August 8, 2012
More fun facts about our financial system. When you put $100 in your bank, the bank is only required to hold 10% of your money in the vault, the rest the bank can lend out. This is known as “fractional” reserve banking (rather than full reserve). 

This is also why “bank runs” can happen, because the bank doesn’t have all of their depositors money in the vault, but only a fraction of it, hence why banks can run out of money during a “run”.

This is, of course, a false system which exists to benefit the bankers at the expense of the people. The increase in money supply also greatly distorts the economy, leading to bubbles and busts.

More fun facts about our financial system. When you put $100 in your bank, the bank is only required to hold 10% of your money in the vault, the rest the bank can lend out. This is known as “fractional” reserve banking (rather than full reserve).

This is also why “bank runs” can happen, because the bank doesn’t have all of their depositors money in the vault, but only a fraction of it, hence why banks can run out of money during a “run”.

This is, of course, a false system which exists to benefit the bankers at the expense of the people. The increase in money supply also greatly distorts the economy, leading to bubbles and busts.

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