How Banks Create Money - Macro Topic 4.4

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Information How Banks Create Money - Macro Topic 4.4

Title	:	How Banks Create Money - Macro Topic 4.4
Lasting	:	4.12
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This is a myth, the banking system does not operate the way Jacob describes it In reality, banks loans create deposits, and banks create money by entering numbers into a computer
Comment from : LandcruiserFan420

There is no such thing as a money multiplier! It is a mislabeled term Its the worst way possible to represent what is occurring
Comment from : SPEARO TV

Total scam!
Comment from : Chris Irish

I find myself at a crossroads, uncertain whether to liquidate my $250,000 stock portfolio I'm seeking advice on the best strategy to capitalize on this current bear market
Comment from : liu zhang

Doesn't the lendee have to pay back the loan or the whole system breaks? At least, for the most part That money they use has to come from somewhere Isn't more likely the money is transferred from one system to another rather than "created" Whether transferred from international money or raw goods
Comment from : 37Kilroy

Thank you so much for the clear explanation however it seems like fractional reserve banking system give so much power to the banks it's almost scary and something that should be changed/modified Coz look at the reasoning behind the recessions, esp the 2008 Just saying 🤷🏽‍♀️
Comment from : Eyerusalem Haileselasie Solomon

Thank you for the enlightenmentbr-Amar A Mbr(Indian)
Comment from : amar majeed

thank you, now I won't fail my macro course :)
Comment from : Диас Бахтиаров

econ 101
Comment from : Matt Younger

what about a cash withdrawal or 100k
Comment from : Matt Younger

monitizing the debt run on the bank
Comment from : Matt Younger

Sounds like a ponzi scheme
Comment from : James Sung

Where does the 5 come from?
Comment from : Beatles and Kendrick Lamar

How do u teach me more than my college professor
Comment from : sweetly

How many people are here after the Silicon Valley Bank crash and chuckled when Mr Clifford mentioned "bank runs"?
Comment from : James Bond33

Thank you for this video, it was really helpful!
Comment from : Dmitrii Bragari

Thank you so much for this explanation
Comment from : Hà Trang

Thank you fro the way you take the time to discuss with us a better way of learning Economics It seems so much easier to learn from
Comment from : Fantasia Bouchez

And thats how banks create money from nothing For example, in my country(Serbia), CBS(Central Bank of Serbia) set a required rate of reserves at 5, but in 2 years, required rate of reserves is 0 So, in two years, banks can lend all its deposits deposited before 2 yrs
Comment from : Boka Kotorska

Using HELOCS as checking accounts by depositing your income
Comment from : Debie Isaacs

Amazing 👏 you made this so easy to understand! Thank you🙂
Comment from : Onika Bannis

this is some seriously stupid stuff if you watched this and didn't realize he's full of crap, you are not bright
Comment from : Chris

Is the MM no longer a thing since the world left a fixed exchange rate in 1971 and instead uses a floating flare? No gold back IOU money This is antiquated
Comment from : Jay Mills

The money multiplier/fractional reserve banking system is a myth Bank lending isn’t constrained by reserve requirements Banks can borrow whatever reserves they need to meet their requirements They don’t loan out deposits , money creation is a simply an entry on a ledger - it comes from nowhere brbrIt is true that banks create money out of thin air , but it is constrained by demand for loans , capital and liquidity requirements (which differ frombrReserve requirements)
Comment from : JP 72

So money is bullshit
Comment from : DefiantDomingo

But what about when people repay their loans?
Comment from : Drake

Thank you so much sir 😊
Comment from : Ivy Joy F Magbanua

this is so damn helpful omfg thank you so much
Comment from : Nelly Xie

thankyou!!!!
Comment from : Laiba Masood

This guy talks so matter-of-factly about slavery La dee dah banks create money and you have to work to pay it back
Comment from : Norman Plombe

In 2020 they changed the reserve requirement to 0 so does that mean they can create latterly infinite amount of money?
Comment from : Luis Fabricio Serrano Torres

not me just taking lots of economic classes to do an entire economic system in minecraft
Comment from : Quandavious Dingle the III

thank you so much, I was having such a hard time understanding what actually happens and why money is created in the first place 4 days of question marks only for you to clarify my confusion in 4 minutes haha
Comment from : Big Round Seal

Does this new money exist permanently? Or does the government ever decrease the money supply on a certain schedule or equation?
Comment from : Stan Bucasas

Quick tip for you guys: If you are having trouble doing the money multiplier, try doing this instead Use the same formula (1/reserve ratio) and with the number you get multiply it with the amount of money deposited And for the last part subtract the initial money that was deposited from the new amount of money you found: For example $200 was deposited and the reserve ratio is 20 percent The money multiplier is 1/2 which is 5 Now multiply 5 by 200 you get $1000 Subtract the initial 200 from the new 1000 you found which is 800 and that would be the increase in the money supply Hope this helps
Comment from : Kobi Cemal

U r the best!!!!
Comment from : Noshara Brown

Jacob, that is wrong RPD (Reserve Policy Doctrine) was proven finally wrong in 1983Banks need 0 deposits to give out loans They create accounting operations on the liabilities and assets sides simultaneously, thus creating totally new money (increasing usually m2) without touching deposits It's sad you are misleading people here
Comment from : ThePot

love you bro
Comment from : rijan

More like GDP out of thin air If I give my friend 1k and he buys a phone from me for 500 the I didn’t make the 500 out of thin air but the GDP did increase by 500
Comment from : Alex Li

Reality vs academic: the reserve ratio really is not that important Banks lend money as long as they deem it profitable and as long as there are credit worthy borrowers and demands They’ll take care of the reserve by borrowing funds if they have to
Comment from : Afarro

Buy Bitcoin
Comment from : TylerDiebs

Everyone talks about government printing money, but they never mention how banks do the same thing
Comment from : Kyloren Kardashian

First comment in a couple years so this may not get answered Im an eco tchr in TX According to the FED the current reserve requirement is 0 Mathematically, this means that there is no money multiplier since you can't divide by 0 Does this mean that the MM is undefined or approaching infinity? I'm the tchr, I'm supposed to have the answers I am the worst tchr in America Thank you for recognizing that
Comment from : William Maguire

This lesson is nonsense Richard Werner empirically debunked the money multiplier effect by proving banks create all money when they issue loans with no need for deposits or reserves
Comment from : Wide Hotep

There is something repugnant about borrowing money the banker did not work for And they have the power to reposess a borrowers home from money they created out of nothing Some deal that is What a corrupt system Legalized loan sharks
Comment from : Johannes C

'The process by which banks create money is so simple that the mind is repelled'brbrJohn Kenneth Galbraith
Comment from : Johannes C

Dude looks like an off brand Mark Cuban
Comment from : The Road Beers Podcast

My stupid textbook makes simple things so damn complicated
Comment from : This is alien

So banks create inflation That means that non-borrowers subsidize borrowers
Comment from : natechomnicorp

Been watching and learning from ur videos since last year thanks u r the best teacher 👍👍
Comment from : Joel Sundresan

David boreanaz That’s who he looks like
Comment from : monique t hurley

Reserve requirements were reduced to ZERO in 2020
Comment from : Michael Wakeman

lol am not even good at math
Comment from : ivtepanhasak

Banks don't lend deposits or reserves Banks create money when they lend Deposits are used to balance the books He's describing the fractional reserve theory of banking, which is complete bunk The credit creation theory of banking is accurate
Comment from : Kar Far

Another failure of mainstream academia
Comment from : Paul Page

Clearer than MRU explanation, Thanks
Comment from : Thanakrit Thanaathiporn

does it mean that the new money is actually the imaginary new money ?
Comment from : Yash cool yo yo

What gives money value?brNothing
Comment from : Etienne 777

Very great video Explained very clearly
Comment from : Bálint Áts

Wrong, If you really want to know the truth on how the banking system works search my channel for: "How Banks Make Money"
Comment from : John Daniels

This is incorrect Deposits aren’t required for a bank to create loans (which creates money out of thin air)
Comment from : Todd Smith

hey hey hey hey every videos you just hey hey hey -_-
Comment from : Khoa Võ

Why the Uni teachers don't teach like you sir😍
Comment from : DailyMotivation____

ac dc
Comment from : Goodguy Typhlosion

Jacob Clifford is my economics professor at this point
Comment from : Dina Garfield

How does the fed control the money supply if banks create money by lending it? Doesn’t that mean the money supply is always changing?
Comment from : Preston Halle

The central banking system is controlled by the rothschilds
Comment from : Swapnil Khatnani

2014: In the US we have fractionary depositbr0:50br2020, Federal reserve: Yes, but nobr wwweidebaillycom/insights/articles/2020/4/federal-reserve-eliminates-reserve-requirements
Comment from : Massimo C

Can you make a more detailed video on bank balance sheets?
Comment from : Isaac Ong

Su papi muneno?
Comment from : Smxley

Why is no one talking about how this guy looks like mark Cuban
Comment from : David Macias

Such a gifted teacher you are! Wow!
Comment from : It’s All Good

This is the fractional reserve theory of banking IT IS WRONG Refer to Richard Werner on YouTubeIf, after close scrutiny of Prof Werner's arguments, you still believe the fractional reserve theory, please tell Prof Werner he his wrong before you tell me (and why)
Comment from : Anthony Kennedy

Banks don't lend out money from deposits,brThey type new money into existence and make you pay for itbrThey are a central authority that breaks the rules of how currency should workbrFiat money is nothing compared to cryptocurrency
Comment from : Unconventional Wisdom

You sir are an absolute godsend
Comment from : Ali Khan

While banks can create money through the supply of loans, so do credit cards operate under the same mechanics?brChecks and debit cards are backed by checking accounts linked by routing-numbers right, so what are credit cards backed bybrI supposed it is
Comment from : SamsungLG

good explanation finally got it!!!!
Comment from : Become a Web Developer

Man, I have to start a bank now
Comment from : ⵜⴰⴱⴰⵜⴰⵜⴰⵜ ⵉⵎⵣⵉⵢⵏ

I paid 10 grand to be told the same thing but more confusing and also not reviewable for later use smh
Comment from : Parker Hilliker

i was able to build a big income stream during the covid-19 pandemic investing with a professional broker, Mrs Stacey Lawrence
Comment from : kushnir

BANKS DONT CREATE MONEY bro my teach is a #### and this video, Banks take money people have saved up and stored away and put it into the economy for use My god this guywaste my time saying nonsense
Comment from : fighters fight

Thank you for making it so clear I finally understand the whole concept
Comment from : Zil zzz

funny how banks can lend out money they don't haveany of us do that and we'd be criminals
Comment from : Brandon

Hold up but when the bank initially loans out the 90 dollars, the person has to pay it back and can’t deposit it into a new bank because it’s technically not their money, right? That’s how loans work?
Comment from : Omar Mohamed

You're an absolute Legend
Comment from : M D

Do is it correct to say that banks never loan the money they HAVE, they only lend the money they created? And the amount they can create depends on the amount of deposits they have?
Comment from : scarletovergods

"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020 This action eliminated reserve requirements for all depository institutions" wwwfederalreservegov/monetarypolicy/reservereqhtm
Comment from : Samuel Swafford

Thank you!!!
Comment from : Grace Hu

This has been bothering me for years It seems like the only magic occurring here is in the definition of "money supply" There is no net creation of value, because each time a bank loans out money, it also creates a liability such that the net value is $0 Does "money supply" seriously not take into account liabilities? Those liabilities can stack up to $900 from the initial $100, but they don't go away Every time I borrow $5 from my friend, I've "created" money I sure hope the Secret Service doesn't come get me, but they probably will once they learn that every time I repay money that I borrowed, I "destroy" money Looks like I'm a counterfeiter and currency destroyer
Comment from : iamihop11

This helped me so much thank you!!!
Comment from : Sam Stubbs

So wouldn't it be obvious to most that this wouldn't be a good thing,? A form of currency manipulation that directly adds to overall liquidity in slow-short term yet definite exponentual devastation long-term to the value of the dollar? Ideally a balance needs to be detained either adding more people or by removing that excess liquidity
Comment from : Luis Allen

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Comment from : devid hon