When a client takes out a $1 million loan to buy a house, the lending bank
does not take a preexisting mature $1 million present in its cash reserves, or
from a depositor’s balance at the bank. It will simply issue the loan and create
the dollars that are used to pay the seller of the house. These dollars did not
exist before the loan was issued. Their existence is predicated on the borrower
fulfilling their end of the bargain and making regular payments in the future.
This does not seem possible, the inflation would be unreal, surely higher than 10% a year. How can I confirm the truth of this?
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