Quote from: blckhawk on February 12, 2024, 07:49:45 AM

ent.

I don't believe that's how they do it with the money of their clients, banks work on a fractional reserve banking system which means that they only keep a part of the deposited money in the bank while they chip in a lot of it so they can lend it to borrowers,[/quote]

Banks retain core capital which is largely based off risk assessment of the money. Even the core capital can be bond worth which in itself is a form of lending. This was largely illustrated in 2008 when the core capital of a bank was mortgage debt and because it had been so mislabeled in its risk of default it caused many banks to fail in their operations. they have changed the rules some now and generally the property market is not quite so skewed towards high risk lending as it was at that time but the overall lesson of debt leverage instability is not one we should forget.

Fractional reserve is the basis of western capitalism on every level the assets are rarely kept without leverage which means losses without recovery of the debt is especially dangerous to the balance sheets of banks. I blame not private industry but government for the 2008 failure, it was a deliberate policy of the central government to propagate a stimulus effect in lending which caused harm and poor debt. Mortgages are normally incredibly safe because its backed by an asset the but pricing of that asset itself was wrong and the entire market inflated beyond justification. It was a run away or feedback effect if anyone recognizes that scenario, it causes collapse without question with no useful purpose or work occurring ie. alot damage to the economy.

Some people think the entire modern system in national economies will reset for similar reasons. I dont know that occurs but its certainly true we lose value every year to inflation and it hurts people and benefits those with large debt operations like central government in effect we are being taxed by central banks by their policies.