Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Economics How do banks create credit. Help!

  • 03-12-2015 1:56pm
    #1
    bobbyss
    Registered Users, Registered Users 2 Posts: 5,276 ✭✭✭


    Have been reading Positive Economics CH 18 Money and banking and Less Stress also. Am flummoxed by the explanations given in the former on PP 243-244. I am not well versed in economics as you will see.

    Can anyone point me in the direction where this concept of a bank keeping about 10% as as a reserve is better and more clearly explained ? How exactly does it work?

    I am very confused by the book's use of the words assets, liabilities and loans in its example. How can the E100 be both an asset and a liability? In its chart it seems to state that a E100 deposit is a liability?
    How can a bank create deposits by giving out loans? The examples make no sense to me.

    Can anyone explain it as simply as possible on an idiot's level. The idiot being me. Much appreciated.


Advertisement