Fractional-reserve banking is the current form of banking in all countries in the world, unfortunately few people understand how it functions.
When you go to the bank and put in your money as a deposit, the bank takes your funds, sticks it in their coffers and then lends out many multiples of that dollar amount, keeping only a small portion of what it actually has on hand. These funds it has on hand are called reserves. The reserves are what the bank then uses to satisfy withdrawals when people ask for their money back.
Here is a graphic depicting the process, as you can see the bank takes the customers deposit and loans out many multiples of what it actually has.
This is a system many of our founding fathers fought vehemently against, shown in this historical illustration depicting Andrew Jackson as a heroic knight, sword in hand trying to chop heads off the hydra representing the fractional reserve banking system.
Weather or not Andrew Jackson was right in opposing it, the fractional reserve system is what we have today as the defacto worldwide standard.
Weather or not Andrew Jackson was right in opposing it, the fractional reserve system is what we have today as the defacto worldwide standard.
In response to several requests I will elaborate on this more over the next few days. Please bookmark this page and check back if you are interested!
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