Quote:
Originally Posted by aka123
No, I wasn't saying the same thing. Lending from what you have got is totally different thing than lending from what you don't have.
But yeah, bank can lend 90 % of your deposits to you and keep 10 % in reserves. Although, not very useful practice regarding the customer, as you have to pay interest. So, no motive to do so.
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So where did the extra $90 come from in your scenario. Also what if instead they put your entire $100 into reserves and loaned it back to you (without interest) what happens to your scenario then? I'll tell you, your $100 turned into $1000 only $900 of which they draw interest. And thats if they stay within the 10x perameters. As I said some were leveraged out into the 100s.