Fractional reserve banking
category: general [glöplog]
Banks can and do crash.
There's a bunch of people who've lost faith in their bank. They're not sure their money is safe so they're taking it out, and as a consequence the money that's not yet been taken out becomes less safe. Once that gains enough momentum, the bank is virtually doomed (and whoever doesn't pull out their investment in time will lose it).
Of course, Northern Rock suddenly found itself backed by the UK government who risked billions of pounds of taxpayer money in an effort to save the (private) company. The reason of course, apart from standard nepotism, is that the collapse of one bank could have a cascading effect on other banks, insurance companies, pension schemes, etc.
Anyway. ;)
There's a bunch of people who've lost faith in their bank. They're not sure their money is safe so they're taking it out, and as a consequence the money that's not yet been taken out becomes less safe. Once that gains enough momentum, the bank is virtually doomed (and whoever doesn't pull out their investment in time will lose it).
Of course, Northern Rock suddenly found itself backed by the UK government who risked billions of pounds of taxpayer money in an effort to save the (private) company. The reason of course, apart from standard nepotism, is that the collapse of one bank could have a cascading effect on other banks, insurance companies, pension schemes, etc.
Anyway. ;)
was just watching zeitgeist, part 3 mentions the issues of central banking / federal reserve banking.
federal reserve != fractional reserve
And the problems with fractional reserve banking aren't really conspiracy theories. The dispute is over the significance of the risks, not over the nature of the problem. Everyone agrees that building an entire world of material goods by trading in value that doesn't exist yet is at least questionable.
And the problems with fractional reserve banking aren't really conspiracy theories. The dispute is over the significance of the risks, not over the nature of the problem. Everyone agrees that building an entire world of material goods by trading in value that doesn't exist yet is at least questionable.
You guys talk about such boring shit!
It's boring, but that doesn't mean it's not important.
