Quote:
Originally Posted by onwebcam
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.
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The extra 90 came from lending it. You owe 100 for the depositor and the loan taker ows to you 90.
You can't put all in reserve and at the same time put it into action, it's against the whole definition or reservers. I have done military service, so I explain this military wise: you have 100 soldiers, if you put them all into action at the same time, you have zero reserves. If you keep 30 of them out of the fight, you have 30 % reserve. Same with money, but in banking lending or investing is the "action".