3 ms·

But not increasing it as fast as the loans increase, hence, fractional reserve.

• kgwgk 4y ago
  If the fraction was to stay constant deposits would increase as fast as loans. In fact the problem of the US banking system in the last years has been that deposits have been increasing much faster than loans.
  • tome 4y ago
    > If the fraction was to stay constant deposits would increase as fast as loans. In relative terms yes, in absolute terms, they'd be lower. > the problem of the US banking system in the last years has been that deposits have been increasing much faster than loans Yes, it seems to be. "Too much money chasing too few returns", as they say.
    • kgwgk 4y ago
      > In relative terms yes, in absolute terms, they'd be lower. Not really. The Loan-to-Deposit ratio is usually lower than one so if both double that means that deposits grow more than loans in absolute terms.
      • tome 4y ago
        Yeah, that's my misuse of the term "deposit" where I meant something like "total reserve amount".