Interesting how the banks create money just from his computers, jut typing and writing the loans the create, is incredible this system was working for many years
I’m finding the $100 deposit bit a bit confusing to follow for now.
If one needs to borrow a $100, why deposit a $100?
…(I get it now)
For those who started reading and understanding well Tom Schauf’s book on lending, there is also the concept that when you ‘borrow’ money, you are creating ‘money’ on the spot. It’s an IOU which gets created. The bank buys government bonds with that IOU and those bonds get stored in a checking account from where the banks lend you the money (that you created). This encourages more inflation (as explained also in the video) as the next year, the banks have to create more money to the government against even more government bonds. It’s a whole topic in its own right however I’m needing to spend more time understanding this concept of borrowing too.
Thanks.
I had no idea how the monetary system worked and for some reason I understand the concept behind cryptocurrency much better. I’m having some real challenges understanding government money and how it can be printed. Especially, considering the use of US dollars all over the world. I might have to revisit this entire section later. Money has value but also it is a representation and the fact that money can lose it’s value is a really scary prospect that I had never really considered. These lessons and discussions have pointed out flaws and issues that I was not aware of.
CBDCs (e-Yuan in particular) or decentralized cryptos (or The Bitcoin Standard exclusively)?
Who will prevail?
i just want to add that SWIFT replacement could be coming sooner than later:
after many countries impacted with sanctions by mostly USA and allies; mostly financial sanctions through the monopoly board SWIFT; China and Rusia now would be using their new board CIPS using, not dollars, Renmibi as part of the transactions;
these would allow countries to use other ways to make global trading:
https://thediplomat.com/2022/03/can-chinas-swift-alternative-give-russia-a-lifeline/
perhaps Bitcoin would come into action as more countries adopt these as a legal tender asset.
like El Salvador;
goverment bond or equity bond
În crypto, derivatives are overcolateralized. you have to put more collateral that what you are borrowing.