A somewhat political fact, but one that made some of my friends dumbfounded:
When a bank issues a loan, it generates that money literally out of thin air and credits that money to the loan account rather than using deposits they already had. For example, if you want to borrow $100,000, the banker approves the loan and doesn’t hand over cash or move existing money around - instead, they just go on their system and credit your account with the sum, that’s it.
A somewhat political fact, but one that made some of my friends dumbfounded:
When a bank issues a loan, it generates that money literally out of thin air and credits that money to the loan account rather than using deposits they already had. For example, if you want to borrow $100,000, the banker approves the loan and doesn’t hand over cash or move existing money around - instead, they just go on their system and credit your account with the sum, that’s it.
Which is why a “run on the Bank” or “Bank run” is unsustainable for Banks these days.
As of March 2020 the reserve requirement for banks in the US is 0%.