See the OP. When a bank issues a loan, it does not lend money it has, it creates money.
How fucking good is that?!!!
And that loan goes on the bank's balance sheet as an asset! Which is exactly why interest rates are near zero and they are talking about introducing negative interest rates. They don't need or even want your goddamn savings, in fact, they would prefer you borrow the money so that can wave a magic wand and pull it out of a hat....
I've figured it out.
You guys think there is something evil about double entry accounting.
Hint: Do you know what Debit and Credit REALLY mean? I mean, cut to the bone, conspiracy theory meaning?
Left, and Right, respectively.
So that "Asset" just means it's on the left. That "Liability" just means its on the right.
And guess what - they have to be the same. Left + Right = 0
Correct the asset was borrowed into existence.
Next, you will be telling us that, Assets are debt-by definition!
Thanks for the economics lesson..
a positive balance on the left side of the asset account, is an asset, by definition.
for a real mind bender for the uneducated
A deposit is an asset for an individual
a deposit is a liability for a bank
the bank offsets this liability by granting a loan, to say a small company, which is an asset for the bank