Jayson Lowe explains how banks reuse the same dollar across multiple loans. When borrowers repay, those funds become deposits the bank can lend out again, creating new money that didn't exist before. Longer loan terms let a single dollar cycle through the system repeatedly.
And these are legitimate questions when you're consuming, right? Can I afford the payment? What's the rate? You know, will I get approved? So will everything work out, you know, so that I can purchase this thing? The banks ask, who controls the asset? What's the collateral? What's the cash flow? How long is this relationship going to last? In other words, how long have we amortized that stream of payments over? And what's the risk? How quickly can we redeploy the capital? How many times can we get this single dollar to work in favor of the bank, meaning payment Money comes in, it's logged as a repayment, which is a deposit. Bank goes, look, we can now create more money that didn't exist before. So if we've got a relationship that's amortized over a long period of time and those payments keep flowing in, and that gives us the capacity to create more money where no money existed before, that's what they're thinking of. So which list sounds more likely to create wealth over 3+ decades? I go deeper in a free training at learnwithjay.com, or just follow along and I'll keep it simple.
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