Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How Banks Create Money From Thin Air
In this episode, Lucas and Luna dismantle the myth that central banks print all money. Using a simple $100 deposit example at JPMorgan Chase, they explain how fractional reserve banking allows commercial banks to create new deposits through lending. The conversation covers the real constraints on money creation—capital requirements, loan demand, and liquidity buffers—and why the money supply isn't just a dial turned by the Federal Reserve. For listeners in September 2026, understanding this mechanism clarifies why inflation can persist even when the Fed holds rates steady.
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The skinny
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