Re:Follow the money: Apple vs. the FBI
by fauigerzigerk on Monday March 28, 2016 @05:41PM
(#11377641)
"fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money"
I think you misunderstand the meaning of that quote. The money supply doesn't grow beyond the amount of underlying reserves because an individual bank lends out more than it has in deposits (and other funds). The multiplier is the result of this cascade:
https://en.wikipedia.org/wiki/Fractional-reserve_banking#Exa...
I think you misunderstand the meaning of that quote. The money supply doesn't grow beyond the amount of underlying reserves because an individual bank lends out more than it has in deposits (and other funds). The multiplier is the result of this cascade: https://en.wikipedia.org/wiki/Fractional-reserve_banking#Exa...