Fractional Reserve Banking

Posted by: Matt    Tags:  , , ,     Posted date:  November 13, 2010  |  No comment

November 13, 2010

Why are we in a huge financial mess global?  Well, I’ll tell you right now, it’s not rocket science.  It’s just simple arithmetic.  At the height of this collapse huge banks like Chase and Bank of America had up to 32x leverage.  In other words, these giant banks could loan out up to 32 times the amount of money they actually had.  So when one loan goes bad, it goes bad x32.  As anyone can see… it was just a matter of time before this house of cards came tumbling down.

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