6:21 right, the bank has only 1 million in its safe, but it actually has 3 million plus interests on its account. 8:18 I have to say it’s not blindly trust. Here is where an Actuary comes in.
By the logic that "the pie is not limited", we should print money and make everyone rich, but that's not quite how it works right? The reality is that by getting credit, you are impoverishing everyone else. Banks are more or less willing to lend money based on the interest set by the central bank, which is decided based on the inflation rate. People borrowing money are the cause of inflation, and since big businesses and projects are getting the big investments, you are getting poorer everyday. While housing and energy play across the inflation rates and government money, by getting paid the same you are getting poorer. There is no such thing as an unlimited pie, the resources are always finite (or they wouldn't make sense), but the illusion of infinite growth is sure appealing. The real magic here is making a system that can trick those who can't really grasp it into thinking that tomorrow will be a better day and, sometimes, that thought alone is enough to make it come true. We are intellectualising and sophisticating naivety. The economy and politics are deeply intertwined, Capitalism is not just an economic system, it is a form of government.
I like Noah Harari as a historian and thinker. I have read his books and enjoyed them but just like everyone else he should not comment on things he is not an expert otherwise there is a chance of misinformation. What he is describing is a fractional reserve banking which in reality is not practiced in any major economy around the world today. Whenever you get a loan from bank they literally create money out of thin air. www.sciencedirect.com/science/article/pii/S1057521915001477
I love Yuval but right now he is talking rubbish. There is nothing good about a banking system with nothing behind it. This is why capitalism is prone to boom and busts. Which usually hurts the most vulnerable and has become a ritual of transferring wealth from the poor to the rich. Continuous economic growth is not normal. Behind it is a lot of fraud, lies and theft. Why is he espousing the worst things about the modern age? Make no damn sense.
fractional reserve banking is the biggest fraud perpetuated in the history of mankind. "trust in the future" is the same trust people place in Ponzi scheme organizers. The only reason people havn't woken up yet is that the debt keeps growing fast enough to keep everyone deceived. Eventually there will be a massive deleveraging which will collapse the world economy. There's no reason banks couldn't operate on full-reserve systems, where you pay a fee to the bank as their revenues instead of perpetual fraud debt being created so that the amount of interest owed can never possibly be paid back without more debt.
Can't agree> Credit and money creation actually "FORCES" the economy to grow through inflating the money supply. This is unnatural because nothing in the universe can grow forever; even imaginary thoughts end .. as in long novels and poetic masterpieces. Really, what matters is that: Can the ever-inflating money supply make our lives better? and the answer is a big "NO". Not even in the short run. People have become hectic about their life savings and societies all around the world suffer from poverty and economic instability. And in the long run dreams must face reality (we can't live inside a bank). So, the real question should not be "how to get money to open a bakery?"; it should be how to manage all the factors of production and not just capital. If one has the land, labor and the entrepreneurial skills, capital is just an issue of a few setup and variable costs. But modern capitalism has made it all about money through the banking system.To conclude: if you define everything in terms of an invaluable commodity; then everything loses its value. Business owners will drain the lands and other environmental resources dry, they will also fire their employees regardless of their expertise because they can always go ask for new loans to buy new lands and exploit new workers. That's why many contemporary writers who tackled the issue call the modern economic system a system of " Voluntary Slavery".
Well said. I love Yuval but this is nonsense. The expectation of continuous growth is the actual problem. As is the fact that banks have nothing backing these loans which leads to boom and busts that essentially take money from the poor and give it to the rich.
Hi Gaurav thank you for sharing. Excellent lectures. I noticed that these are part of a lecture series. I googled but could not find other videos. Can you please share the link to the series. Thanks
@@chewyjello1 I looked but could not find the series of lectures from where these 2 were picked. I suspect that they were from an online course he gave. Somebody somewhere must've saved them
This guy doesn't understand banking...banks don't need ANY money to make a loan. They only need a Federal Reserve account. A 10% reserve has long been obsolete and irrelevant. Bank of England, for instance doesn't even have the farce of a reserve amount required to make loans. Positive Money banking 101 on youtube has 6 brief videos on how banking works.
