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So fractional reserve banking is simply a mix of full reserve banking and savings and loans banks. Banks keep some reserves say 10% and loan out the other 90%, then the money loaned is spent within the economy, redeposited and the process repeats. In full-reserve banking the deposits are simply stored...
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I just finished the lecture course by Peter Klein and Joe Salerno, the Causal-Realist Approach to Economics, and the last lecture on banking and the business cycle was very fascinating. However, I was confused when Mr. Salerno said that the costs go up in the capital goods industry. Firstly, bank reserves...
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[quote user="Okooka"]But isn't the problem with FRB as well? Banks give out multiplied ammount of credit based on deposits, so when a crisis hits and people start to default, the money supply contracts. Do I have anything wrong with seeing it like that? Admittedly I still don't quite...