Banks Create Money To Facilitate Transactions - Example 🔗

Summary:

• the rich person paid for a meal with ingredients and some gold
• the poor person got paid to make a meal
• the bank got paid to facilitate the transaction

Alternatives to avoid the bank loan:

• EITHER the poor person already has the gold to buy the ingredients from the beginning
• OR the poor person convinces the rich person from the beginning
• OR the ingredients don’t get converted to a more valuable meal