Smoke, mirrors ... and how a handful of missed mortgage payments started the global financial crisis
But underneath all the jargon is a fundamental truth about banking: that it is based on a kind of confidence trick. It's called "fractional reserve banking". Alone among commercial institutions, banks are allowed to create value out of nothing - in other words, they are allowed to lend out money they don't have.
A good article that explains how we have got to where we are.
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