Todd, you already said that each loan was fully funded, and yet with the slightest bit of research you would find out that the banks operate on fractional reserves. This reserve fraction is set by the Federal Reserve and member banks must keep that fraction of their outstanding loans in reserve. At 10% each bank has 90% of their outstanding loans backed by nothing. If you could be so wrong in such a simple thing in your first post why should I believe anything else you have to say?
We've had this discussion before Todd and you were extremely rude. And now you have shown yourself to be basically ignorant of how our monetary system works. Don't trust me Todd, read what Henry Ford had to say on the matter, or does he have to post proof of what he knew too?
Todd, you already said that each loan was fully funded Only because they are.
banks operate on fractional reserves.
Yes.
Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is only required to hold reserves equal to a fraction of its deposit liabilities.[1] Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.[2]
Fractional-reserve banking
banks must keep that fraction of their outstanding loans in reserve.
No. They reserve a portion of deposits, not a portion of their loans.