The Majority of the new Loans that get issued inside Australia Come from Writing loans from thin air.
Explanation: - The term "Fractional Reserve" means that When you deposit $100 into NAB, NAB can now Hold a Fraction of that $100 in reserve and Lend out the rest.
The Fraction that the Banks in Australia must hold in reserve is about $2.30c and then the bank can lend out $97.70c.
So in effect your bank account shows $100 in it, but NAB lent $97.70 to a Borrower, so now that Borrower has $97.70 in cash of your $100
What that means is about 98% of your 100 bucks is in 2 places at once.
That $97.70 that was borrowed may have paid a bill that went into ANZ bank.
That $97.70 is now available for ANZ to lend out again, by just retaining $2.30c out of every 100 bucks deposited and lending out $97.70 again.
So in effect Banks in Australia can lend out about 43 times the amount that they borrow from overseas.
Each dollar coin you see in your bank, is linked to about 98c of debt elsewhere, and that 98c elsewhere is linked to 96c of debt elsewhere and so on
So its a free Money game, paying 2.5% Term deposit and re-lending about 98% of it at 4.5%
Effectively making about a 40% markup on their costs by direct debit every month for 25 years.
Its the simplest and most profitabe Business Model of any Business in Australia.
Thats why it would be such a Cash Cow for small Towns and small Cities, they would thrive if the Government took up my proposal for Builders to become Building Societies.
- Forums
- Property
- "Coffs"
The Majority of the new Loans that get issued inside Australia...
- There are more pages in this discussion • 4 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Featured News
The Watchlist
BGD
BARTON GOLD HOLDINGS LIMITED
Alex Scanlon, Managing Director & CEO
Alex Scanlon
Managing Director & CEO
SPONSORED BY The Market Online