Compared to you, it's obvious that I am.
http://en.wikipedia.org/wiki/Fractional_reserve_banking#Money_multiplier
If this simple diagram is still too difficult for you to understand, please let me know.
Posted on 06/08/2014 6:42:22 PM PDT by Perseverando
I’ll make it simple for you. If you give your wife $20 does that increase the supply of money in the economy?
Thank God for small favors.
The borrower buys a car.
The seller deposits $9000 in the bank.
Total bank deposits have increased by $9000.
Did I loan it to her?
Are her IOUs considered part of the money supply?
Don't think too hard.
Lol you’re not a math genius are you.
Comedian maybe?
Compared to you, it's obvious that I am.
http://en.wikipedia.org/wiki/Fractional_reserve_banking#Money_multiplier
If this simple diagram is still too difficult for you to understand, please let me know.
If the bank loans money then its deposits go down. The loan is counted as an asset as it has value due to the interest it earns.
Where money is created is much higher in the chain then your local bank.
You are mistaken. If the bank loans $9000 of your $10,000 deposit, you think your next statement shows a $1000 balance? LOL!
The loan is counted as an asset
You got one right.
Where money is created is much higher in the chain then your local bank.
Most is created at this level.
yer a genius!
Pointing out your confusion doesn’t require a genius.
that was sarcasm
theres a difference between your deposits and the banks.
If you don’t understand the simplest point, bank loans increase money supply, even I can’t help you.
they are loaning money thats already in the supply
not new money
dufus
The multiplier effect depends on the set reserve requirement. So, to calculate the impact of the multiplier effect on the money supply, we start with the amount banks initially take in through deposits and divide this by the reserve ratio.
If, for example, the reserve requirement is 20%, for every $100 a customer deposits into a bank, $20 must be kept in reserve. However, the remaining $80 can be loaned out to other bank customers. This $80 is then deposited by these customers into another bank, which in turn must also keep 20%, or $16, in reserve but can lend out the remaining $64.
This cycle continues - as more people deposit money and more banks continue lending it - until finally the $100 initially deposited creates a total of $500 ($100 / 0.2) in deposits. This creation of deposits is the multiplier effect.
Idjit.
You’re concerned about that fantasy but ignore the Fed. Yeah your a hack for them.
The Fed does not change the fact that bank loans increase money supply.
Yer a troll
You’re an idiot, noob.
What state will you relocate to?
Bump and bookmark this for later reading.
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