Debunking Economics - the podcast cover image

Banks, reserves, lending and money supply

Debunking Economics - the podcast

CHAPTER

Understanding Banking Mechanics

This chapter explores the practical workings of banks through the fictional Dobby Bank, discussing key concepts like banking licenses, electronic transactions, and the nature of deposits. It challenges traditional banking models by clarifying how loans create deposits and examining the role of reserves in financial stability. The discussion highlights the confusion surrounding banking operations and the necessity for banks to manage reserves and liquidity effectively.

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