Re:We will not pursue the potential acquisition of FTX
by JumpCrisscross on Thursday November 10, 2022 @10:17AM
(#33547680)
> bank must reach some level of capital requirement to make this loan
No, they don’t. We force them to through fiat. But credit isn’t created from money—credit is money. Left to their own devices, financial systems create as much credit as the market will bear, then the market shifts, money vanishes and voila, a panic.
Re:We will not pursue the potential acquisition of FTX
by chii on Thursday November 10, 2022 @10:16PM
(#33556922)
and after said panic, you end up with "some level of capital requirement to make this loan".
"we force them through fiat", is just the same as "we force everybody to not murder and steal".
The bank must reach some level of capital requirement to make this loan. In other words, if the bank does not have enough reserves, they cannot make this loan.
The bank can use customer deposits as part of their reserves. They can also borrow from another bank (presumably, paying them interest). Lastly, i think central banks also have a reserve borrowing method (but not sure about this).