The truth about the traditional banking model: it is dead. Ok, to be temporally current, it is dying. Six reasons why:
The sustenance of economic systems often relies on delicately balancing two perilous extremities. When looking at inequality, for instance, one finds that the lack of it will lead to an economy’s atrophy, while its excess may lead to unsustainable tensions. Since the end of the most recent financial crisis, developed countries have been inclined towards the latter scenario.
In response to potential economic uncertainties arising from the recent Brexit vote, the Bank of England announced it would be expanding its Quantitative Easing (QE) programme. Over the next 6 months it will be pumping an extra £70bn of new money into financial markets – bringing QE to a total £445bn.
A lot of people can go their entire lives without asking themselves how money is created and where it comes from. On the other hand, as the Bank of England noted, many modern day economic textbooks provide a flawed description of money creation. In any case, the concept of money creation can be tricky to grasp.