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TRC #654: What Is Inflation? + John von Neumann: The Man From The Future

The Reality Check

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Is the Reserve Ratio a Myth?

The idea that banks need to have a certain amount of real money in their safes in order to lend out a certain percentage is a myth. They can create as much money as they want as often as they want. The reserve ratio has not been positive for over 50 years. No banks then charge the rate they are allowed to loan out to either increase or decrease the money supply that way.

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