Video about Monetary Multiplier, Part II: The Balloon Model.

Watch the video about the money multiplier:

Positive Money (2012, December 20). "How is money really made by banks? - Banking 101 (Part 3 of 6)" [Archivo de vídeo]. Recuperado el 27 de junio de 2018.

The author is amazed about himself because he discovers that money is not only coins and bills, but also “electronic money”. This is hardly surprising, since definitions of money include deposits, which are not bills and coins. He criticizes a very primitive version of the money multiplier, the “Pyramid" model, in the first video. In this second video, he proposes an alternative: the “Balloon” model. This alternative model is just an extension of the money multiplier model, where voluntary reserves depend on the degree of confidence of banks, which may be easily incorporated to the model as a parameter.