Get this... If I deposit say $10,000 into my bank. My bank has to set aside 10% and is allowed to loan the remaining $9000. Now if Lisa takes out a loan for $9000, the bank treats that as a new deposit, so they have to put $900 aside and can loan out the remaining $8100. Now if John takes out a loan for $8100, they treat that as a new deposit and have to put aside $810 and can loan out the remaining $7290. On and on until there is nothing left. So from an initial deposit of $10,000, the bank creates $90,000 out of thin air! Is this right?
Posted on: Sun, 10 Aug 2014 04:16:15 +0000
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