Valuetainment - April 02, 2026


“Banks Can Lend With 0%” - Banking System EXPOSED For Creating Fake Money & Asset Bubbles


Episode Stats


Length

7 minutes

Words per minute

179.40152

Word count

1,271

Sentence count

84

Harmful content

Misogyny

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, we discuss the impact of the Fed's quantitative easing on the economy and the role of banks in supporting it. We also discuss why banks should lend to small firms and why they should focus on business investment.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
00:00:00.000 So, let me just explain. There's three types of lending.
00:00:03.380 When banks give a loan for asset purchases,
00:00:08.620 which is, well, if you're buying an apartment, land, real estate, property,
00:00:13.020 but also financial assets, all the lending to hedge funds,
00:00:17.560 you know, they're leveraged. Private equity is leveraged.
00:00:20.040 You know, all these loans.
00:00:22.340 You've got money creation, but you're not adding to value to the economy.
00:00:27.020 Therefore, there's no impact on GDP because you're just transferring ownership and assets.
00:00:31.680 But at the same time, because you're creating new money, it has an impact.
00:00:34.700 What's the impact?
00:00:35.400 If you suddenly create a lot of money and pump it into the real estate market,
00:00:38.280 you don't need to study economics to know what's going to happen with real estate prices.
00:00:42.380 And, of course, the banks usually behave like each other because of the various regulatory influences.
00:00:47.440 So then when they start doing that, you get a real estate boom.
00:00:50.080 Property prices go up.
00:00:51.020 If they start lending more for hedge funds, you get an asset market boom, a financial market boom.
00:00:56.780 end of that. So this is unproductive and unsustainable credit creation, which creates the
00:01:02.020 asset bubbles that lead to the banking crisis. And we've had so many, you know, more than 100
00:01:06.240 in the past 50 years alone. That's just one of three scenarios. When banks create credit for
00:01:12.680 consumption, that means you've got more purchasing power, more demand for consumer goods, but you
00:01:17.320 don't have more consumer goods, you get inflation, consumer price inflation. That's what they did in
00:01:21.620 2020 and i want to actually make the link now to what's going to happen next because i think we're
00:01:27.220 going to see another bout of inflation just one moment hold that thought i'm gonna let you wrap
00:01:31.140 it up i just said rob asked the question i asked the question i sent him the question
00:01:34.960 in order for a bank to lend a million dollars how much money do they need to have in reserve i know
00:01:39.360 there's a minimum for insurance company but how what is it for banks the old rule pre-2020 was
00:01:44.460 10 deposits you know what the new rule is zero percent are you kidding me well i told you what
00:01:51.120 What do you think about this?
00:01:52.120 This doesn't make any sense to me, though.
00:01:54.020 That's how they got out of 2020.
00:01:55.340 They did.
00:01:56.120 There was a QE without QE.
00:01:57.500 But that's been reality in many ways, even when there were official reserve requirements.
00:02:02.020 Because when you are the creator of money, what is it to say, oh, there's a capital requirement, there's a reserve?
00:02:07.140 You're creating the whole money supply.
00:02:09.400 Are you supportive of this?
00:02:12.000 Okay, let me say the third thing, and then I can tell you what I'm supportive of.
00:02:15.360 So the third possibility is when banks give a loan to entrepreneurs, entrepreneurs like you, entrepreneurs like your audience, you know, business people who are working hard, are implementing new ideas, are adding value.
00:02:31.040 Then this is really what banks should focus on.
00:02:34.460 What you then get is prosperity, growth, job creation, and no inflation and no negative consequences.
00:02:43.480 That's what we get.
00:02:44.340 we get higher GDP growth. So we've got these three scenarios. And what I'm saying is I'm
00:02:49.860 supporting bank lending for business investment, especially to small firms, because that's almost
00:02:55.100 always a job creator. It's almost always productive. Large firms, well, they don't really
00:03:01.180 need bank loans. They go elsewhere. They get access to capital markets and so on. And also
00:03:06.260 often it's all about rationalization and they reduce stuff. So it's really the small firms.
00:03:10.800 And the small firms are crucial because there's 70% of employment across the globe in every country.
00:03:16.720 In some countries, more than 70% of employment is with small firms.
00:03:19.700 And so I'm saying, and my original quantitative easing was to kickstart that bank credit for productive business investment that delivers job creation, prosperity, GDP growth.
00:03:30.600 And that's what we need to do.
00:03:32.400 And that's what we need to set up banks for. 0.94
00:03:35.000 And if it's a bank that will lend only for business investment, why should there be strict reserve requirements or capital adequacy requirements or regulatory requirements making it hard to get the license?
00:03:46.980 Do you know that there's never been a banking crisis due to too much lending by small banks to small firms?
00:03:55.880 You know, big banks don't lend to small firms.
00:03:57.560 Only small banks lend to small firms.
00:03:58.860 It's where we need many small banks.
00:04:00.620 there's never been a banking crisis due to small firm, you know, business lending because that is
00:04:07.560 productive and there's no downside. And that's what we need. And if you set up a bank that's
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00:05:20.260 You're talking still about the reserve client. Why are we still talking about the reserve client?
00:05:23.540 Okay, it's not the Jeffrey Epstein list, but it is a misunderstanding, you know.
00:05:29.160 The reserve requirement model was taught in textbooks until the sort of 70s since it's been replaced by the financial intermediation model where they say, oh, there's nothing to see here.
00:05:41.420 Banks don't even create any money.
00:05:43.240 So in that sense, it was more true than what they're now teaching.
00:05:48.000 There's no money creation.
00:05:48.780 Banks don't create money.
00:05:49.500 It's what they're teaching now.
00:05:50.460 all the leading textbooks, finance professors, the finance journals, which is totally wrong and
00:05:55.880 disproven. And before was this fractional reserve model. But it was just a measure to lead the
00:06:02.920 conversation away from credit creation, because this fractional reserve model still argued that
00:06:08.300 each individual bank receives deposits, does its analysis, and lends out money. And then in
00:06:15.020 aggregate, as they interact, there's this fractional reserve money multiplier, money creation going on.
00:06:20.020 that's not true and I disprove that it's published you know you can look it up it's open access
00:06:25.360 paper the most downloaded academic paper of any Elsevier publications across all disciplines
00:06:30.400 can banks individually create money out of nothing and of course I do the analysis on my
00:06:36.240 substack rwerner.substack.com where I analyze current events and Richard Werner's on Manect
00:06:42.740 if you want to ask him any questions we're going to put his QR code around here and the link as
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