Finance & Fury Podcast

Welcome to Finance and Fury, the Furious Friday edition. Today – discuss the topic of banking policy changes and how this opened the gates for the potential of never-ending money supply in the modern banking system To start with – look at How does money get lent out in Australia? Well – by a bank of course – you go to a bank to borrow money but what are they allowed to lend around? Well in basic economics – banks are treated as a financial intermediary – their role in a traditional sense is to connect savers to borrowers – they act as the middleman So a saver with surplus cash will put it into the bank – the bank will then use this as a reserve and lend out based around this Under this situation – a banks ability to lend is limited by how much they have of their customers savings – which act as the deposits Because in order to lend more money – they need more depositors – no depositors – no loans However – this theory is based around what is known as fractional reserve banking – where a commercial bank has