Michael Foster wrote: > Stephen A. Lawrence wrote: > >> Your earlier claim, quoted below, was that an individual bank could >> lend out 10 times the amount of that bank's total deposits. The >> above quote from Wiki does not support that claim. > > OK then, banks acting in concert lend out 10 times as much money as > is deposited in individual banks.
False. Sum of all deposits is at least as large as the sum of all loans. That's the point. This same exact effect exists if the country is on the gold standard. The Fed is not involved. Please see: http://www.mail-archive.com/vortex-l@eskimo.com/msg29127.html This is a basic property of banks, not a feature of the weird economic times we live in.
