• chicken@lemmy.dbzer0.com
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    11 months ago

    Money printing. Larger amounts loaned out every year devaluing all existing dollars. The number might be higher but it counts for less. Official inflation figures don’t even cover it since they don’t count things people actually try to use to store wealth.

        • crashfrog@lemm.ee
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          11 months ago

          Loans don’t increase the money supply, though. They increase monetary velocity.

          • chicken@lemmy.dbzer0.com
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            11 months ago

            Most new money enters the system by being created via loans ultimately from the federal reserve bank. This is the primary way the money supply expands.

            • crashfrog@lemm.ee
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              11 months ago

              Right but that’s a lot different than the loan being discussed here, which is when the bank capitalizes its own loans via deposits.

              • chicken@lemmy.dbzer0.com
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                11 months ago

                That’s an assumption about what I meant, but the fact is both create money. Banks loan out new money, which must only be matched by deposits equal to a small percentage of their outstanding loans specified by the reserve requirement. Which not too long ago IIRC was temporarily removed entirely.