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> On another note, there is inherent instability in debt-based economics From an adequate distance, fraction reserve banking looks a whole lot like a ponzi sch
by Zaskoda 4y ago
> On another note, there is inherent instability in debt-based economics
From an adequate distance, fraction reserve banking looks a whole lot like a ponzi scheme.
- BirAdam 4y agoI would say it is, yeah.
- marcosdumay 4y agoOnly if the debits are large enough. Interest-paying debit can be quite healthy. It does not have to be a ponzi scheme.
- w1nst0nsm1th 4y agoNo. It's not. The 2 phenomenons are very different, if you trace monetary movements from one economic actor to another. They are not even close. It's like comparing a hat and a car. https://www.investopedia.com/terms/f/fractionalreservebanking.asp https://www.investopedia.com/terms/f/fractionalreservebankin... https://www.investopedia.com/terms/p/ponzischeme.asp https://www.investopedia.com/terms/p/ponzischeme.asp
- Zaskoda 4y agoLet's look at your link for fractional reserve banking: "Banks only need to keep a specific amount of cash on hand and can create loans from the money you deposit. " So a bank can loan out more money than it has to loan. In addition to creating money out of thin air, that loan will accumulate interest fees. It gets even worse when these loans are made to another bank who will loan that money out again. No, let's look at this system, as I said, "from a distance." The entire system has X number of dollars in it and Y amount of loans. It doesn't take long and the amount of debt exceeds the amount of actual dollars that exist in the system. That is to say, there isn't enough money in the system to pay all of these loans back. It's worse than a Ponzi.
- imtringued 4y agoYou mean any banking scheme where creditors decide when debts are paid.