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It's interesting you describe it as "fractional reserve banks" given the fractional reserve bit has been largely irrelevant for a good while now (and in many co
by hgomersall 5y ago
It's interesting you describe it as "fractional reserve banks" given the fractional reserve bit has been largely irrelevant for a good while now (and in many countries, flat out wrong). For sure though, it would be super useful if everyone knew how banks work.
- geysersam 5y agoHow do you mean? Why do you say the fractional reserve bit is irrelevant?
- hgomersall 5y agoI mean reserves don't actually constrain lending: http://www.debtdeflation.com/blogs/2012/04/02/ptolemaic-economics-in-the-age-of-einstein/ http://www.debtdeflation.com/blogs/2012/04/02/ptolemaic-econ... Edit, also: http://www.debtdeflation.com/blogs/2012/03/29/krugman-on-or-maybe-off-keen/ http://www.debtdeflation.com/blogs/2012/03/29/krugman-on-or-...
- throw0101a 5y ago> Why do you say the fractional reserve bit is irrelevant? Fractional banking hasn't been a thing for decades. Tobin called re-loaning deposits the "Old View" in 1963: * https://cowles.yale.edu/sites/default/files/files/pub/d01/d0159.pdf https://cowles.yale.edu/sites/default/files/files/pub/d01/d0... Some countries haven't had reserve requirements for over thirty years: * https://en.wikipedia.org/wiki/Reserve_requirement#Canada https://en.wikipedia.org/wiki/Reserve_requirement#Canada Roche has a good paper on the modern monetary system: * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 See also the Bank of England: * https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...