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Thread: Fractional banking questions??

  1. #11

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    Quote Originally Posted by Lorian View Post
    Fractional reserve started and starts with depository runners (banks) that lend out the valuable goodies that people brought them for storage purposes. Not with a central bank.
    http://en.wikipedia.org/wiki/Fractional_reserve_banking
    Read the first lines.
    Sorry for being obtuse here...

    If the Central bank didn't issue the money in the first place, there'd be nothing for the fractional reserve system.

    Of course the key word here is issue

    As in: some banks are allowed to "issue"

    issue indeed. let's see if they can issue silver. other than SLV

    *
    Last edited by chinewalker; 11-08-2012 at 02:16 PM.
    A skeptic's work is never done.

  2. #12

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    Quote Originally Posted by chinewalker View Post
    Sorry for being obtuse here...

    If the Central bank didn't issue the money in the first place, there'd be nothing for the fractional reserve system.

    Of course the key word here is issue

    As in: some banks are allowed to "issue"

    issue indeed. let's see if they can issue silver. other than SLV

    *
    chinewalker has a point here. There was no money in the beginning to derive fractions from.

    "Currency", maybe, but Federal Reserve currency is total fiat. To confuse currency with money is absurd.

    .
    Last edited by AnotherDave; 11-08-2012 at 10:16 PM.

  3. #13

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    Quote Originally Posted by chinewalker View Post
    Sorry for being obtuse here...

    If the Central bank didn't issue the money in the first place, there'd be nothing for the fractional reserve system.

    Of course the key word here is issue

    As in: some banks are allowed to "issue"

    issue indeed. let's see if they can issue silver. other than SLV

    *
    What argument is that?
    You can aswell also insert the condition 'if the Earth wasn't there'.
    It doesn't need a central bank to apply a fractional reserve method.
    Only some 'behind the scenes' and/or legal allowance/tolerance/ignorance.
    It's not hard.
    Imagine I'm Lorian and I have a safe.
    Imagine you're chimewalker and you don't have a safe.
    On some day, the sun says hello above the horizon and you knock my door to ask me if I can put your bag diamonds in it. I say ok and I give you a signed note that proves your ownership of the bag diamonds.
    After a year I notice that the bag diamonds still sits there. And I come across an idea. What if I lend out some diamonds for a fee? Till the time that you revisit me to reclaim your bag diamonds, I might have the lent out diamonds back.
    See what happened? I applied a fractional reserve method on the bag diamonds. Where do you see a central bank in the story? Nowhere. That is just what common banks are allowed to do.

    And hence, my first sentence, the one you claimed from that it was wrong, fractional reserve is a cascade that starts from deposited money.
    the void

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