fractional reserve banking in australia, page-6

"well it's not just about money deposited, it's about money created based on deposits"


This lunatic conspiracy theory has been kicked around for decades, and there is no shortage of newbies who continue to buy into it.

There is no mystery about this at all. It's normal banking. All it means is that the bank carries a small proportion of their assets in cash to honour withdrawls, but not enough if every depositor decided to withdraw all their money at the same time. Why is that ? Because the bank has lended the money long-term to people like home owners. There is no *money creation* involved.

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