How Banks Create Money

You can't make money out of thin air…unless you're a bank.

Today we learn the surprising truth behind the vault and learn what happens to the hard-earned money we deposit.

The basics of banking has always been that banks connect people in need of money with people holding excess money in need of a safe place to store it. As we learn in this video, banking goes way beyond this simple transaction.

Another major form of income for banks that was not heavily covered in this video includes fee income. This includes things like account service fees, credit/debit card fees and more.

Many concepts in this video were simplified for the sake of explaining concepts. For example, in the real world, people that borrow money typically don't hold on to it as cash and will instead use it to buy goods and services. The person/company receiving that payment will then deposit the money in their own accounts. Feel free to ask questions in the comments below for a deeper explanation on anything covered (or not covered) in the video and I will try my best to answer.

This video was influenced by the following:
https://www.frbatlanta.org/education/...
https://www.investopedia.com/articles...
https://www.cnbc.com/id/100497710

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Music: https://www.bensound.com/royalty-free...