Book Nook Message Board - Msg: 17071729

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Pastimes : Book Nook

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To: Ilaine who wrote (402)	2/16/2002 4:13:36 PM
From: Don Lloyd	Read Replies (1) of 443

CB - ...Even when a share of stock is sold at a loss, no money was ever "lost." The money was simply transferred from one account to another.... Is this really true? What if the purchase money was borrowed from a fractional reserve bank and cannot be repaid? The bank then has to eat the loss and suffer a reduction in its reserves. This then results in a multiple decrease in the outstanding loans possible in the next time period. This decrease in the outstanding credit level is a real reduction in the broad money supply. I don't know if this is true or not. If it weren't so confusing, banks would never have been allowed to get away with it. -g- Regards, Don

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