Traders & Investors Club

We’ve seen the two main ideas that the general public have about the way banks work.

Both of them are wrong.

That’s not too surprising. After all, most people don’t spend their time obsessing about how banks work. And banking is complex, which means that most people give up trying to understand it.

The money multiplier story says that banks actually create much of the money in the economy.

Allowing people with an incomplete understanding of how money works to manage our economy is very dangerous. It’s like allowing engineering students who don’t understand gravity to build skyscrapers.

Other videos in the series:

Part 1: Misconceptions Around Banking

Part 3: How Money Is Actually Created By The Banks?

For more information, please visit the Postive Money website.