Bitcoin Prevents Fractional Reserve Lending
Figure 1: A simple illustration of how fractional reserve lending works
Most of the money used today comes from fractional reserve lending
Fractional reserve lending / banking is where most of the fiat based money in use today comes from and the means by which banks burden people with debt. Figure 1 shows a simple illustration of how the Fractional Reserve Lending system works. For example, say you had $100 USD that you deposited to a bank. If the bank had a 10% reserve requirement, it can loan out $90 USD. The process then repeats, the $90 USD loan out can be deposited into another bank with a 10% reserve requirement, so $81 USD can be loaned out again.
This process can continue an infinite number of times. From, just this example of 3 banks, what started out as $100 USD of money deposited became $171 USD of money loaned! Now if everyone, or at least more than 10% of a banks depositors, went to the bank to withdraw all their money at once, there would not be enough to cover all the obligations. This event is also known as a “bank run”!
Figure 2: Famed Economist, John Maynard Keynes Quote on Inflation, Deficit Spending, Fractional Reserve Lending & Taxes
The banking system is subtly stealing people’s buying power and assets
Fractional Reserve Lending, allows banks in a very subtle way to loan out much more money than they currently have in reserves and burden people with debt and long-term inflation! Famed economist, John Maynard Keynes once said that in a fiat based monetary system, inflation, deficit spending, and fractional reserve lending are a means by which banks that control governments can steal people’s buying power and hard assets too (Figure 2)!
The modern banking system is based on an illusionFigure 3: The Illusion of the Modern Banking System
Figure 3 shows the game that bank use to control people with debt. People work all their lives to earn money, fiat currency, that has a continually diminishing buying power through inflation and fractional reserve lending. Banks simply create this fiat currency out of “thin air” by using their printing presses or nowadays simply typing some numbers into a computer screen. They burden the people with more and more debt which they use not only to control people but also transfer hard assets from the vast majority of the population to the creators of money, the financial elite.
In a sound monetary system, which we had in generations past in a commodity based monetary system based on gold backing the money supply, fractional reserve lending, deficit spending and inflation isn’t possible. For example, when we were back on a gold standard, the banks simply couldn’t create more money by printing it or using fractional reserve lending because they actually needed gold to back up the currency that they were creating. It is also much more difficult to burden people with debt and long-term inflation in a sound monetary system.
Bitcoin will return us to a sound monetary system
In our current digital era, Bitcoin and other cryptocurrencies act as a type of digital gold. The supply of Bitcoin is limited and the amount created every year is predictable. Banks or other central institutions cannot simply create as much as they want of it. Thus, Bitcoin is a limited digital commodity similar to physical gold.
Bitcoin and other cryptocurrencies make peer-to-peer (P2P) transactions and more importantly decentralized creation of money possible again similar to when our ancestors where using physical gold coins as money. Fractional reserve lending, deficit spending, and long-term inflation will be prevented if there is mass adoption of Bitcoin and other cryptocurrencies. Furthermore, people will not be burden with massive amounts of debt using cryptocurrency!
Don’t miss out on our recommendations and special offerings! These sponsors also support this free publication.
http://www.moneywisealpha.com/recommendations
Follow us on social media too!
Website: http://www.moneywisealpha.com/
Book Site: http://btcmoneytop20.com
Blog Site 1: https://medium.com/money-wise-alpha
Blog Site 2: https://www.publish0x.com/money-wise-alpha/
Blog Site 3: https://steemit.com/@moneywisealpha
Blog Site 4: https://moneywisealpha.tumblr.com/
Blog Site 5: https://moneywisealpha.blogspot.com/
Telegram: https://t.me/MoneyWiseAlpha
Facebook Book Page: https://fb.me/BTCMoneyTop20Ways
YouTube: http://www.moneywisealpha.com/videos
DailyMotion: https://www.moneywisealpha.com/dailymotion
DTube: https://www.moneywisealpha.com/dtube
Bitchute: https://www.moneywisealpha.com/bitchute
Book Promotion:
Twitter: https://twitter.com/my_csales23
LinkedIn: https://www.linkedin.com/in/christian-john-sales-92375ab/
Book Group: https://www.linkedin.com/groups/10472552/
Great article. I'm going to gift you 500 Hobo tokens. You can use Hobo tokens to submit your articles to the HoboDAO (@hobo.media) for review in daily curation contests.
You can find your tokens by using the Keychain wallet or by going to steem-engine.com.
Thank you very much Black.Letras!
This post was resteemed by @steemvote and received a 99.94% Upvote. Send 0.5 SBD or STEEM to @steemvote
This post was upvoted and resteemed by @resteemr!
Thank you for using @resteemr.
@resteemr is a low price resteem service.
Check what @resteemr can do for you. Introduction of resteemr.
This post is Powered by @superbot all the way from Planet Super Earth.
Follow @superbot First and then Transfer 0.100 STEEM/STEEM DOLLAR to @superbot & the URL in the
memo that you want Resteemed + get Upvoted & Followed By @superbot and 1 Partner Account.
Your post will Appear in the feed of 1300+ Followers :)
So don't waste any time ! Get More Followers and gain more Visibility With @superbot
#Note - Please don't send amount less than 0.100 Steem/Steem Dollar ,Also a post can only be resteemed once.
Thank you for using @superbot
If you would like to support this bot , Please don't forget to upvote this post :)
Stay Super !
You have received a resteem. My 7000 followers will see your post afresh. Your post will also be shown to members of my discord server.
Your post has been tweeted to 2000 followers. See it on twitter
Your post has been shared with 2000 facebook members. See it in facebook group
Congratulations @moneywisealpha! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :
You can view your badges on your Steem Board and compare to others on the Steem Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPVote for @Steemitboard as a witness to get one more award and increased upvotes!
Very interesting.
Are saying that fractional lending creates inflation and eroded the value of fiat?
Posted using Partiko iOS
Resteemed by @resteembot! Good Luck!
Check @resteembot's introduction post or the other great posts I already resteemed.