Posted on 03/18/2013 6:46:57 AM PDT by Kartographer
Stock markets across Europe and Asia tumbled today as investors reacted to an unprecedented raid on bank accounts in Cyprus prompted by a £8.6billion bailout by the European Union. As the Cypriot parliament delayed a crucial vote on the measure for the second time, angry scenes erupted on the streets of the capital Nicosia. Protesters who stand to lose ten per cent of their savings stood outside the Parliament building holding anti-German banners which left doubt where they believe the blame lies for the latest crisis to envelope the eurozone.
Meanwhile, many Britons who have moved to the Mediterranean island face losing thousands in savings as they are unlikely to be compensated. The British government has said it will pay back troops stationed on Cyprus who have cash seized.
(Excerpt) Read more at dailymail.co.uk ...
Of course that's not true. If it were, no bank would ever go out of business, no bank would ever suffer a run.
Fractional reserve banking means banks hold a fraction of deposits in reserve, and lend out the rest (less than 100%).
Look, 2 deposits, $100 and $80, two loans, $80 and $64. Every loan funded by a larger deposit. If a bank could really create money out of thin air, why would they need a deposit, ever?
I don’t suppose these weasel politicians have considered that their proposal will spark a run on the banks.
And drive Cyprus further into the arms of Russia, who oh by the way, would love nothing more than to build a naval base there.
The government already owns your land. Just try not paying your Real Estate taxes (rent)!
you are preaching to the chior - ive got a second place (80 acres) in the hills 60 miles from our place in town - I can swing the extra taxes - but its not really an doption for some folk - that was more my point - thanks for the thoughtful response
The reserve requirement is 10%
You deposit $100 in the bank
That bank can then loan out $90 to Sarah and keep $10 as it’s reserve.
so you still have your balance of $100 in your bank.
Sarah can then deposit that $90 loan in her bank so now she has $90 as her balance in her account and you have $100 in your account . how is that not creating $90 out of thin air since your $100 now turned into $90 + 100 = 190?.
The reserve requirement is 10%
You deposit $100 in the bank
That bank can then loan out $90 to Sarah and keep $10 as it’s reserve.
so you still have your balance of $100 in your bank.
Sarah can then deposit that $90 loan in her bank so now she has $90 as her balance in her account and you have $100 in your account . how is that not creating $90 out of thin air since your $100 now turned into $90 + 100 = 190?.
http://www.yesmagazine.org/issues/the-new-economy/how-banks-make-money
You cannot see the forest because of all the trees that are in your way.
Banks can create money from deposits, not thin air.
If they could do that, they wouldn't need a deposit.
I asked simple questions and you go philosophical on me.
Ok, one least try, if banks can create money out of thin air, why the hell do the Cypriot banks need a bailout from the EU? Why do they need to give their depositors a haircut? Why not just create some money and make everything better?
Forest for the trees? Sure.
who are you bill clintion “depends on what the meaning of is is” . you and your buddy are spreading misinformation . I posted the truth, read it again since you didn’t understand.
The reserve requirement is 10%
You deposit $100 in the bank
That bank can then loan out $90 to Sarah and keep $10 as its reserve.
so you still have your balance of $100 in your bank.
Sarah can then deposit that $90 loan in her bank so now she has $90 as her balance in her account and you have $100 in your account . how is that not creating $90 out of thin air since your $100 now turned into $90 + 100 = 190?. It is that $90 didn’t exist but the bank created it out of thin air. but they can do a lot more ,just repeat the above
http://www.yesmagazine.org/issues/the-new-economy/how-banks-make-money
Excellent. The bank created $90 in loans out of the $100 deposit. Not out of thin air.
but they can do a lot more ,just repeat the above
Sure. They can create an $81 loan out of a $90 deposit. A $72.90 loan out of an $81 deposit.
Yeah, blame it on Merkel, Cypriots. As if the government you elected had absolutely *nothing* to do with the mess you’re in.
The fallacy that's tripping you up is that the the first bank has a liability of $100 to you and the second bank has a liability of $90 to her, but not necessarily the actual cash (not all of it). If you and her and others make demands to withdraw your cash the bank might have to borrow that amount from the Federal Reserve to pay you off. The Fed is who is creating the money. (BTW, the bank actually calls the deposits assets, not liabilities, but they clearly incur liabilities in the normal sense. They are actually borrowing from depositors).
In Europe, the ECB (I believe it is) has pledged to fulfill their normal liquidity obligations to the Cyprus banks, so they can conduct normal operations if/when they re-open, but this is nowhere near the liquidity that would be required to get everyone's money out. They wouldn't be able to come up with that, no way, because they don't have their own central bank.
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