4 ms·

not sure why you are being downvoted as if fractional reserve banking is not the status quo

• gruez 7y ago
  That's not relevant in the context of this discussion because at the end of the day, someone is not getting those interest payments. Sure, you can argue the money is still there (in the form of debt), but that doesn't help whatever entity that requires the cash now.
  • ianleeclark 7y ago
    Why do you believe some entity needs the cash now?
    • robjan 7y ago
      Other entities may not forgive the banks for failing to make repayments on their loans. There are also instruments such as bonds and fixed income which may be backed by mortgages.
      • deleted 7y ago
        [deleted]
      • ptah 7y ago
        the money is not from other entities. it is literally made up based on a fraction of the reserves the bank holds. https://en.wikipedia.org/wiki/Fractional-reserve_banking https://en.wikipedia.org/wiki/Fractional-reserve_banking