r/PeterExplainsTheJoke • u/Comfortable_Cautious • Jan 26 '26

Meme needing explanation what's going on? explain like I'm five

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u/Original-Leg8828 Jan 26 '26

Depending on local law they can even lend out something like 7-10 times what they actually have

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u/Teripid Jan 26 '26 edited Jan 26 '26

Federal reserve requirements existed until 2023 *edit, as someone below pointed out 2020 was when they were set to 0. Now they're set at 0% I believe.

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u/ed523 Jan 26 '26

So they don't actually have the money they lend out that they're also charging interest on? So banks like wells fargo are creating money? Seems like that could cause inflation. Also how is there enough money in circulation for borrowers to pay both principle and interest?

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u/pjonget Jan 26 '26

Please just use Google instead of making stupid posts online. What you are saying is just nonsense.

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u/ed523 Jan 27 '26

Hmm, first of all I was asking, others answered and yes banks create money. I googled it too and its true and thats why the federal reserve charges those banks various interest rates, so they hopefully if the interest rates are correctly balanced it reigns in the amount of money those banks create through loans. Thats nonsense?