How Banks Can Print Money!🏦💵 #Shorts

If you were to put $100 into your U.S. bank account right now, the bank is legally allowed to loan 90% of that money.

So in our example, that's $90.

Now imagine somebody comes to the bank and they take out a loan for $90.

Maybe they want to treat themselves to a Disney vacation at a budget friendly resort.

Then they take that $90 and they put it right back into the bank for safekeeping because their vacation isn't going to be for a couple of months.

Well, at that point, the bank can they loan out their $90 again at 90%, and that's another $81.

The process can continue over and over and over again, gradually shrinking the first amount down to a penny.

And if everyone tries to take their money out of the bank at the same time, theoretically this could cause a major cascading event and potentially could trigger even more people to pull their money out.

This is what is known as a bank run and this can happen in stocks and in crypto.

So, make sure to do your own research and never risk more than you can ever afford to lose.

Did you know that?

Let me know in the comments! 🤔

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DISCLAIMERS:
Please always check with a professional before making any decisions with your money. These videos are for educational purposes only and I am not responsible for your actions in any way. No official financial advice is being given. Never listen to anyone online who tells you to not check with a professional! Joe Parys is not providing you with individual investment advice. Joe Parys is not registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. Joe Parys is not responsible for any gains or losses that result from your investments or investment decisions. Investors should always consult their financial adviser before investing.

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