And then of course I have that 250,000.

I guess you could say non cash assets, right?

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

If you run out of cash, you can fall back on your savings in the bank.

He deposited the prize money in the bank.

I just give them a checking account.

So 10 of 110 is 11.

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

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

Now, the first entrepreneur, he's very conservative and he's been saving all his whole life to do this.

I'll open a bank account.

I have a fairly wealthy village.

My share in cash. Now.

Cash.

Now, the reality is you didn't get the cash forward, and you had to spend 200 of cash out of your pocket, so you're still, just like the cash accounting, you're still going to have negative 100 in cash.

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.

You know, about my money.

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

Because it buys treasuries, just from people or from banks or from institutions, and then those people take that cash that they just got for these treasuries, and they'll deposit it in banks.

So how much could I expand my balance sheet?

Yes, exactly.

Cash, please.

Cash!

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.

I want to deposit some money.

I trusted him with the money.

So what would be total demand liabilities?

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

But it's the same idea.

I have 300 gold pieces of reserves

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

We opened today.

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

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

So they'll go and they'll deposit it in maybe bank 1 over here, then over here in bank 2, and since there's more money in bank 1 and bank 2 you have the supply of money going up supply going up and also the demand for reserves is going up this cash right here, these are reserves.

The bank keeps money for people.

He left his safe in my care.

Deposits on long term leases.

I entrusted my money to him.

And then instead of giving them actual gold,

And we went the fractional reserve route.

The fine shall be paid in cash.

Oops... I pressed the wrong button.

He has plenty of money in the bank.