Thursday, March 27, 2008

Fractional Reserve Banking – Fractured

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 (653 views)
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One thought on “Fractional Reserve Banking – Fractured

  • |david Jones says:

    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.

    Reply
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