Learn 50+ Years of Economics in Only 7 Weeks: apply at https://www.stevekeen.com (Bonus: accepted students who join get Ravel — the double-entry, macro visualization tool used in this video.) Banks don’t “lend out” your deposits, they create money when they lend. In this video, Steve Keen dissects the classcial economist's fractional-reserve story, responds to critics, and uses Ravel to show why the classic money-multiplier only “works” if loans are made in cash. Once you enforce real double-entry bookkeeping, the narrative collapses — and the real mechanics of bank-originated money and debt come into focus. What you’ll learn • Why the textbook money-multiplier breaks under proper accounting • How bank lending creates deposits (new money) on both sides of the ledger • Why reserves ≠ “loanable funds” and why deposits aren’t lent out • Where popular explanations violate assets = liabilities + equity • Why getting money creation right matters for debates on deficits, QE/QT, and “can we afford it?” • How Ravel exposes hidden assumptions in neat verbal stories — step by step Key takeaways • If a model can’t balance the T-accounts, it’s wrong, regardless of how often it’s taught. • Loans create deposits; deposits aren’t a stockpile that gets parcelled out. • Cash is the only way to make the textbook multiplier arithmetic “work”, which tells you the model is not how modern banking operates. • Misunderstanding bank money leads to bad policy: deficit panic, confused takes on QE/QT, and misguided bank rules. About Steve Keen Steve Keen is an economist known for accounting-consistent, data-driven models of money, debt, and instability. Creator of the Minsky and Ravel tools, he replaces classroom myths with operational mechanics you can simulate and test. Try the Seven-Week Rebel Economist Challenge Apply here: https://www.stevekeen.com • Weekly live access & Q&A • Cohort of rigorous, curious learners • Ravel included for accepted students who join Support reality-based economics • Subscribe for more Ravel walk-throughs and myth-busting • Like if this clarified how banks actually create money • Share with someone still quoting the money-multiplier #economicseducation #moneycreation #fractionalreservebanking #doubleentrysystem #ravel #macroeconomics #fiscalpolicy #monetarypolicy #banking101 #stevekeen
