Why Do Banks Create Money? Do They Create Money to Help

question 82

Essay

Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason?

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Definitions:

Accounts Receivable

Amounts due from clients to a business for received goods or services that remain unpaid.

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

Accounts Payable

Liabilities or amounts owed by a business to suppliers or creditors for goods and services received but not yet paid for.

Independent Audit

An evaluation performed by an external entity to examine the accuracy and fairness of a company's financial statements.