question about Fractional Reserve lending

Discussion in 'Economics' started by college_trad3r, Jan 16, 2009.

  1. If you have $100 can you lend out $1000?

    If that's the case then couldn't warren buffett create a bank with 40 billion which can lend out 400 billion.

    If you can lend more money then you have then why do you need money from savings accounts, isn't that overkill?

    Why not seperate banks that control savings account versus banks that lend?

    You will have to pay a bank to save your electronic money and you will no longer get interest on your savings.

    A FDIC is no longer needed. But we can nationalize the banks with the savings accounts, give government control over them?

    Am I thinking this wrong or...?:confused:
  2. e#21


    Add the embarrassment of losing 5% of that annually because of inflation, who would ever put money into a savings account?
  3. euclid


    Obviously not. If you have $100 deposit and you are required to keep a fractional reserve of 10%, that leaves $90 that you can lend.
  4. Ask stock_trad3r, he might know.
  5. you don't think warren's already leveraged beyond 40 billion? Fractional banking allows more than one way to leverage a $.