what does fractional banking mean
Discussion
nostr:npub1t3ggcd843pnwcu6p4tcsesd02t5jx2aelpvusypu5hk0925nhauqjjl5g4 just saw this. I should have been more clear and stated “fractional reserve banking”. That said, here is a definition from Investopedia:
“What Is Fractional Reserve Banking?
Fractional reserve banking is a system in which only a fraction of bank deposits are required to be available for withdrawal. Banks only need to keep a specific amount of cash on hand and can create loans from the money you deposit. Fractional reserves work to expand the economy by freeing capital for lending. Today, most economies' financial systems use fractional reserve banking.”
The key point being that banks ‘promise’ depositors (creditors) they can withdraw ‘on demand’, but then only keep a fraction available lending it out to others for a period of time (locking it up in time).
The conspiracy: This is actually a fraudulent practice as the bankers are effectively stealing the depositors time. The market will self correct through ‘bank runs’ but then the State often bails these out.
So, is it actually a fraudulent practice and should be outlawed?
‘Fraudulent practice’
“It’s not a “reserve,” and it’s not “federal.” Although the Fed is a creature of the government, it’s not, technically speaking, part of it. It’s really controlled by the large banks, who benefit primarily through “fractional reserve” banking. In the past, when banks were just ordinary businesses that warehoused money and acted as brokers for loans made with savings, keeping a fractional reserve was a fraudulent practice that would eventually result in bankruptcy, followed by criminal charges. The creation of central banks, like the Fed, facilitated it as common practice; in effect, debt became a form of money.”
Excerpt From
Right on the Money
Doug Casey
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