust?…
To understand where money comes from, we first need to picture the banking system. All banks have an account with the Central Bank (for example…
We’ve spent two weeks looking at fractional reserve banking, and I pointed out that although this is the model presented by textbooks, it bears very…