How Banks CREATE MONEY From Nothing | Money Multiplier Effect Explained | Think Econ

[@ThinkEcon]

Hey everyone! Thank you for showing the channel so much support over these past two years. If you enjoyed this video or found it helpful, leave a like. If you are looking for more educational economics videos, then consider subscribing to the channel! :)

[@leopard6554]

I'm not a student and won't go to school. I've never studied economics. But recently I've found it very interesting... I don't want to become an economist. I just want to get more knowledge and insights about economics so I can make better decisions in my personal life and understand the world better...!!! Could you recommend any economics book for a complete beginner that is useful and easy to understand? Thank you 😊 I

[@ThinkEcon]

It really depends on your interests. Are you more interested in the financial side of things? Maybe international trade or macroeconomics? Perhaps individual and firm decision making? Behavioural economics? What piques your interest, because there’s many great books out there for me to point you towards! I’m glad that you’re taking an interest in the study. It really does help in everyday life! 😊

[@leopard6554]

I'm more interested in the financial side of things. But a little mix of other areas is fine too...😊

[@keamogetswesetshedi9602]

Well explained!

[@ThinkEcon]

Thank you!

[@danquinn83]

Good video, but isn't the current reserve ratio actually 0%? Meaning banks are actually required to keep 0% of your deposit on hand?

[@ThinkEcon]

In the US? Yes, as of 2020 it’s now 0%. My 10% example was to illustrate the concepts but you’re correct, I misspoke when saying it’s the current rate because it’s now 0%!

[@armendibishi7985]

A bank can create 900$ of bank bookmoney out of 100$ of cash not just 90$ of bank money

[@leopard6554]

So when banks get greedy and put less in the reserve and loan out more, they fail...!!! Of course my assumption is over simplified...!!!😉

[@ThinkEcon]

The concept of fractional reserve banking is all contingent on people having faith in the banking system. Without faith in the system, bank runs occur, and banks fail. There’s a fine line for profits and sustainability, but not all countries have a required reserve ratio, to be honest. It’s up to the individual banks to strike that balance in many cases!