The MMT Podcast with Patricia Pino & Christian Reilly cover image

#126 Dirk Ehnts: How Banks Create Money

The MMT Podcast with Patricia Pino & Christian Reilly

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How Commercial Banks Influence the Level of Commercial Bank Money in Circulation

Commercial banks are not the government's creditors. The government has own bank and issues its own money. That money coming into being causes commercial bank money to come into being. And that's why the government can afford to buy any trousers priced in its currency without limit. We're going to be talking to dirk about this in a moment, but for more on the mechanics of banking and central banking, you can listen to our episodes 13 and forty three. For more on the real spending constraints of governments that issue their own currency, it helps to understand inflation - i'd recommend our episodes 65, 104 and 123.

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