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> If provide an overnight loan for you 10 times, I haven't spent $10B dollars. No, but you had to have had $10B to transfer. > Same if I had guaranteed $100B.
by anamax 16y ago
> If provide an overnight loan for you 10 times, I haven't spent $10B dollars.
No, but you had to have had $10B to transfer.
> Same if I had guaranteed $100B.
No, but someone had to believe that you had access to $10B in case the guarantee was needed.
> Save for a default, I haven't spent anything (actually I made money).
"I made money" doesn't follow. Whether or not you made money depends on the terms. And, even if you did make money, it doesn't follow that it was a good deal. (The risk may have been greater than the return. The fact that you haven't been in an accident doesn't imply that not wearing seat belts is a good idea.)
- jonknee 16y ago> No, but you had to have had $10B to transfer. No, I would have had to have just $1B (it gets tossed back and forth--with interest given to the Fed). Also, the Fed doesn't need the $1B, it can create it and then destroy it when it's deposited back. It's electronic these days, so a number is incremented and decremented in a database.
- anamax 16y ago> No, I would have had to have just $1B You're right - I misread. > Also, the Fed doesn't need the $1B, it can create it and then destroy it when it's deposited back. It's not quite that simple. Everything is okay until it isn't deposited back. Then there's an extra $1B in the economy.