Emersons Financial Eve of Destruction Board Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Emersons Financial Eve of Destruction Board

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Proud Deplorable who wrote (12)	9/24/2007 7:37:30 AM
From: tyc:>	of 15

>>tell me where the rest goes. My understanding; First let me correct myself. I implied that a bank creates money when it makes loans. I should have said 'the banking system' creates.. etc. Yes, I suppose you can say it just sits there. It constitutes the banks' reserves, to be used as/when depositors require hard cash, (i.e.total reserves provide the minor amount of cash that might be withdrawn from the banking sytem). The whole system hinges on the fact that money generally stays within the banking system; a withdrawal from one bank for use, becomes a deposit in another bank after use. My understanding is that a bank borrows from the CB (only) to maintain the level of its reserves. It can also borrow from other baks in the system for the same purpose. (Incidentally, IMHO the same "creation" occurs legally when stock is borrowed/loaned for shorting. The purchaser of the short (as well as the lender) both believe they own the same share of common stock, ad infinitum. The "reserve" in this case is the margin requirement of the short. All logical, uncomplicated, and above board and based on the fact hat very few people require stocks to be held in hand)

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next