If You Don't Understand Credit, You Don't Understand Money

Most people believe banks lend out money that someone else has deposited. But what if that's not how modern banking actually works? In this video, we break down one of the biggest misconceptions in economics and explain how commercial banks create the majority of money in the modern economy. Following economist Richard Werner's famous observations inside a German bank and the Bank of England's own publication on money creation, we'll explore what really happens when a bank approves a loan. You'll learn: • How commercial banks create money • Why banks don't simply lend out deposits • What double-entry bookkeeping has to do with money creation • Why loan principal destroys money when repaid • Why interest remains in circulation • Why mortgages dominate bank lending • How credit influences house prices • Why understanding credit changes the way you see the financial system This isn't a conspiracy theory. It's how the modern monetary system actually works. Whether you're interested in economics, investing, personal finance, banking, inflation, real estate, or simply want to understand where money comes from, this video will completely change the way you think about money. If you enjoy videos that explain the logic behind money using evidence, official sources, and simple examples, subscribe to Logical Money for more. 📚 REFERENCES Bank of England — Money Creation in the Modern Economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy Richard Werner's research on bank credit creation and modern banking has also been referenced throughout this discussion. Bank of England paper (mentioned in the video): https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy Subscribe for more videos explaining: • Economics • Personal Finance • Investing • Banking • Wealth Building • Inflation • Financial Markets • Monetary Policy • Real Estate • The Logic Behind Mon