It is true that banks can loan out more than they have on deposit. They borrow the excess from the Fed and then loan it out to people.
What I don't know is what the ratios are. What I do know is that the numbers above are only taking into consideration the savings interest they pay you and ignoring the amount of interest they pay out to the Fed. Soooo, even assuming that the 90-300% figure on the collected interest is correct, the payout is still 80 to 290% no matter what!
The important piece is the spread between the interest they pay out to you and to the Fed vs. the interest they are collecting on various loan products in their portfolios. The bottom line is, the scenario above is not completely accurate and it certainly isn't as dire as it makes things out to be. I didn't watch the entire video either but I've seen plenty of conspiracy theory vids like that to last me a lifetime. Credibility for such things is nil with me.
You can do the same thing in the stock and futures market. In fact, if you've bought a house, you may have done it already. In the stock and futures markets, it's called buying on margin or buying on contract. In real estate, it's called a mortgage!
Look at your mortgage. Especially 10 years ago. You put down $20,000 to buy a $200,000 house and in the coming years, you pay interest on the $180,000. At the end of five years, the house might be worth $300,000 (if you lived in California!) You will have added an additional $14,000 to your equity with your payments and you would have spent $58,000 in interest. Sooo, you take the $20,000 initial investment plus the $14,000 in additional principal paid gives you a total of $34,000 invested. Take the $100,000 increase in value less the $58,000 in interest you paid and you have a net increase of $78,000. $78,000 divided by $34,000 gives you a return rate of 229%. Yup. That's two HUNDRED and twenty-nine percent or, slightly more than double your money in five years. Divided by 5 gives you an annual return rate of about 45%. Not bad.
My mind is wandering. Damn ADD.
Edit: Oh, damn. Forgot the original point! THAT, is what leveraging your money is all about. You put out 20,000 but you get to use 180,000 that belongs to someone else.
--Wag--