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Fractional Reserve Accounting (part 2) |
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Uploaded on Sunday 21 June, 2020 to the illusion of money |
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How a bank monetizes IOUs in the context of a fractional reserve system |
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In part 1 of this tutorial, we saw how a bank operating in a fractional reserve system can expand the money supply by holding just a fraction of its deposits in reserve. In part 2, a different method is contained in which the same result is achieved by creating checkable accounts and monetizing pledges to repay (IOUs) as offsetting assets to enable the loans. This tutorial on simple fractional reserve accounting is part 2 of 2.
This video is courtesy of the Khan Academy whose YouTube channel is available here. |
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