10 June 2010
fractional reserve banking, is it just me or is it an obviously stupid thing to do?
Posted by admin under: Economics .
i found out what fractional reserve banking is. read this if you don’t know;
http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_creation
but i can’t believe they just create money out of thin air! no wonder they became so rich, and no wonder it came back to bite them!
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2 Comments so far...
Madame M Says:
12 June 2010 at 4:31 am.
Well, yeah. It is largely a fantasy, isn’t it? But could we have done the things we’ve done in the last 50 years without it? All that extra money in the system has meant significant funds available for research — advances in cancer treatment, amazing tele-technology, a computer in every phone . . . .
The thing is, we have to pay for it. And I guess we’re paying for it now. But . . . I guess only history will tell if it was all worth it, or if our technologically advanced time is just a blip, fueled by fossil fuels and plentiful (if imaginary) money.
Knuckle Head Says:
13 June 2010 at 8:55 pm.
It is a brilliant idea! It is such a efficient use of money that has enabled us to create amazing amounts of wealth and prosperity. Instead of money sitting under your mattress and being unproductive, it is put to use by people who currently need it. It is more dangerous, but fractional reserve banking has been used now for all of the modern history of America and is fine as long as people don’t over react “run on the bank”. We got into trouble this time because of greed from home buyers and lenders. Irrational greed is dangerous to capitalism.