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Banking Explained – Money and Credit

Banks are a riddle wrapped up in an enigma. We all kind of know that they do stuff with money we don’t understand, while the last crisis left a feeling of deep mistrust and confusion. We try to shed a bit of light onto the banking system. Why were banks invented, why did they cause the last crisis and are there alternatives?

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37 thoughts on “Banking Explained – Money and Credit”

  1. Did not like this video. It is a bit biased.
    These microbanks, alternative banks might be good for small things but will never be good to finance a nuclear plant, a big car factory and many other business that generate thousands of jobs.

    Banks need to be regulated and controlled but canno be replaced with a microbank

  2. May be a short explanation of what a Credit Default Swap certificate is. The unsustainable mean to goldplate a junk bond, used by banks, which was the main reason for the credit crunch of 2008.
    In 2022, the hot item has become "Fiat Money", money invented on the spot with a simple reconciliation, and can have unknown as unforeseen effects on the economy as a whole. First of all, a galloping inflation.
    Great video, thanks…

  3. What about inflation and printing money out of thin air by the central banks? simply stealing the value of the people savings ? is that crucial for our society as well? I think you have skipped the most important part about Banks

  4. Banks are not financial intermediaries. Banks create money by selling their credit in exchange for cash or debt. Banks create credit out of nothing unlike non bank financial institutions. Banks create deposits when they exchange their credit for cash or debt(making loans). The reason why banks pay interest for cash is for liquidity purposes. Cash or tokens provide liquidity in an economy by being able to exchanged for goods or services. But demand deposits can be accessed by debit or credit cards, letters of credit, bank transfers, drafts, cheques, bills of exchange, bills of credit. These cash substitutes can be used as substitute for cash. When customers demand for cash and the banks cash runs out, the deposits in the bank never run out. The cause of bank runs is not being able to provide liquidity. After all only about 3% of all money is in cash. Today most people use credit/debit cards and other electronic payment methods and therefore bank runs almost never happens. This is coupled by the fact that central banks can print as much cash as necessary for tokens today unlike before when coins were made up of copper, silver or gold.

  5. "Banks lend out the savings". This is far from true. Usually Kurzgesagt gets it right, but this time it did not, which by itself demonstrates how complex and mysterious is the modern financial system. With fractional reserve system, banks create money out of thin air, and the requirement to be backed with savings only gets smaller and smaller

  6. The thing is that banks don't even offer any interest to most people with bank accounts anymore. It actually costs money to have a savings account. People just have checking accounts free with direct deposit so that they can do business electronically, have a debit card, etc. They have a bank account because they need one, not because they want one.

  7. The Federal Central Bank, THE FED RESERVE. sets the rules that has caused inflation so that the gov. can inflate away their debt by reducing the value of your currency. Costs don't go up, because of all the printing of free money it just takes more to buy the same old things now. This was done on purpose, it's not a mistake.

  8. What actually happened after the 2008 banking crisis, was that the little guy got wiped out. Meanwhile, the rich all consolidated their assets and got many times richer. And here we are. All of us poorer. And the Banks are still in business, still paying themselves massive bonuses. And actually the answer is to nationalise the banks so that they have to work for us, rather than their shareholders and bosses.

  9. Give me a break. Money is created when someone gets a a bank loan. Then poof! You have a piece of paper called a check or your bank acount goes up. It is all fake. To pay them back you have to work.

  10. I will forever be indebted to you, you've changed my whole life and i continue to preach about your name for the world to hear you've saved me from a huge financial debt with just little investment, thanks so much Mrs Megan Tracey.

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