How Banks Create Money

[@HeshamMuffini]

3 things that helped me and literally changed my life 1. I stopped watching porn 2. I read the book called ‘25 Money Secrets From Donald Trump’ 3. Stop drinking

[@HairyBalls709]

Did you just stop watching porn or completely masturbating

[@Rainleemusic]

I just about to go to sleep, then my brain start asking how bank makes money. Now that I got the answer, I may sleep in peace 👌🏻

[@kdv_fit]

Start investing lol

[@alessandrorona6205]

Same for me.

[@raeeznjr]

Bruh 😂😂 same

[@DarylSkinner]

I'm the same watching this as I'm in bed 😂

[@RioLajasWolF]

Same here.

[@stuartporteous7762]

Banks don't need deposits to issue loans. They create brand new money when they issue a loan. Central banks have stated this fact for quite some time.

[@01ProFfs]

Thank you very much for pointing that out. It cannot be told too often.

[@gabi.a]

what they say in the first part of video makes no sense... I wouldn't be able to acess my money if it was used by the bank to make loans... they corect themsleves at 2:30

[@y...salvador...y1497]

Absolutely, they can print money from nothing while we can't!!! they cause inflation, and that makes people's money that they worked hard for less valuable every time!!!

[@johnmichaelbnuez5444]

What do you mean they create new money when they issue a loan? Where does the money come from? From the client or central bank?

[@sierra1513]

They change a number on your account, that's literally all They do, it's money from nothing

[@karfar8029]

Banks never lend deposits. Banks create money out of nothing whenever they make a loan. The fractional reserve theory of banking, like the financial intermediary theory of banking is complete bunk. The credit creation theory of banking is accurate.

[@thefreedomrebelclub1865]

They are talking about ratios bro. Reserves held measured against new money creation. The explanation is simplified to one person to make the process easier to understand.

[@IndexInvestingWithCole]

Banks cannot create money out of nothing so no, you are complete bunk.

[@phatlewt2932]

@@thefreedomrebelclub1865 it's insanely disproportionate

[@alfredoclarajr.2562]

When I watched the first 30 seconds, I knew I'm in a right video.

[@hyeeagle]

Correction… Bank give you 0.1% interest to your savings account not 1.0%

[@PranavTheGreat1]

In indias its 7%

[@mr.rachetphilanthrophist601]

No. In india it is not that much, my brown friend.

[@Zularus]

This video is the neo classical view on banking, this is not how banking actually works. Banks create loans in a debt credit relationship, the bank creates money out of nothing but once the money is payed back the money is destroyed.

[@RomeoRuber]

I‘m not an expert but I think that, at least in Europe, the banks actually need to refinance the money that was given away as a credit as soon as the customer is using it. I mean otherwise they wouldn’t even need any money and could give endless credits.

[@raymichael8628]

This helped a lot. I was reading an Economics book and I was kind of confused with the 10% reserves and creating the money part. Thanks!

[@mjsmcd]

Fed eliminated reserve requirements

[@Shad-u8y]

Bro, I am also Researching about it... I want to dig deep cause I didn’t understand the concept clearly in my book...now I get it...

[@mjsmcd]

They done lend out reserves ,they classify loans as deposit liabilities thus creating money

[@legend1645]

What is underground banking?

[@theoneandonlyworldruler418]

loans just get created out of air.

[@dakuten7883]

bippity boppity...bank?

[@JohnDaniels]

It is was worse that this, when a loan is created the money is created and the bank gets to keep the interest.

[@heavymeddle28]

This video explained what I haven't understood in my 49 years

[@heavymeddle28]

@Blue Traveller what? Just because I go to a barber doesn't mean I know how to cut hair

[@heavymeddle28]

@Blue Traveller I really don't know what your point is. This video explained what I didn't know before. To your question if I've ever been to a bank is of cause yes. It doesn't mean that I know how a bank works. If I did I wouldn't have watched this video. Now I do understand better. What is your point?

[@heavymeddle28]

@Blue Traveller I still don't know what your point is. Why don't you make a video or write a book if you want to educate people?!.🤔

[@ssamerica3062]

Tbh I came here so I could more easily understand the Kurzgesagt video. Thank you

[@matthewlaughlin7082]

Training to be a Teller and this helps more than the modules!

[@laurissamiller4364]

I am sure you know the reserve requirement was lower to 0 in 2020. I liked the video, but it would be nice if you emphasized that all bank money is created. What the Federal reserve does is supply the base for money creation. Other than cash the money created by the federal reserve is held in the reserve accounts in banks.

[@topapps4953]

keep it up bro you are making a great content it's so sad that u didn't upload a video for the last 3 months

[@Wisdomseeker1028]

So how else do we expect banks to make loans? Obviously they need to loan out money deposited by others and make it available for the depositors to withdraw

[@sparksolutions2017]

Great video!!! This stuff is hella interesting

[@piyushbhardwaj2775]

Can I use this video in my video

[@feelgoodhal9709]

How banks work: - customers deposit money and gain interest - they take that money and loan it to businesses with interest rates - the difference is the bank’s profit - only 10% actual cash reserves needed in the bank

[@paskahousu8884]

How banks really work: -they use people, company, literally everything what you can loan money, goverments etc in slavery... It is quite shocking how so small amount of people understand this. Our current financialsystem is based on dept... With usury it is slavery. When capitalists ruled europe, practising usury was forbidden and you were killed if you practised it.

[@jaysupportsquad675]

I have a question. So, for example I deposited 100,000 in my savings account. The bank loaned 40,000 from my savings to X, and credited this to X'schecking account. X issued a 20,000 check to his friend. How much cash are we talking about? Is it still 100000 or do I consider the 20k and 40k? How much cash then are available to me, the bank, X and his friend? Is my 100k still available to me? Thank you I was just confused.

[@ThatAverageMTBer]

The 100,000 is still available to you

[@neilkadakia6204]

Great video. Subscribed. How did you make your animations? What software?

[@david2am]

one of the best videos! thanks a lot

[@myloz6013]

Thank you. Short and very informative

[@rebeccasummers4911]

Can you explain bank certificates and how they work?

[@jasoncampbell4203]

So... banks won't loan money if there's too high a risk of loss? Loss of what? Money that didn't exist an hour ago?

[@alejandroavila9940]

Can I create my own bank? And how?

[@MusicLyf4]

Yes, go talk to your regulator. Most likely a crentral bank in your country

[@squidwardleg]

u need doctor degree, bachlor and master

[@mrliamalan]

Is the Federal Reserve sustainable? 1996-2008: GDP ↑45%, Monetary Base ↑46% 2008-2020: GDP ↑32%, Monetary Base ↑600% Prior to 2008, the Monetary Base and the GDP were 98% correlated reflecting the reciprocal relationship of money and economic expansion. Can the current rate of monetary expansion without corresponding GDP growth continue without consequence? *Bloomberg sued The Federal Reserve in 2011 and uncovered a $7.7T secret bank bailout not represented here.

[@trentonwhite1814]

Wow!!!!

[@cristiannicolae6309]

Because most of that money is going into loans for asset purchases, which are not taken into account when calculating GDP. It also explains why you see huge price inflation in stocks and real estate. PS: Hope you don't believe fractional reserve is how money is created (read through the comments if you want to know how it actually happens)

[@1andtheOnly]

This Video does not say the full story. It just tells you half the truth.

[@thabangkanti]

Thanks for the video💯just what I need to learn📝📝📝

[@realitycheck297]

Banks cannot lend their money. Money is created whenever you sign a loan agreement, (A promissory note, aka IOU), so you are borrowing money that YOU created. When you pay it back, it merely disappears and it is as if you hadn't created it. That is except for all the Interest you paid to the bank for being allowed to borrow the money you yourself created. Simples!

[@dekippiesip]

Actually only central banks only create money. If you deposit money on your bank, then a large part of your money is being lended to someone that gets a loan. So indirectly someone else is borrowing YOUR money. The €19.000 simply doesn't exist. It is simply €10.000 of wich €9000 is being lended out and €1000 is actually in the bank. A bank is simply the middle man between the set of depositors and the set of lenders. To put it really simply. You have a group of dudes that have a lot of money and don't know how to spend all of it, and you have a group of dudes that have some really great ideas but don't have the money to finance it. The bank then serves as the middleman of the economy, making sure as little money as possible is not being spent at any moment. The problem with the financial crisis was not this fundamental concept, this is a great way of using your potential to the fullest as an economy, but the fact that Banks where to lenient. They lended their money to dudes who couldn't pay it back with interest, and if the borrowed money doesn't return that means trouble for the depositors too. It's always expected that some lenders won't be able to pay back their debts, but if too many can't the bank risks going broke unless saved by the taxpayer. The solution is simply that you don't lend out money to idiots, only lend out to investors with a really good plan that is highly likely to bring in more money than the start up costs.

[@lucapastore5816]

Uhh, thank God there's still someone understand credit creation while the whole world getting crazy over 9:1 fractional bs

[@JohnDaniels]

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford

[@royalty2924Love]

I don't understand the guy with the cash part. Did he deposit his money as well or its from the first money deposited?

[@lachlanhyde1924]

Jesus socialist, incoming...

[@murtazaali2337]

But for this they need lots of new notes how they accrue it?

[@ericalmeida4917]

amazing content

[@mrosjo]

This was very helpful, thank you.

[@Mario_Giovanelli]

I heard the Federal Deposit Insurance Corporation does not own any money, and that's why we pay it all back in taxes.

[@yuriygrief7986]

It's insane arithmetic to sum up 10k of deposit with 9k of debt and conclude that we have 19k in economic... Let's imagine we don't have a bank in the equation: I've just lent 10k to my friend. He can use 10k money (just like credit) while I have his liability to return them (just like a deposit). Do we have 20k in total now?

[@matheuscarvalho6601]

How someone get's a loan to deposit in another bank for a low rate?

[@cswann6662]

That’s where it went wrong. No 1 deposits money they borrowed from 1 bank into another bank. They spend that money on a liability or invest it into an asset that will cash flow or make a quick profit.

[@AmoreMemes]

Fun fact normal banks brands don’t print money but the central banks like Bank of England.

[@charlie3k]

S T O N K S

[@romanferrari]

Can someone explain to me how 10k - 9k = 19k?

[@santiagoespinosa1229]

You still can access your 10k and the other persons the 9k but that 9k was generated from the original amount

[@travisfubu9053]

This is a misconception banks do hot necessarily lend you other people's money they just create the money when anyone asks for a loan

[@stuartporteous7762]

I've read that also. It still hasn't clicked in my head why they take deposits if they aren't intermediaries...? If they create money when issuing a loan based on their confidence that you can repay, why take deposits??

[@ErikPT]

Yeah we call it financial assets aka credit derivatives

[@noctsickversusTOBETOLD]

@@stuartporteous7762 INTEREST

[@cristiannicolae6309]

@@stuartporteous7762 They take customer deposits in order to legitimize bank deposits as a form of money. That is to make the public believe that bank deposits can be converted into currency at any time, and thus it's as good as bills and coins. This is what ultimately allows them to artificially create new deposits (money) when they issue a loan. If they didn't do this, the public would just see it as a scam.

[@warmike]

When you've lent money to the bank you don't have that money in cash, you have a security worth that much. In the example with $10k, you have a $10k security, the bank has $1k and a $9k security, and the borrower has $9k. If we would consider these securities as money, then corporations and governments issuing bonds would also be creating money, but that's absurd.

[@justworkingfortheweekend8504]

Does banks make money off a chequing account

[@gunnarK-j4w]

Yes, they like those deposits the most because banks don't have to pay interest on them.

[@chrissadyg3109]

Covid19 it’s 0% now a fractional reserve anymore

[@beatqueenofcrud]

welp guess the whole banking system is fake and the banks can give fake loans to everyone and double their money in minutes

[@bhushanbankar2023]

But I have doubt,if they are giving our money to other folks,then how they manage money of us, means we whenever can withdraw money from bank ?

[@prakasheen4u]

Great info..

[@mysticjason9259]

So when is the revolution?

[@ethanpetersen810]

1:01 That’s it? Holy cow!

[@timboevingloh1340]

look up richard werner money creation theory, this is fractional reserve theory which isnt correct

[@lukeschwab5327]

Who takes out a loan just to put it back into another bank? That part doesn't make any sense to me. Can someone please explain and help me understand?

[@matthiashuisman8739]

You will receive the money of the loan because you need to do an investment with your company, for example. How would you afford this investment when you do not have the money in the bank from the loan? As a company or person you sign for a loan and you will receive that loan into your bank account, otherwise you could never do your investment. You have to need the money of the loan in your bank account, otherwise you could never pay your investment you want to do. Hopefully you understand it.

[@mohammedrah3694]

Great video 👍🏼

[@henryfamurewa4213]

Great and informative video

[@SkystruckOnline]

WHO THE FUU DOWN THUMBS THIS? Fantastic content!!!

[@sizzelot]

Why would anyone want to borrow at 5% and then deposit that money into a savings account that pays 1%? That is what he said happens that causes the money supply to increase, but that doesnt make sense.

[@Noah-sl8cu]

There has to be a better way right? Not tying money to work seems dangerous but now as an adult I see why we have financial crashes no way we don’t have a smarter system then this 😭

[@khalidahmed1595]

Well described 👏

[@salimmohammad4559]

Useful Info

[@Sarah1997-1]

Who started banking system and why???Can anyone explain?

[@asambeeyoutubers2804]

Who created money? That person or persons made slaves out of everyone

[@STRAWMANburner]

0:20 Dude, it's against the law for banks to lend out ANY money that belongs to any of their customers. Where did you get this silliness from? Just go download and read modern money mechanics if you wanna know how money is made.

[@Anand10000]

how is it "creating money" if you are just transferring one person's money to another only without telling the 1st guy that his money is with someone else now??

[@billsipsis7629]

wait so if I deposit 10000$ and 9000$ is given to another person doesn't that mean that the banks are printing money out of thin air?

[@tarekhamouda5125]

That does not make sense, when I deposit a 1000 in a bank, the bank will debit cash balance and credit the client account, then when the bank loans out money then it will credit its cash balance and debit the other client loan, so total amount of money on the balance sheet should remain at net, no new money created

[@tarekhamouda5125]

Money is created only when the Fed buy deposit certificates from other banks with new money

[@gabi.a]

no one explains this properly, fk sake but I think I finally got it: the bank has to have 10% of it's total balance in cash, so if you deposit $100, the bank can pretend it has $190, because it still has the fkn %10 cash its obligated to have, and know the bank can loan $90 made from "thin air". This is a inflationary force. When the person who took the loan pays it back is a part I still don't get, cause I've heard the money vanishes.... I fell like crying from joy, I've been trying to understand this for MONTHS 🥳😭

[@erensolmaz2435]

Thanks❤

[@Uncutwith_Rudra]

Thanks 😊

[@Naidu-k8m]

Lets put it in a nutshell. Take from Peter to Paul and Mary. Then take from Paul to pay Peter. Then take from Mary to pay Peter. Obviously there has to be fixed time structures to allow some freeplay.

[@ahoh3214]

I don't get it. Why do people get loans and then just deposit them in the bank? Don't people get loans because they want to buy stuff with it???

[@irmansyah4022]

The explanation video about banking is very clear, helpful and increases our knowledge. Thank's 🙏🙏🙏

[@ECO19060]

Wonderful...Vedio

[@rahulporal]

You had me at Five minute....

[@maunebelle6709]

Someone give me the monke explanation I’m too dumb for this

[@DavidEVogel]

Did the video explain “How money is destroyed?”

[@dogchaser520]

I'd like to know how banks are using our deposited money now that Glass-Steagall was repealed. (This arguably caused the 2008 crash.) Are they investing it in risky ventures such as the stock market?

[@roshanofficial3580]

Nice

[@H-_.9]

I still don't see the creation of money. So the individual is loaning the money to the bank. I don't see that money doing double work only getting loaned back out. I don't see twice the money out there. you have no money till you use it. at that point doesn't the bank need to have the money back from whom they loaned it to for you to use?

[@justcurious1940]

I'm sorry for interrupting this comment section but I'm just curious do u guys think that bankers are smarter than programmers or the vice versa

[@DistributistHound]

So pretty much 95% of the money has to be repayed with interests at some point and the economy of goods and services lives on a perpetual mortgaed money flow, we could only hope to capture some through salaries, profits, leases and dividends and help sustain it through savings that are deposited in the bank so the financial sphere doesn't crack Why the banks own the money and not the workers and entrepreneurs?

[@worldfamous260dewitt]

Indeed

[@ricksonpat4451]

Actually there is no limit on the reserve that a bank must have Fractional reserve banking is a myth!

[@rossboyack7434]

But remember the FDIC no obligation to pay you back right away fifty years before you got all your money back

[@Ryansk2003]

I’m lost

[@rzu1474]

Isnt that a ponzy scheme?

[@zelanahmed4864]

Loans Create Expenses!! So they can print more money!

[@venkateshp1564]

Awesome

[@kosmiktutpik6222]

Learn here kzbin.info/www/bejne/mV6wkJ6Mj7mZa5I

[@davidmacias4991]

Infinite banking

[@daryushowell6530]

So there is no money in my account in reality?

[@justforthelols286]

this is not how banks create money!!! banks create money when a borrower wants a loan- once the loan has been approved new money has been created. the money did not come from someone else's account or the bank's reserves , it was simply created when the bank purchased the promissory note from the borrower.

[@illuminatiaqi6130]

So If I give my bank 10k then I loan them 9k I make 19k wow thanks man!!

[@beatqueenofcrud]

well.. not really

[@spiritbear2445]

I'm confused about that part of the vid

[@spiritbear2445]

@@beatqueenofcrud do you understand it?

[@FyreFrags]

@@spiritbear2445 you technically dont make 19k. if you deposit 10k and get a loan for 9k, the bank owns the 10k you had earlier so 19k is pushed into the money supply but you dont necessarily make 19k i believe. I may be wrong. hope this helps to clear some stuff up though

[@shahonazkarim1794]

well yes but actually no

[@yolobolo3306]

zajebiste❤

[@panoko6950]

Zgadzam się

[@xzjulius]

Keep it up

[@Elsa-qy9hr]

They have to do HARD WORK keeping our money safe😂 that's ridiculous

[@abrahamruiz8693]

I don’t get how it turned to 19000 if he has his money cash

[@lachlanhyde1924]

The bank can essentially create the other $9,000 out of thin air. The fact that the borrower has to pay back the $9,000 plus interest leads to its existence. Like the video said, it literally increases the money supply. :)

[@iamihop1123]

@@lachlanhyde1924 Here's the part I don't understand: that $9000 loan has a -$9000 debt that is created at the same time. Are debts not included when calculating money supply? If they aren't, then you don't need the deposits at all. Every time anyone borrows money, formally or otherwise, they're increasing the money supply.

[@lachlanhyde1924]

@@iamihop1123 From my experience I don’t think debts are included in the money supply. If you have a look at the amount of money that has been injected into the economy by central banks recently, that has increased the money supply dramatically, all the while increasing the amount of debt that governments hold. I think what this video is saying is that when banks receive a deposit, they must retain a certain amount (known as a reserve requirement) of this deposit in order to satisfy liquidity and capital needs. However, they are able to lend the remaining amount. Through this, they are able to turn a $1,000 deposit into $1,900 in the real economy by retaining $100 and lending $900, while still upholding the financial claim of the initial depositor’s $1,000.

[@jaezryl]

That is how the banks pool money. You deposited 10,000. Banks gain 10,000. Banks reserve 1,000. Bank lends the 9,000. Business gets 9,000, earns then pays the bank with interest. The bank has now in principle 19,000 plus the interest to be used. This is the idea, at least.

[@saphirah6584]

But „making“ money is just wrong. What they are doing is taking your money and lending it to others. The bank does not have „more money“. In theory 2 people do have more money on the banking account than before. But this system only works because you do not withdraw your money. So all this does is give your money to others. If suddenly all people would withdraw their money the system would collapse.

[@Wol7fie]

If I put 100k money in bank with 4% interest do I earn 4k monthly?

[@Benjamin-od8od]

yea if the bank borrows all your money at once which is not always the case and then they dont repay it back on time (its usually repayed back pretty quicky)

[@beptex2858]

But it wouldn’t be monthly unless the bank uses 10% of your 100k deposit to lent it to someone, right? My point is that you will only earn money if the bank lends 10% of your deposit to someone from the interest rate. Right?

[@stuartporteous7762]

Interest in an annual payment

[@KAPUSIJAPAN]

“You can print money but you can’t print wealth”

[@kalkishiva3554]

Just print the money

[@simonpeyton-n3h]

u cant just print the money as that makes all the other money in existance have less value

[@MrTaloul]

basically money is a scam or more specifically modern money is a scam

[@Soma-7662]

in case of Lebanon 🇱🇧, the FDIC went bankrupt 😑

[@VisionsTalent]

As a teacher I must say this is a great video

[@chiravalentin]

as a teacher?!? you should not be allowed to teach just because you believe this crap and can't find the obvious gaps in his logic. if you put 10K in a bank and all goes in a deposits pot! from there the 9K for a loan will be taken and not from the 10K! are you serious?!?!?! if the first guy takes the 10K out he will not take his actual money out but again from this pot! no money is being made here! Idiocracy was a documentary about the future... it sure seems that way... I am astound....

[@VisionsTalent]

@@chiravalentin wow. You sound like a great person. I should not be allowed to teach because I like a video that you don’t? Lol. There is an obvious gap here if a CARTOON can make you feel that way. Ok KZbin bully lol.

[@VisionsTalent]

@@chiravalentin furthermore it is a short so obviously there is more to it than that but you are truly a sad person to attack me that way over a simple opinion about a cartoon. I hope your life gets better.

[@chiravalentin]

@@VisionsTalent no. you should not be a teacher because you promote fake news like this. who would want to have a teacher for their kids that is a flat earther or believes in adam and eve aka "cration"?... ups... forgot about americans...🤣🤣

[@VisionsTalent]

@@chiravalentin you’re life is miserable life. How do know what I promote? You are making assumptions of my opinion and we know what they say about people who make assumptions. One statement is not to characterize me. I’m over this conversation. Enjoy your weekend.