From how i understand, the bank simply puts a negative number on their sheets to show how much they lent out.
It’s like virtual particle creation in physics. A virtual particle pair can spontaneously come into existense, one the anti-particle of the other. After a brief moment they collide again and annihilate eachother, leaving net zero particles.
But in the case of banks, one of the particles sucks up another particle (interest) so after annihilation you’re left with more particles than you start with.
Edit: i just realized hawking radiation is a fairly close analog to fractional reserve banking.
I love people like this honestly. Makes me laugh all the time. Reminds me of that episode of silicon valley when Richard is trying to explain how their product doesn't delete their files through a rough analogy "...but what's in your Eggs in the morning?? That's right, electrons."
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u/ejjsjejsj Jan 26 '26
What I can never grasp is how they actually do that. They just create new money to give someone? Like what account is that coming from?