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Comment by not2b | Hacker News Reader

We already had private money creation; every time a bank makes a loan, money is created. Governments don't directly control the money supply, they only do so indirectly.

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Also known as fractional reserve banking (the money can make loan more money than it has in its reserve).

If someone tries to do a bank run the fed will supply the bank with missing money, in part, because the fed was created by private banks to counter bank runs.

Banks loan from their availabile capital no? They don’t just make up money for loans.

"And it is for this reason that although banks don’t need your money, they do want your money. As noted above, banks lend first and look for reserves later, but they do look for the reserves."

https://www.investopedia.com/articles/investing/022416/why-b...

No, banks are allowed to loan more money than they have in reserves (they are allowed to have a fraction of a loan in their reserves = fractional reserve banking).

As a result, money is created through each loan.

https://en.wikipedia.org/wiki/Money_multiplier

Client A = 100 dollars client B = 0 dollars Bank passive = 100 dollars bank actives = 100 client b makes a loan of 70 dollars client A = 100 dollars client B = 70 dollars Bank passives = 170 bank actives = 170 Now client C needs a 100 dollars loan. 100 < 170.

Bank actives 270 bank passives 270 …

In the simple savings-and-loan case, banks loan from their deposits. So technically it is the bank's available capital, but the capital belongs to someone else. If the bank has $1 million in deposits, it might decide it can safely loan out $100k, which in some sense increases the money supply.

No. Or maybe in really rare cases. One man savings are really another man debt. In reality, actors that can roll their debt do so (so states and companies with enough capital as collateral), allowing common men to have savings.

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