The one that shows a 10% reserve requirement magically turning a $100 deposit into a hair less than $1000?
I get it. Would you 'splain that to the Toddster for me?
I'd do it myself, but clearly my teaching skills aren't up to the challenge.
Table:[7] Fractional-Reserve Lending Cycled 10 times with a 20 percent reserve rate (sources: The Principle of Multiple Deposit Creation[8], Federal Reserve Bank of New York[9], Bank for International Settlements[4]) | ||||
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individual bank | amount deposited | amount lent out | reserves | |
A | 100 | 80 | 20 | |
B | 80 | 64 | 16 | |
C | 64 | 51.20 | 12.80 | |
D | 51.20 | 40.96 | 10.24 | |
E | 40.96 | 32.77 | 8.19 | |
F | 32.77 | 26.21 | 6.55 | |
G | 26.21 | 20.97 | 5.24 | |
H | 20.97 | 16.78 | 4.19 | |
I | 16.78 | 13.42 | 3.36 | |
J | 13.42 | 10.74 | 2.68 | |
K | 10.74 |
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total reserves: | |
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89.26 | |
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total amount deposited: | total amount lent out: | total reserves + last amount deposited: | |
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457.05 | 357.05 | 100 | |
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commercial bank money created + central bank money: | commercial bank money created: | central bank money: | |
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457.05 | 357.05 | 100 |
If you can follow the math, you'll see that subtracting total loans from total deposits gives you the reserves.
In your bank example, deposits are $10,000 loans are $100,000 and reserves are $10,000.
Let me know how you managed to make $10,000 - $100,000 = $10,000.
Do you work for the government? LOL!
I'd do it myself, but clearly my teaching skills aren't up to the challenge.
Your thinking skills need some help too. LOL!