26 ms·
The mechanics are incorrect but he has the general idea of the benefit banks accrue from each additional deposited dollar.
by SHIT_TALKER 11y ago
The mechanics are incorrect but he has the general idea of the benefit banks accrue from each additional deposited dollar.
- dwd 11y agoHighly recommend reading Steve Keen's "The Roving Cavaliers of Credit" for a dose of reality on the whole process. tl;dr "banks extend credit, creating deposits in the process, and look for reserves later" http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/ http://www.debtdeflation.com/blogs/2009/01/31/therovingcaval...
- SHIT_TALKER 11y agoYou will find no dispute from me as to whether banks actually do restrict themselves to limiting their credit creation to a ratio of their deposits. But that is how it is supposed to work.