Full Reserve Banking

[Fake Boris]

first of all, this isn't true: "Your calculation assumes $400 average balance rather than $2K in the case of Rah". more importantly, let's replace the initial deposit with any amount x > 0 and the reserve requirement with any number r in (0,1). you still end up with

x*[ (1-r) + (1-r)*(1-r) + ... ] = x[ (1/r) - 1 ] = x[(1-r)/r] =: L

dollars worth of loans, against L*[r/(1-r)] = x dollars worth of reserves and L+x = x*(1/r) =: D dollars worth of deposits. you still end up with L < D, which contradicts your claim.

Trivia question:

A bank has $2,000 worth of reserves, and a reserve requirement of 10%.

How much can it lend?

[hitokihitoshi]

don't pick on him. answer me.

Sorry, you're not making any ****ing sense.

[hitokihitoshi]

i've already shown that it's 18K, but your initial claim was not about the multiple ON RESERVES. you made a statement about the multiple ON

DEPOSITS.

Trivia question:

A bank has $2,000 worth of reserves, and a reserve requirement of 10%.

How much can it lend?

[Fake Boris]

I don't even know what you're talking about.

[hitokihitoshi]

really? what part was unclear? i'd be very happy to clarify.

I don't even know what you're talking about.

[Fake Boris]

really? what part was unclear? i'd be very happy to clarify.

1) Your original scenario assumed that the bank finances its reserves through deposits, which is BS.

even if it weren't

2) replace the variables in your hypothesis with in an initial deposit of $2k and a reserve requirement of 10%, and the figures provided in the previous discussion with rah are correct

[hitokihitoshi]

1) Your original scenario assumed that the bank finances its reserves through deposits, which is BS.

why is this BS?

2) replace the variables in your hypothesis with in an initial deposit of $2k and a reserve requirement of 10%, and the figures provided in the previous discussion with rah are correct

not true. the INITIAL DEPOSIT is not the same as the AVERAGE DEPOSIT, and your initial claim was about the multiple on the AVERAGE DEPOSIT.

[N35t0r]

i'm not sure that i understand this rebuttal. who is the "you" in "Your initial argument", "your claim", etc?

Fakeboris. You posted while I was typing.

[Fake Boris]

why is this BS?



not true. the INITIAL DEPOSIT is not the same as the AVERAGE DEPOSIT, and your initial claim was about the multiple on the AVERAGE DEPOSIT.

OK. Let's put aside the rest and focus on this.

An average balance of 2k is a mathematical indicator that functions just the same as if it were an initial deposit.

[hitokihitoshi]

what is "a mathematical indicator that functions just the same as if it were" some other object? please clarify or retract your initial claim.

OK. Let's put aside the rest and focus on this.

An average balance of 2k is a mathematical indicator that functions just the same as if it were an initial deposit.

[Fake Boris]

No, you tell me.

What difference would it make for the money supply if we're working with an initial deposit rather than an average balance?

[hitokihitoshi]

well, for one thing, MONEY SUPPLY / INITIAL DEPOSIT is NOT equal to MONEY SUPPLY / AVERAGE DEPOSIT.

No, you tell me.

What difference would it make for the money supply if we're working with an initial deposit rather than an average balance?

[Fake Boris]

It depends. If average deposit = initial deposit, what's the problem?

[hitokihitoshi]

I just showed that the average deposit is NOT equal to the initial deposit. This is precisely the point.

[Fake Boris]

Where did you do that?

We're working with an hypothetical scenario anyway.