A bank isn't a vault. It's a machine for turning your savings into other people's loans.
You think the bank guards your money. Really, it borrows from you (your deposit) and lends to others at a higher rate. The gap between the interest it pays you and the interest it charges borrowers — the spread — is how it makes its money.
It pays savers a little, charges borrowers more, and keeps the difference.
Pays you a little, charges borrowers more, pockets the gap.
If everyone wants their cash at once, the bank can't pay — it lent it out.
Held between Singapore’s three big banks — DBS, OCBC and UOB — combined.
A bank is a place that will lend you money if you can prove that you don't need it.— Bob Hope
The quiet trick at the heart of the whole system: banks lend out most of what you deposit — and that act creates brand-new money.
Put $1,000 in the bank and you assume it sits in a vault. It doesn't. The bank keeps a small slice as a reserve and lends the rest. The borrower spends it, it lands in another bank, which keeps a slice and lends the rest again. Round after round, your single $1,000 becomes many times that.
Each round the bank keeps 10% (dark) and lends the rest (green). Every loan becomes the next deposit — watch the running total climb.
kept by the bank. The smaller the reserve, the more money the system creates.
every $1 of real cash can support about $10 of money in the economy.
The process by which banks create money is so simple that the mind is repelled.— John Kenneth Galbraith, economist
Above all the banks sits one institution that can create — or destroy — money on purpose.
A central bank is the bank for banks. It controls how much money exists, sets the cost of borrowing, and rescues the system in a crisis. Singapore's is the Monetary Authority of Singapore (MAS) — unusually, it steers the economy through the exchange rate, not interest rates.
Power flows down from the central bank to you.
In a panic, the central bank steps in so the system doesn't collapse.
It steers the economy via the SGD exchange rate, not interest rates.
Dollar — from the Joachimsthaler, a silver coin minted in a Bohemian valley called Joachimsthal in the 1500s. "Thaler" became "dollar," and the name circled the world.
Inflation is always and everywhere a monetary phenomenon.— Milton Friedman, economist
Two dials run the whole economy — and they're wired together.
Inflation is prices rising over time, so each dollar buys less. Central banks fight it with interest rates: raise rates and borrowing gets dearer, spending cools, prices settle. Cut rates and the opposite happens. It's a constant balancing act.
Rates up cools things down; rates down heats things up.
At 6% inflation, prices double in about 12 years (72÷6).
Too much inflation or too little — both damage the economy.
Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars.— Sam Ewing, writer
A new kind of money that no single bank or government controls.
Cryptocurrency is digital money recorded on a blockchain — a shared ledger copied across thousands of computers, so no single bank or state runs it. Bitcoin was the first, in 2009. Supporters love the freedom; critics point to wild price swings and scams.
No middleman — a network of computers agrees on every transaction.
The network — not a company — keeps the record honest.
Prices can soar and crash; scams are common. Tread carefully.
Ranked by market value, late 2025 (approximate).
The root problem with conventional currency is all the trust that's required to make it work.— Satoshi Nakamoto, creator of Bitcoin
Every so often, crowds convince themselves something is worth far more than it is.
A bubble is when a price soars far above real value because everyone's buying simply because the price is rising — until belief snaps and it crashes. From Dutch tulips in the 1600s to dot-com stocks and crypto, the pattern repeats: greed, mania, crash, regret.
Smart money quietly buys early; the crowd piles in at the top.
When people who never invest start buying, the new buyers are about to run out.
Prices only rise while fresh money keeps arriving. It always stops.
Bubbles don’t burst on bad news. They burst the moment there’s no one left to buy — when the last optimist has already bought in.
The four most dangerous words in investing are: 'this time it's different.'— Sir John Templeton, investor