Banking 4: Multiplier effect and the money supply

How "money" is created in a fractional reserve banking system. M0 and M1 definitions of the money suppy. The multiplier effect.

Category:

Education

Tags:

• money
• multiplier
• m0
• m1
• supply
• banking
• fed
• reserve

[HigherPlanes]

Wouldn't it be nice if real world investments were as good as your example.

[metalguitar311]

Thank you for making this video! I want to point out - the whole system is entirely dependent on the banks having perfect lending practices; if there is ever mal-investment, it creates bubbles in the economy when the borrowers do not pay back their loans. This system of banking is immoral because no bank is perfect in its lending practices. Make no mistake: FRB is theft - the gold cannot be exclusively owned simultaneously by the borrowers and depositors. That is impossible.

[jackedup2077]

Seriously, it sounds like the bank just stole a factory and an irrigation system

[BOZ11]

@metalguitar311 "FRB is theft - the gold cannot be exclusively owned simultaneously by the borrowers and depositors"

Yes, exactly! They're creating money by duplicating 90% of the deposits. Thing is, it's all digital now, so the money supply expansion is real, as opposed to Sal's model where the money supply remains at 1000 coins. The bank in his scenario lied to it's depositors about how much they have!! Theoretically ALL depositors should be able to close their accounts slowly, but they can't

[deanarobo]

@Nooby1357 Sorry, its taking me a while to realise who's the real retard here...

[Nooby1357]

@deanarobo shut the fuck up fucktard

[n0star0navid]

I have a QUESTION.I will be happy if someone culd answor it. What if everyone want to teak out there money at sametime. What happend then?

[cathysastupidslut]

@metalguitar311 unless the borrowers and followers had one identity, a number of things could fix this or lead to this example.

a) borrow from the bank you deposit in. (less probably esp if borrowing amount is more than deposited)

b) man deposits, woman borrows, they marry, money is simultaneously owned in unison

c) man borrows money, man deposits money, they live in a state where gay marriage is illegal, LEGALIZE GAY MARRIAGE so those men can be out of debt and have happy lives!

[04tonyd]

It's true, you can't eat gold, but you can wear it, you can fill cavities with it, and you can treat arthritis with it. In contrast, all you can do with fiat paper currency is use it in exchange, and you'd better not keep a large fraction of your wealth in actual paper dollars, since their purchasing power constantly erodes with the passage of time.

[deanarobo]

@Nooby1357 Get down and polish my shoes you swat. Its clearly a typo, he finished the '0' yet the machine didn't recognise this and left the left side of the '0' out. You can even see the middle curve of the '0' before it got chopped off.

[Nooby1357]

you wrote it wrong, you wrote 3010 apples at the end, not 3000

[iamryko]

also what if everyone was to run to the bank and ask for there money who gets the money? first come first serve ?