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Old 01-14-2009, 02:51 PM  
mona
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Join Date: Feb 2008
Location: Mona = "female monkey" in Spanish
Posts: 1,940
Check out Fractional-reserve banking -- http://en.wikipedia.org/wiki/Fractional-reserve_banking

It'll throw you for a loop, and explain what's going on.

Basically, you deposit $100 in a bank, and that bank only has to keep, let's say, 10% on reserves, or $10, and can loan out the remaining $90 -- Thereby "creating" $90 and putting it back into the economy, meaning there's $190 out there (which was only really based on $100).

Do that enough times, and you get billions of dollars as "assets", when only a fraction of that money actually exists.
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