TIP 006 : The Next Stock Market Crash & Interest Rates (Investing Podcast)
The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network
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Lending Out More Than What You Actually Have?
A lot of people don't realize that banks can lend out more than they have sitting in there in their account from, ah, you know, everyday investors. So if i come to your bank and i give you ten dollars to put into an account, you, depending on what a reserve ratio the fed gives you, let's say that the reserve ratio is ten to one a if i come in and i giveyou ten dollars, that bank now has the ability to lend out a hundred do ars instead of just the ten dollars that i put into the bank. And so internally in the bank and in risk management, we look at that because we don't want to be over leveraged
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