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Old 12-23-2009, 08:03 PM   #8
Jedi Ninja
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Banks don't create money out of thin air. When they lend money, they either use money held in deposit accounts, issue bonds, borrow from other banks, etc.. The idea that banks create money is a misunderstanding of what the money multiplier is.

See here: http://en.wikipedia.org/wiki/Money_creation
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