And let's say that I can, in the bank,

So how can we do that?

I put the money in a three year time deposit at the bank.

Deposits on long term leases.

It's the savings accounts versus the debit accounts with no deposits.

I think most of us understand the general idea about life insurance

So what I do is, I take their 900 gold pieces, and I take it as a deposit.

Some students come across the table, they're failing all four subjects.

When you put money in the bank, you deposit it.

So 10 of 110 is 11.

I'll open a bank account.

I have a fairly wealthy village.

He deposited the prize money in the bank.

I just give them a checking account.

You know, about my money.

And I think something happened, right? He put aside a little cash for you.

And then your bank statement shows that your bank kind of goes up 1,500 and you pay the rent and the food and then it goes back close to zero, then it goes up to 1,500 but they want to see that this 1,500 is hitting periodically.

And we went the fractional reserve route.

I want to deposit some money.

I trusted him with the money.

So what would be total demand liabilities?

I have a lot of money in my savings account.

Well, no. Because then a bank take on arbitrary amounts of risk and there are regulations, although I think a bank would do it on their own to some degree, but there're regulations called reserve requirements that tell us how much lending can a bank do relative to its actual reserves. In this case, it's reserves of gold.

So this is the account of B. The account of Villager B.

That would be total bank notes in this case and bank notes are also something we'll later leave a world where every bank is issuing bank notes, but I just wanted to give you that kind of historical context, how bank notes even started off.

The bank keeps money for people.

He left his safe in my care.

I entrusted my money to him.

And then instead of giving them actual gold,

Let's say I take a 100 gold piece deposit, and of course I have an offsetting checking account that those people can at any point use either to write checks or at some point they can come back and demand their money back.

So how much could I expand my balance sheet?

He has plenty of money in the bank.

I have 100 in terms of the building itself.

There is a reserve requirement.

Let me do that I'll do that in purple. These are checking accounts or notes deposit accounts for people.

Good morning, Melvin. Here's the money.

Wages and salary are pay received at regular times.

Fixed Interval

Interval

But it's the same idea.

I have 300 gold pieces of reserves

I could've actually issued bank notes, same idea.

It'll have some interest rate, let me make something up, maybe it's a 7 loan.

We opened today.

I mean, I could even have a denomination that's it could be a 500 gold piece.