Everybody Should Read This Explanation Of Where Money Really Comes From: BANKS

Everybody Should Read This Explanation Of Where Money Really Comes From: BANKS

They would primarily serve as places that process payments and hold deposits, but they would be stripped of their most pivotal function, which is creating money.

It explains how, contrary to what people might think, a bank doesn’t make loans, by taking the deposits of a client and then lending those deposits out. Instead, the bank creates money out of thin air. If you want to get a mortgage for a house, and the bank deems you to be credit-worthy, it puts the amount of money you need into an account. That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank.

http://www.businessinsider.com/where-does-money-come-from-2014-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

 

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