i’m just going through some basic financial philosophy discussions and i’m just trying to clarify the basics.

how much money is there in total, in the world?

up until yesterday i had assumed that the total amount of money in the world is zero ($0) because what one person has in bank account, another person has in debt at the same time, since money is literally nothing else than a codified form of debt.

now i’m wondering, is this even accurate? if a big bank takes out a loan from the central bank, say, it takes $1B in loan, then it has $1B in money on the account but also $1B in liability at the same time, so the sum is zero. However, there is an interest on the loan, let’s say 2%. Then the bank owes $1.02B actually, while only having $1B on the account. So the total amount isn’t zero, it’s negative. Is this correct?

  • Aniki@feddit.orgOP
    2·
    10 hours ago

    A bank can have $1 mil on hand and lend out $10 mil plus, as long as they have a high enough percentage available for withdrawals.

    yeah but they have to pay back the $10M eventually, at least formally, so they have that as debt (or liability, or whatever they call it) at the same time. thus the sum is zero, where they were before.

    • RoidingOldMan@lemmy.world
      3·
      10 hours ago

      In this example the bank started with $1 million total. Loaned out $10 million. If the guy paid back $10 mil, the bank would have 10x their starting money.