Create money by lending-called fractional reserve system

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Money has several uses, in society. You might want to start by explaining what money does for us. Could we live without physical (cash) money?

The banking system creates the money in the US ( the few physical bills are just receipts for bank reserves. Banks create money by lending, called the fractional reserve system.

Please describe the process by which banks use our deposits to create money. Be sure to work the reserve requirement into your posts, and explain the deposit expansion process, and how the reserve requirement limits the amount of money. Do we have more money that there really is? Would we have less without deposit expansion?

Reference no: EM131166797

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