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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (11736)	12/9/2001 9:14:55 AM
From: Ilaine	Read Replies (2) \| Respond to of 74559

Banks can loan your money without your permission due to fractional reserve banking. By law, they have to maintain a percentage of deposits, and the rest they can loan out. Don was advocating that banks maintain 100% reserve. If a bank has to maintain 100% of deposits, then it can't loan money. If it can't loan money, it can't charge interest. If it can't charge interest, then it can't pay interest. You will have to pay the bank to store your money. Or you could give the bank permission to loan your money, in return for a percentage of the interest it charges. Which is, de facto, what we do now. But then (under 100% reserve banking) you can't use your money, because it was loaned out. So you have to forego consumption.