Most people think banks lend out money that savers have deposited. But in today’s system, that is only part of the picture.
When a bank approves a loan or mortgage, it usually creates new digital money by adding numbers to the borrower’s account.
In simple terms:
This is why many economists say private banks create most of the money supply.
Because where banks choose to create money can shape the economy:
Banks are still regulated and cannot create unlimited money without rules, checks, and capital requirements.
Most money today is not printed cash. It is digital money created through bank lending.
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