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SleepyHead

Fractional Reserve Banking For Dummies

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Could you explain it this quick?

When is the media going to actually expose this?

Yet more QE today, on top of the decades of fractional reserve banking, and yet no analysis of the expansion of the money supply they create.

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Could you explain it this quick?

When is the media going to actually expose this?

Yet more QE today, on top of the decades of fractional reserve banking, and yet no analysis of the expansion of the money supply they create.

not quite right, all the man needs to deposit for the bank to lend 90 is 90..the reserve is in banks capital from shareholders and other assets. so the bank would need 9$ of its own in reserve.

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Guest UK Debt Slave
not quite right, all the man needs to deposit for the bank to lend 90 is 90..the reserve is in banks capital from shareholders and other assets. so the bank would need 9$ of its own in reserve.

I think it works out the same both ways doesn't it?

Ultimately, if the reserve requirement is 10%, the banking system can end up multiplying the original deposit X10.

It doesn't matter that the money is deposited in different banks on its journey because it is a closed loop system

Correct me if I'm wrong of course.

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I think it works out the same both ways doesn't it?

Ultimately, if the reserve requirement is 10%, the banking system can end up multiplying the original deposit X10.

It doesn't matter that the money is deposited in different banks on its journey because it is a closed loop system

Correct me if I'm wrong of course.

its similar.

but in the case on the film, if the first depositor requires his 10 back he can only get back 1. cos the bank has nothing.

In the capital adequacy scenario, he can have his 10 back because the central bank will see the bank is adequately capitalised and will loan the 10 to the bank on a short term basis.

Edited by Bloo Loo

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