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RE: People don't understand money. We really should. We really should try to explain it super simply.

in #money8 years ago

lets assume this is a series of low interest business loans at 8% yearly for 1 year

that $100 deposit generates for the bank in the first year (assuming NO repayment vs the loans);

$1900 in fractional reserve principle amounts
$152 in loan interest

If the any of amount of the loans are repaid, they generate even more money at a huge rate that's literally created from no where. They are not loaning out money that exists, it only exists once someone removes it from the bank and requests cash.