Partial reservation is "money from the air"

in #bank7 years ago

Bank loans in a system with partial reservation is "money from the air". The amount of money drawn is really based on the volume of deposits, but not as everyone thinks "loans are our deposits". In fact, everything is much worse - for example, if the bank has $100 deposits, then at a reservation rate of 10%, it will cheat out of them $900 of new money.
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Picture Source: pixabay.com
So banks are trying to give out as many loans as possible and therefore they are not much worried about the "return". But they are very worried about the closing of deposit accounts of any kind, even if they have one bucks. These accounts allow them to create money from the air.

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Hai @aa-gudzini thank you for following me. I see your posting still have 2 article. Dont giveup. Make better tomorrow

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