At the beginning of the week,

I'll open a bank account.

And then instead of giving them actual gold,

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

I only have 1,000 of cash.

So how can we do that?

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

Paula, how much have we got in the bank?

Well, do I need to get out the checkbook and show you? No, I....

And I don't hand that person gold.

I have a lot of money in my savings account.

And then when A takes this check that he got from D, brings it back to the bank.

He opened a checking account with the bank.

I'd like to open a savings account.

Your account is empty.

I opened an account in my daughter's name.

although this would be an asset for him is a checking account.

And then I can create a checking account for him.

So, he starts off with a negative balance, so a negative balance means that he's overdrawn his checking account.

Now the natural question is, how far can this process continue?

How much was in Stewart's checking account after the second deposit, so after both of these deposits right over here?

What's the balance of my account?

I could have also issued notes and all of that, but let's say

He deposited 100 dollars in his saving account.

And then I have checking accounts for these people who deposited them.

I just give them a checking account.

Microsoft makes a lot more than that, but I make a billion dollars.

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

Checking,savings took out about 125,000 in cash.

So it looks like you took a loss negative 100.

By doing that simple thing, there was an increase in enrollment by 20 percent and there was an increase in the amount of people willing to save or the amount that they were willing to put down into their savings account by four percent.

I owe them 1,000 gold pieces that they can come and get at any moment

So?

I can make a checking account, 100.

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

But regular cash deposits were made to your personal accounts, somewhere upwards of 5,000.

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.

You're gonna be looking at my people going through their bank statements, their phone calls and medical records.

Everything's plain... taxes, bank accounts.

Which is his right.

Anything in their toy account they can spend on whatever they want.

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.

Accrued interest will be paid into your account.

The money has been wired to your account.

So if you went and surveyed everyone in the city and you said, how much do you keep in your checking accounts?