Re:Money creation in the modern economy (2014) [pdf]
by k2enemy on Thursday September 09, 2021 @04:57PM
(#28474560)
When banks "create money" there is a matching liability already in place -- the claim that some depositor has on that money. The bank isn't "richer" by having made that loan.
An imperfect analogy is if you buy a car for 20,000€ using a credit card. You haven't paid any real money, but now you have a liability that the credit card company will eventually claim.
An imperfect analogy is if you buy a car for 20,000€ using a credit card. You haven't paid any real money, but now you have a liability that the credit card company will eventually claim.