4 ms·
This article misrepresents just how much of the economy it's made up of these IOUs. If you deposit $100 and there's a 10% reserve requirement, that doesn't mean
by scottmsul 6y ago
This article misrepresents just how much of the economy it's made up of these IOUs. If you deposit $100 and there's a 10% reserve requirement, that doesn't mean the bank can loan out $90. Rather, they can loan out $1000 since the $100 is 10% of that.
- baobabKoodaa 6y agoThe article did not make any claims about how much the money supply can expand within a specific regulatory environment (such as the 10% reserve requirement you mentioned). I felt like that was outside the scope and would not be possible to present with a simple example.