Replying to Avatar MattA

fractional reserve banking fuckery

* a person deposits money in a bank.

* the bank keeps a small portion as reserves and loans out the rest.

* this loaned money is deposited again, repeating the cycle.

each cycle increases the total money supply

banks create money by lending while keeping only a fraction of deposits as reserves

🚨 money is removed from the system when deposits are withdrawn as cash

* Stack Sats

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SwBratcher 1y ago

And didn’t they recently remove the required minimum deposit reserves to allow new loans without holding some back? Or was that new rule subsequently lifted?

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