Rewriting economics 101, how the Bank Multiplier Effect works

Modern economics describing the bank multiplier effect -- Keynes keys reborn
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Real world Bank Multiplier Effect special features not taught in university. [Part of the 2008 bank credit crisis is due to not understanding the bank multiplier paradigm, and that by selling morgage investment certificates, speeds up the bank multiplier process -- plus those huge leverage buy-out loans by investment banks.]

Single bank, small town analogy. A bank can loan funds even if it does not have any, if the loan, the seller gets is redeposited back to bank. After loan redeposited, then reserve held from there. Old bank multiplier placed cart before the horse, and declared reserve taken before loan, but the bank can after the loan is redeposited then take reserve. Makes the amount of total capital the bank aggregate not cap the amount of bank loans that can lent over time. Makes amount that can be lent infinite,

Bank of Clearance policy establishes types of bank multipliers. The score card is not actual currency, rather rights with the Bank of Clearance to lend more. Important economics bank multiplier novelty -- as the amount of loans increases, a mega bank could have deposited, a greater amount than the the total fiat real bills outstanding; therefore what matters is the Bank Of Clearence using a "right to loan scorecard" to manage money supply. (Explains in part, how the 700 billion bank bail out works without having to print that much new bills by the government.]

Bank of Clearance and bank loans. When a bank gives a loan, the amount the bank has to come up with is dependent on what what the Bank of CLearance says, Bank of CLearance the gatekeeper. So because the bank lent you such and such, does not mean in reality the bank has to come up with that amount.

Celebration with new Bank Multiplier theory, is that the Bank of Clearance style, allows access to the M4 money supply. Any credits granted are backed up, and does not reduce size of economy. Huge wealth creator for government to access money supply without borrowing.


(The bank multiplier in its true form. University economics talk of the bank multiplier is not the real world. An idea worth trillions.)