[getsoutalive]

Your question was "You put $100 in the bank. The bank loans out $90 and keeps a $10 reserve. How is that like counterfeiting?"

I simply explained how they turn a $100 deposit into a claim on $100 and a $90 loan. Of course they do not have a printing press, but I did not say that is was counterfeiting, I said it was like counterfeiting. Your answer that the central bank stands ready to make the depositor good should the loan default, is where the actual printing would take place.

Now, if the banker made loans from time deposits, a CD for example, that is different. Because the depositor gives up his claim for a specified period, the banker may loan that money for a similar period of time without creating the problem described above.

[Toddsterpatriot]

Now, if the banker made loans from time deposits, a CD for example, that is different.

You know the reserve requirement on CDs is zero, don't you? If the borrower defaults, the CD holder gets zero. At least in the original case, the depositor has $10 available.

I guess we shouldn't allow deposits and loans?