Asklemmy

43945 readers

625 users here now

A loosely moderated place to ask open-ended questions

Search asklemmy 🔍

If your post meets the following criteria, it's welcome here!

Open-ended question
Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
Not ad nauseam inducing: please make sure it is a question that would be new to most members
An actual topic of discussion

Looking for support?

Looking for a community?

Lemmyverse: community search
sub.rehab: maps old subreddits to fediverse options, marks official as such
[email protected]: a community for finding communities

~Icon~ ~by~ ~@Double_[email protected]~

founded 5 years ago

MODERATORS

[email protected]

441

What industry secret are you aware of that most people aren't? (programming.dev)

submitted 5 months ago by [email protected] to c/[email protected]

643 comments fedilink hide all child comments

you are viewing a single comment's thread
view the rest of the comments

[–] [email protected] 3 points 5 months ago* (last edited 5 months ago) (2 children)

Holy shit. I get it! That's a great explanation and I really appreciate your taking the time to type it all out. I'm glad we don't have Lemmy medallions to award but, if we did, I'd give you one. I now see how a 100% reserve requirement, i.e., all deposits completely backed in cash, would entirely change banking.

The only thing that feels weird to me is the virtual money the bank creates doesn't seem go away once it's paid back. For example, if a mini bank only had $1000 and lent $900 with a 10% reserve, they'd end up with $1900 once the loan is repaid (ignoring interest). Or does the $900 they lent create a -$900 for the bank that is cancelled through repayment?

[–] [email protected] 1 points 4 months ago

Or does the $900 they lent create a -$900 for the bank that is cancelled through repayment?

Correct (effectively). Remember how you are "loaning" money to the bank by depositing money in ur bank account? Think about it - if someone loaned you money, and you spent it somewhere, would you have 0 money or would you have negative money (in terms of cash)?

Interestingly, this is why Nordic countries technically have one of the highest wealth inequalities in the world. It's because they easily get home loans as the government acts as their guarantors. Here's a vid to explain this.

Holy shit. I get it! That's a great explanation and I really appreciate your taking the time to type it all out. I'm glad we don't have Lemmy medallions to award but, if we did, I'd give you one.

Awwww thankssss

[–] [email protected] 1 points 5 months ago

While the loan is outstanding the bank would only have $100 ($1000 - $900 loaned out), so when it is repaid they go back to $1000.