Valuetainment
“Banks Can Lend With 0%” - Banking System EXPOSED For Creating Fake Money & Asset Bubbles
02 Apr 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: How do banks create money and what are the implications?
So let me just explain. There's three types of lending. When banks give a loan for asset purchases, which is, well, if you're buying an apartment, land, real estate, property, but also financial assets. All the lending to hedge funds, you know, they're leveraged. Private equity is leveraged. You know, all these loans. You've got money creation, but you're not adding to value to the economy.
Therefore, there's no impact on GDP because you're just transferring ownership and assets. But at the same time, because you're creating new money, it has an impact. What's the impact? If you suddenly create a lot of money and pump it into the real estate market, you don't need to study economics to know what's going to happen with real estate prices.
And of course, the banks usually behave like each other because of the various regulatory influences. So then when they start doing that, you get a real estate boom. Property prices go up.
Chapter 2: What are the different types of lending by banks?
If they start lending more for hedge funds, you get an asset market, you know, financial market boom, and then that. So this is unproductive and unsustainable credit creation, which creates the asset bubbles that lead to the banking crisis. And we've had so many, you know, more than 100 in the past 50 years alone. That's just one of three scenarios.
When banks create credit for consumption, that means you've got more purchasing power, more demand for consumer goods, but you don't have more consumer goods. You get inflation, consumer price inflation. That's what they did in 2020. And I want to actually make the link now to what's going to happen next because I think we're going to see another bout of inflation. Just one moment.
Hold that thought.
I'm going to let you wrap it up. I just had Rob ask the question. I asked the question. I sent him the question. In order for a bank to lend a million dollars, how much money do they need to have in reserve? I know there's a minimum for insurance company, but what is it for banks? The old rule pre-2020 was 10% deposits. You know what the new rule is? 0%. Are you kidding me? Well, I told you.
Chapter 3: How does bank lending impact real estate prices?
What do you think about this? This doesn't make any sense to me, though.
That's how they got out of 2020. They did. There was a QE without QE. But that's been reality in many ways, even when there were official reserve requirements. Because when you are the creator of money, what is it to say, oh, there's a capital requirement, there's a reserve? You're creating the whole money supply. Are you supportive of this?
Okay, let me say the third thing, and then I can tell you what I'm supportive of. 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. Then, this is really what banks should focus on. What you then get is prosperity, growth.
job creation and no inflation and no negative consequences. That's what we get. We get higher GDP growth. So we've got these three scenarios. And what I'm saying is I'm supporting bank lending for business investment, especially to small firms, because that's almost always a job creator. It's almost always productive. Large firms Well, they don't really need bank loans. They go elsewhere.
They get access to capital markets and so on. And also often it's all about rationalization and they reduce stuff. So it's really the small firms. And the small firms are crucial because there's 70% of employment across the globe in every country. In some countries, more than 70% of employment is with small firms.
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. And that's what we need to do. And that's what we need to set up banks for. 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? Do you know that there's never been a banking crisis due to too much lending by small banks to small firms? You know, big banks don't lend to small firms.
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Chapter 4: What happens when banks lend for consumption?
Only small banks lend to small firms. It's where we need many small banks. There's never been a banking crisis due to small firm, you know, business lending because that is productive. And there's no downside, and that's what we need. And if you set up a bank that's going to do that, here's the license. That's how quick it should be and how easy it should be.
What's the risk, though? You prefer 0%?
You're talking still about the reserve requirement. Why are we still talking about the reserve requirement? Okay, it's not the Jeffrey Epstein list. But it is a misunderstanding. 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, banks don't even create any money. So in that sense, it was more true than what they're now teaching, there's no money creation, banks don't create money, is what they're teaching now. All the leading textbooks, finance professors, the finance journals,
which is totally wrong and disproven, and before was this fractional reserve model. But it was just a measure to lead the conversation away from credit creation because this fractional reserve model still argued that each individual bank receives deposits, does its analysis, and lends out money.
And then in aggregate, as they interact, there's this fractional reserve money multiplier, money creation going on. That's not true. And I disprove that. It's published. You can look it up. It's open access paper, the most downloaded academic paper of any Elsevier publications across all disciplines. Can banks individually create money out of nothing?
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Chapter 5: What is the significance of the 0% reserve requirement for banks?
And of course, I do the analysis on my Substack, rwerner.substack.com, where I analyze current events.
Richard Werner's on Manect. If you want to ask him any questions, we're going to put his QR code around here and the link as well. And the 51% of you that enjoys the podcast, you watch it, but you don't subscribe. We would appreciate if you click on that subscribe button. We are this close to 3 million. We can do it with you. So if you don't mind taking a minute, subscribe to the channel.