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To: InterceptPoint

If a bank has a 5% cash reserve requirement and a $100 deposit how much of that $100 dollars can they loan out?

a) $95 backed by the remaining $5 (5% reserve)
b) $2000 backed by the entire $100 (5% reserve)

Hint: They make a lot more charging interest on $2000 than they would on $95...


17 posted on 12/20/2017 6:52:18 AM PST by null and void (The internet gave everyone a mouth. It gave no one a brain.)
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To: null and void

...As in here’s one way the current system creates money out of thin air.


18 posted on 12/20/2017 6:53:50 AM PST by null and void (The internet gave everyone a mouth. It gave no one a brain.)
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