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The Grip Of Death

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Ive just finished 'the grip of death' by micheal rowbotham (someone on this website suggested reading it) and found it interesting and alarming, i noticed that some of the reviews on amazon.com were pretty derogatory basically saying the guy didnt know what he was talking about but not giving any specifics. - has anyone read it and if so what do they think?

also i have a specific question about fractional reserve banking...... if there is a fractional reserve of say 10% does that mean that if i deposit 10 pounds in the bank the bank is then alowed to lend out 90 pounds (as far as i can understands that is what he is saying) - but i read somewhere else (wikipedia) that if i borrowed 10 pounds the bank could lend out 9 pounds and kept 1 pound in reserve -- can anyone explain?

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hello neva

fractional reserve banking means exactly that

a fraction is held in reserve of each loan giving out.

every mortgage giving is newly created money, i think the percetage to be held is 9%

so if a bank takes in deposits of 1 million it can then loan out 11 million, this 11 million is just created as a number on a balance sheet, it never existed before but it does now.

i works quite similar to naking shorting, where you put down 1 million bet on say the movement in oil, but your exposed to 11 million worth of oil and its price movements.its like the anti-thesis of this.

basically gives banks massive exposure for there buck.

when the bank has a run on its money, for every pound they lose they lose 11 pound of what they can potentially loan, hence it only takes a withdrawl of money from a bank of 9% of there loans to bankrupt it, add on what profits it may have sitting as well as defense.

So while it works one way allowing the bank to get richer faster, the downside is they can go bankrupt a lot faster too.

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profits from interest?

do deposits in the bank count as assets?

>No. It means that if the bank's own assets (from retained profits or the sale of new >shares) increase by 10 pounds they can then lend 100.

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  • 302 Brexit, House prices and Summer 2020

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