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If you deposit $10,000 into a bank 🏦

Here’s what happens…

The bank set asides a 10% and loans out the rest of your money.

How it works, say another person comes in and asks for a car loan of $9,000.

At this moment the banks loans out $9,000 from your original deposit, it isn’t there anymore.

The borrower then pays the person selling the car and they deposit the money into another bank which is the part of the same central banking system.

This $9,000 is treated as a new deposit.

The process continues…

The money gets redeposited and re-loaned until the initial deposit of $10,000 becomes $100,000.

The banking system just created $90,000 by loaning out your money.

Banking system is a fraud. Learn #Bitcoin

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Discussion

Nice and Kind Vic 2y ago

Its even simpler. Theres no reserve requirements so they take your 10000 and buy treasuries pocketing the difference on interest rates.

They make money out of thin air when people issue securities (e.g. get a mortgage, car loan, etc) that they "buy" by updating numbers in your account balance, and recording as an IOU.

Theres no longer a connection between deposits and loans

Toby McMann 2y ago

They don't teach you this in school, even at the MBA level at elite schools. Hmm. 🤔

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TK 2y ago

There are actually no reserve requirements as of 2020 so it's much worse than you stated

bot 2y ago 💬 3

That’s true, but what’s wrong with factional reserve banking? It requires faith, like that which many ppl have here for bitcoin.

Mark Camper 2y ago

1) It's compounding leverage, and becomes very sensitive to even marginal loss of faith. You can say that 20% loss of faith in fractional banking is terminal*. 20% loss of faith in Bitcoin is just 20% loss of value.

*because it would be terminal, their risk of such losses is implicitly insured by the tax payers (slaves) shavings and time.

2) The banking cartel doesn't allow your rich uncle to issue loans out of thin air. This privilege is just for the counterfeiting elite.

bot 2y ago

That’s somewhat true, but bitcoin would be similar (and it probably is, I bet most exchanges don’t actually hold as much bitcoin as they ostensibly do based on deposits) but it’s really a fantasy question because bitcoin isn’t a real currency.

But yeah, regulated institutions have certain allowances, even some they shouldn’t tbf.

Habanero 2y ago

Basically it's a con game. Their most valuable asset is the confidence they can aquire. Now I see why they hate our memes so much...

Mark Camper 2y ago

Yup. Memes are the power of the (seemingly) powerless.

halfnull 2y ago

bitcoin and crypto are no different. the only thing with real value are tangible assets. money just exists to trade things of actual value more easily.

Mark Camper 2y ago

What about Pokémon cards?

halfnull 2y ago

that's just a solid investment obviously. joking aside, it's hard to buy a house with nothing but Pokemon cards.

Mark Camper 2y ago

My point is - value is subjective. For you, it might be only in physical things, for others it might be something else.

The function of the money has value by itself. Some things serve this function better, and then get monetary value premium, some worse. And this perception is subjective as well.

I'd just argue that I can see more money-utility in fixed amount of digital tokens that people largely hold in their 'wallets' than the levered debt instruments we're forced to custody with 3rd parties.

Azz 2y ago

The difference is the fixed supply vs one that is constantly being debased in waves of credit followed by periods of contractions.

bot 2y ago

Fixed supply currencies are deflationary, which is worse.

70b34845... 2y ago

The bank will first have some questions about the source of funds if you deposit 10k cash

nobody 2y ago

No! When that person comes in for the $9000 loan, they DONT use anyone’s deposits. They create an asset (loan) and liability. The asset is the $9k loan and the liability is $9k of newly created money. This is how money is created -through LOANS!

Money=Debt

A scam completely.

Jerry Curlan 2y ago 💬 1

The creature from Jekyll Island

freeborn | ἐλεύθερος | 8r0gwg 2y ago

Since about March 2020 the reserve requirement is zero.

Zero.

AJ Nobody ⚡🏴 2y ago

Came to drop that. 🤝

We USED to be fractional reserve.

Glad others continue to spread the word too. Original date had little fanfare.

idsera 2y ago

Not on Xapo Bank (https://www.xapobank.com/). They don't lend users money to other users. They are pro-bitcoin and pay the 4.1% yield from dollars deposits in Sats.

idsera 2y ago

And they support bitcoin lightning.

⚡tephen 2y ago

Reminds me of this video. Worth a watch

https://youtu.be/iFDe5kUUyT0

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BitcoinEagle.dev 2y ago

You've got that from the 2009 YouTube video? It doesn't work like that. Nowhere is there any 10% or 90% number

nodebrook ⚡💊 2y ago

That is exactly how it works, well explained.

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Azz 2y ago

Is the $1000 actually money or some other debt instrument?

Sovereign Being 2y ago

I don’t think it works this way.

When you take out a 500k mortgage, they are not lending you 90% of someone else money. They literally have a license to magic up that 500k out of nowhere, and lend it to you at interest.

Since the scamdemic, there is no longer a requirement to have any reserves.

farooq 2y ago

True