Thursday, Mar 27, 2008
Fractional Reserve Banking - Fractured
Financial Sense Editorials: THE WORLD IS DELEVERAGING
Easy money has disappeared worldwide. This event favors certain classes of investments globally, and penalizes others.
FOR THE NEXT SEVERAL YEARS:
AVOID LEVERAGED ASSET CLASSES
1. Financial stocks, including stock brokers, banks, mortgage lenders, insurance companies, and real estate
Posted by malct @ 12:18 PM (256 views) Add Comment
1 Comment
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1. |david Jones said...
why would I add a comment to something I don't know anything about.
But, as I understood it.
If I deposit 1,000 pounds in my bank the bank has 1,000 pounds to lend to someone at a higher interest than they are paying me.
Fine. but once they've lent the 1,000 pounds that one thousand constitutes an asset to the bank of 1,000 so they are able to lend a thousand to a third person.
That thousand lent to the third person also constitutes an asset which allows the bank to lend a further thousand to a fourth person and so on ad nauseum.
But am I right?
If I am I think the banks pay lousy interest.