This video by Jake Tran gives a simplified summary of the banking industry, and how it’s able to print limitless money. Banks make revenue by collecting interest on loans. Using a hypothetical scenario, Tran explains that a bank is required to keep only 10% of your deposited money, and can loan the rest to other customers. Those loans are deposited in other people’s bank accounts, which can be loaned again, and the cycle continues.
Banks don’t directly print money, but they’re insured by the FDIC, and the Federal Reserve supplies money to cover customers’ existing accounts. The U.S. dollar used to be backed by gold, but it is now a fiat currency, backed only by trust in the government. When the Federal Reserve can print any amount of money, the value of your bank account is at risk. This is why it’s important to invest in assets like precious metals, cryptocurrencies, stocks, land, etc.
