Credit Creation and the Money Multiplier - How do Commercial Banks Make Money?

Credit Creation and the Money Multiplier - How do Commercial Banks Make Money? A video covering Credit Creation - How do Commercial Banks Make Money with the money multiplier?

Instagram: @econplusdal

[superninjarobotgirl]

You are the reason i am doing a degree with a focus on economics. At AS level i originally got a D and after finding your videos i ended up with a full UMS A* at A2. There are no words for how grateful i am that i found your channel and subsequently found a subject i love so much! keep up the great work!

[sophiesam]

I am a student in kenya and you have been of great help thank you so much

[josephmorgan]

This man will honestly never know how much he has saved me in my A levels

[AAA]

This was explained so clearly that it's almost unbelievable

[aliatharmasood]

Your videos have been a massive help all throughout my A levels, especially, year 2 when I was really struggling with eco! Thankyou so much❤

[bdpkdec]

Shouldn’t the arrow for “ return” be going from the bank to the saver since the saver will benefit from the interest rates on their savings accounts?

[laibaqasim]

Thank you for this ! Gave my A levels exam studying from your channel ! Got an A💕

[samhitam]

in my A Levels rn and you are literally saving my grades

[bru]

Finally I catch up the content here after watching multiple videos. It's a very good platform to grasp concepts quickly👍👍👍

[freechurchpress]

"In the modern economy, most money takes the form of bank
deposits. But how those bank deposits are created is often
misunderstood: the principal way is through commercial
banks making loans. Whenever a bank makes a loan, it
simultaneously creates a matching deposit in the
borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the
description found in some economics textbooks:
• Rather than banks receiving deposits when households
save and then lending them out, bank lending creates
deposits.
• In normal times, the central bank does not fix the amount
of money in circulation, nor is central bank money
‘multiplied up’ into more loans and deposits." Money creation in the modern
economy

By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.

[mumtazwaseem]

This man's a savior for me in professional accountancy studies❤❤❤

[kingsolomon]

One problem, since the economy needs continues debt or else we get deflation like we did in 08 because the interest to pay the debt never existed in the first place, fractional reserve banking is nothing more than a ponzi scheme and is doomed to fail.

[Stay_Informative]

Man the only thing I can say lots of love and respect from Afghanistan, I really enjoy your videos.

[mcjon]

youre a god . and bank runs are scary- what actually happens to the individual if they want to withdraw money during a bank run but the bank doesnt have it? Have they just completely lost their money?

[obedbaidoo]

Wonderful 👏... you are great teacher man. You've made it very simple 👏

[parthivchandrak]

Watching this at 1:28am. This guy is insane!

[matthewlangley]

If a saver deposits £100 at the bank, and as you say, the bank keeps £10 on their books, while lending out £90, the resultant effect would surely be that no new money is created. Rather it is moved around. How is this credit creation? There is no explanation for credit creation in this explanation?

[ridexfreeride]

thank you so so much I couldn't understand this before you explained it

[thomasbaker]

It’s also sustainable if and only if the bank lends the newly created money responsibly. Lets say all this new money, created out of thin air, is lent out into the housing market and at the same time the number of houses remains fixed. You don’t need a degree in economics to understand what will happen to house prices in this situation. In fact you just have to see whats happening to house prices in the world right now.

[thesyangjali]

Thankyou for this wonderful explanation you create curiosity among your students