PositiveMoney website says the following:
Here’s a fact that not many people know. A bank doesn’t actually need to have any real money before it can make a loan to someone. When you take out a mortgage from the bank, the bank doesn’t take that money from somebody’s grandma’s life savings.
No. Instead, they simply open up a computer, and type some numbers into your account.
Interesting and pretty damning view. I don’t have enough financial education to judge these statements. I would hold the temptation to accept this as a fact, and probably try to listen to the other side also. For example: I would at least ask how do stuff like CRR(Cash reserve Ratio) for a bank work?
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This blog item was published by Ritesh Sinha.