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Fractional Reserve Banking... not what the textbooks tell you.

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Published on Dec 22, 2012

Fractional reserve banking explained.

This video tells you all about money creation in our widely misunderstood debt based monetary system (often labelled fractional reserve banking). While this video does use the UK as an example, the principles apply equally well to the US (federal reserve) and European (ECB) systems.

This video describes how the "money multiplier" model of our money supply is junk and should not be taught to students...

* Standard & Poor's chief global economist describes the Money Multiplier Model as a "defunct idea"

* Michael Kumhof, Deputy Division Chief, Modelling Unit, Research Department, International Monetary Fund said "the textbook treatment of money in the transmission mechanism can be rejected".

* Mervyn King, Governor of the Bank of England 2003 to 2013 said "Textbooks assume that money is exogenous." ... "In the United Kingdom, money is endogenous".

I could list many more...

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