Re:Double Entry Accounting for Developers
by navaati on Tuesday July 28, 2020 @11:21AM
(#23976711)
Except Fractionnal Reserve. It kinda throws off the idea, how do they do then ?
Let's see, when they lend money they don't have (which is what it is) they increase the number on your account, that is they create a big liability for themselve. On the other hand they create an asset wich is your debt to them. So accounting-wise, it works out, like theorically I could do that (lending) even if I have €0, it's all paper.
But then you're gonna go and empty that account to buy your house, reducing their liability and taking (reducing) their cash instead... that they don't have !
So how does it work ? Does it just work because you don't actually buy houses with bills and coins but with bank transfers, then just shifting the paper magic to another bank ?
To be honest I know they can do something my broke self can't, and it has to du with central banks, but what is it exactly ? Something like "if everybody happens to empty their account to cash at the same time, don't worry mate we'll print them bills and give them to you, pinky promise" ?
Let's see, when they lend money they don't have (which is what it is) they increase the number on your account, that is they create a big liability for themselve. On the other hand they create an asset wich is your debt to them. So accounting-wise, it works out, like theorically I could do that (lending) even if I have €0, it's all paper.
But then you're gonna go and empty that account to buy your house, reducing their liability and taking (reducing) their cash instead... that they don't have !
So how does it work ? Does it just work because you don't actually buy houses with bills and coins but with bank transfers, then just shifting the paper magic to another bank ?
To be honest I know they can do something my broke self can't, and it has to du with central banks, but what is it exactly ? Something like "if everybody happens to empty their account to cash at the same time, don't worry mate we'll print them bills and give them to you, pinky promise" ?