How can a bank “create money out of thin air”? We must enter the magical kingdom of “fractional-reserve banking,” where deposits are turned into loans, loans are turned into money, and so on, to find out.

Original Article: "<a href="https://mises.org/wire/banks-create-money-out-thin-air-what-could-possibly-go-wrong" target="_blank">Banks Create Money out of Thin Air. What Could Possibly Go Wrong?</a>"

How can a bank “create money out of thin air”? We must enter the magical kingdom of “fractional-reserve banking,” where deposits are turned into loans, loans are turned into money, and so on, to find out. Original Article: "Banks Create Money out of Thin Air. What Could Possibly Go Wrong?"{ai:summary}<p>Banks can create money out of thin air through fractional-reserve banking, where deposits are transformed into loans, and loans into money. #economy</p>

Banks Create Money out of Thin Air. What Could Possibly Go Wrong?

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