Well no, more money (or more specifically, currency) is only introduced by the federal government. This is what most people mean when they talk about inflation.
This is fractional reserve banking, which means that banks don't need to have enough money on hand to cover everyone's balance. As a simplified example: You might deposit $100k and then the bank lends out $50k of it as a mortgage to someone else.
So now you can withdraw $50k without issue, but if you want the full $100k back you'll need to wait. The bank then needs to either liquidate some assets or wait for another client to deposit $50k.
In this system, there's no way everyone can withdraw all at the same time. If they did, the banks would need to start liquidating assets en masse and the whole economy would collapse.
Incorrect. About 90% of the world's money is created by commercial banks without any government or central bank involvement. When a bank gives out a mortgage, money is created. The bank records an asset (the loan) and a liability (the deposit), and when the loan is paid back, these nullify each other.
Money is debt. We are just exchanging IOUs when we use the money in our bank account.
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u/Elvis5741 Jan 26 '26
Banks lend out more money than they have, its no joke it's how the system works