9. There are three kinds of money:
1: Coins and bank-notes
3% of money
2: Money created by banks as debt
3: Money created by central banks
For every $1 million in reserves, a bank is allowed to create
(say) $20 million, and charge interest on it.
Printed out of “thin air”, out of trust in the financial system
37. It’s okay to finance
a German tank factory in 1942
as long as it’s “one for one”
38. Central banks create money out of thin air
• When a government orders its central bank to print money the result can be disastrous,
causing hyperinflation. Germany 1922, Hungary 1945, Argentina, many others.
• This is a bad thing.
• This is why central bankers insist on independence from governments.
• In 2009, the Bank of Canada created $25 billion to tackle the financial crisis.
• In 2020, to confront Covid, it created $420 billion by buying bonds and other debt from
governments and businesses
39. “Increasing the credit supply”
“Monetizing the deficit”
“Expanding the balance sheet”
How does a central bank
inject money into the economy?
They buy bonds or securities off banks or corporations, putting
that much extra money into their accounts.
40. Money printing to stop
the 2008 financial
Money printing to assist
recovery following the
45. ECB = European Central Bank
Building retrofits – heat pumps - renewable energy –
bike lanes – transit –electric vehicles