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Bullshit! - About 10 banks per year fail insolvent from lack of deposits. Traditional banks had a 10% reserve while shadow banks leverage below 3% including finance companies, asset-backed commercial paper (ABCP) conduits, structured investment vehicles (SIVs), credit hedge funds, money market mutual funds, securities lenders, limited-purpose finance companies (LPFCs), and the government-sponsored enterprises (GSEs).
When a bank lends money, it becomes a deposit in another account that they lend again into another account & so on again, again & again in an endless loop.
Banks also sell or borrow against loans to create additional loans. This is why Bush had to bailout Wallstreet. Freddie Mac had a leverage ratio of about 70:1. Lehman Brothers was leverage at 44:1 before it became insolvent. Currently US Bancorp is leveraged at 15:1.
About 10 banks per year fail insolvent from lack of deposits.
If they could lend $10 for every $1 in deposits, how can they fail?
When a bank lends money, it becomes a deposit in another account that they lend again into another account & so on again, again & again in an endless loop.
Your original claim was wrong? DURR
Freddie Mac had a leverage ratio of about 70:1.
Explain your understanding of what that means. I'm happy to clear up your confusion again.
Banks failed because they didn't have actual physical US Dollar currency in their possession because they lent it plus the 9 more digital deposit entries they created for every loan they signed.
About 10 banks per year fail insolvent from lack of deposits.
If they could lend $10 for every $1 in deposits, how can they fail?
When a bank lends money, it becomes a deposit in another account that they lend again into another account & so on again, again & again in an endless loop.
Your original claim was wrong? DURR
Freddie Mac had a leverage ratio of about 70:1.
Explain your understanding of what that means. I'm happy to clear up your confusion again.
Banks failed because they didn't have actual physical US Dollar currency in their possession because they lent it plus the 9 more digital deposit entries they created for every loan they signed.
I have $100,000 in one of my BofA checking accounts, yet I can't go to the teller and get more than $10,000 cash today, because they don't have it. If 10% of us depositors demand our cash, the bank will collapse.
All those bank digital deposit entries they created for every loan they signed are still being used digitally circulating between their accounts to purchase goods driving up prices.
Banks do loan more than the physical US dollar paper currency they receive. They simply add more digital credit to their debtor accounts. A debtor uses that credit to pay (credit) another debtor's account for a good or service. Any physical currency banks receive is kept to satisfy a reserve requirement for all the new digital credit they added to accounts.Banks failed because they didn't have actual physical US Dollar currency in their possession
Exactly! When you lend money, you might have a problem if there is a run on your bank.
because they lent it plus the 9 more digital deposit entries they created for every loan they signed.
You're lying. They can't loan multiples of the deposits they receive.
I have $100,000 in one of my BofA checking accounts, yet I can't go to the teller and get more than $10,000 cash today,
That's because they receive no interest on vault cash, not because they lent out $1 million based on your $100,000 deposit.
Trump printed all the value of my savings out. Stole our gold from Fort Knox & depleted our US oil reserves.Awwww, poor girl. Let it all out.
Feel better now?
Banks do loan more than the physical US dollar paper currency they receive. They simply add more digital credit to their debtor accounts. A debtor uses that credit to pay (credit) another debtor's account for a good or service. Any physical currency banks receive is kept to satisfy a reserve requirement for all the new digital credit they added to accounts.
