Banks Leverage Your Money
youtu.be
The video discusses how banks leverage people's money through fractional reserve banking to create wealth and make up to 50% profit on it. The speaker explains that banks control the supply of money and only keep a small portion of people's money in the bank, lending out the rest to create more money through the money multiplier formula. This formula is one divided by the reserve ratio, which for most big banks is 10%. Therefore, for every one dollar that banks don't keep in reserves, they can lend out 10. The speaker emphasizes the importance of leveraging debt like banks, wealthy people, and businesses do to create wealth.
The speaker then relates this concept to real estate and explains how individuals can use leverage to buy an asset that produces cash and grows in value. By borrowing money from other sources, such as banks or private lenders, individuals can buy real estate and create wealth similar to how banks create wealth through leveraging. The speaker provides an example of how he uses leverage in real estate to create wealth, owning $26 million worth of real estate without using any of his own money. He borrows money from other sources to buy real estate that produces cash and grows in value, using a portion of the monthly rent from the property to pay back the person he borrowed the money from.
The speaker emphasizes the importance of learning to leverage debt and utilize other people's money to grow wealth, recommending checking out his video on the BRRRR method, which is a step-by-step process for utilizing leverage in real estate investing. The speaker notes that leveraging debt is legal and beneficial for the economy because the money is being lent out to other people and businesses to create more commerce.
The video discusses how banks leverage people's money through fractional reserve banking to create w