Use these questions to discuss one of the most misunderstood mechanisms in the global economy. Understanding how money is created changes how you see the entire system.
Before this session, did you know that banks create money when they issue loans? How does fractional reserve banking change your understanding of what "money in the bank" actually means?
Try to use: fractional reserve, credit creation, broad money, money supply, deposit
If banks can create money by issuing loans, what stops them from creating unlimited money? What are the practical and regulatory limits on this process?
Try to use: reserve requirement, capital ratio, default risk, central bank, regulation
The money in your bank account does not physically exist as cash — it is a number on a computer. Does this concern you? Why do most people never think about this?
Try to use: digital money, bank run, deposit guarantee, systemic trust, confidence
In 2008, the global financial system nearly collapsed because of bad mortgage lending. In your own words, what went wrong — and who was most responsible?
Try to use: subprime mortgage, leverage, contagion, counterparty risk, too big to fail
Is it fair that banks can create money and charge interest on it? Who benefits most from this system — banks, borrowers, or society as a whole?
Try to use: interest income, money creation, wealth transfer, systemic benefit, reform
"If you owe the bank $1,000, that's your problem. If you owe the bank $1 billion, that's the bank's problem." What does this tell us about how size and leverage change the rules in finance?
Try to use: moral hazard, too big to fail, systemic risk, bailout, accountability