Cowboy Economist Tells Us How the Private Sector Finances Its Deficits

Did you know commercial banks create money out of thin air every time they loan money?

You may have thought that when you take out a $30,000 car loan, the banks takes $30,000 from their vault, and loan you other people’s savings.

This is not the case. They literally create $30,000 out of thin air, and deposit it into your account.

The video below is the Cowboy Economist explaining exactly how this works.

Spoiler: The video includes a little bit of accounting and a little bit a math.

And now, without further delay, I bring you The Cowboy Economist, and his lesson on how the private sector finances its deficits.

And to get a fuller picture of money creation in our economy, you need to watch his next video, in the blog post linked to below.

Cowboy Economist Tells Us How the Government Finances Its Deficits

It will be illuminating. I guarantee it.