Understanding Economics - Lesson 4: Money & Banking (Part 6/6 Fractional Reserve Banking)

[trollwarlord3]

this would be near perfect if you have not messed up the audio and some words.

[zalida100]

Great video series. Thanks V much. I can see that paying a loan is deflationary. I dont understand defaulting on loans as deflationary. I mean if the money was spent into the market and inflated the money supply, then the failure to remove it from the market means the money supply is not deflating. The loaned money is still in the general market.

Unless it just prevents the banks creating more money, but that would just be slowing the rate of inflation, not really deflating. I'm missing a bit:)

[t3hsauce]

This is great. A clear and concise explanation FRB. Favorited.