Row 45165

Row ID: 45165 | Dataset Entry | Axioma AXP Content Repository

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This page contains data entry 45165 from the Axioma AXP content repository. The structured data below represents the complete record for this entry.

Interesting question! I have never thought about it this way

Let's first look at a pure cash based traditional bank in 19th century: After that 100 dollar bill is loaned out to B, bank do not have money to deal with A's payment/withdraw, thus a bank run happens

Of course banks have many customers and they don't come and withdraw at the same time, thus the reserve ratio concept: A bank run seldom happens if they keep 1/10 of the cash at hand. (This is why I said they can not be spent AT THE SAME TIME, they just spend other customers money)

I think the same is true for today's electronic banking, where banks hold very little physical cash, but balances at FED clearing system

When A deposit 100 or received payment at bank X, the bank X would have its account balance at FED clearing system increased by 100. That balance is the money that bank X use to pay other banks. And after B took 100 loan from bank X, that balance would be reduced by 100

So if A is trying to pay another bank Z after that, the bank X will have no money to pay bank Z, since A's money has went to bank Y, thus a liquidity crisis

In this way, a bank would never be able to pay money to other banks that exceeding their balance at FED system. For if they could, then you just need two banks loaning to each other endlessly to create infinite money, electronically. They would definitely practice this if there is no limitation. And that will make central banks' monetary policy useless overnight

FieldValue
text Interesting question! I have never thought about it this way Let's first look at a pure cash based traditional bank in 19th century: After that 100 dollar bill is loaned out to B, bank do not have money to deal with A's payment/withdraw, thus a bank run happens Of course banks have many customers and they don't come and withdraw at the same time, thus the reserve ratio concept: A bank run seldom happens if they keep 1/10 of the cash at hand. (This is why I said they can not be spent AT THE SAM…
label r/bitcoin
dataType comment
communityName r/Bitcoin
datetime 2024-05-22
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url_encoded Z0FBQUFBQm5Lak9lWVUtRUJDMHJnb18zNmlZdmxiR0JJdVV3NWF2dXBQRnhvZDlYZkpnSU9Rd2hLbHJORklIbTdveDZVeWIxRGhTRUd2dzV2ejNSQjd5bkZLel9HUEhMdDExQkdWb3VtazdkekNmTnRMdkwxZTZ2TUkyVTZuS3BUYWthUk5MdUJXbWdZSmF3M3l2U2p2cnVZNzY3YmxwbDNva2F1OHA1UE5RYW5QVGRmZFdPNXdLUVlTMkoyVXdaLXBwOU1Kd05STHJw

Raw Record

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  "text": "Interesting question! I have never thought about it this way\n\nLet's first look at a pure cash based traditional bank in 19th century: After that 100 dollar bill is loaned out to B, bank do not have money to deal with A's payment/withdraw, thus a bank run happens\n\nOf course banks have many customers and they don't come and withdraw at the same time, thus the reserve ratio concept: A bank run seldom happens if they keep 1/10 of the cash at hand. (This is why I said they can not be spent AT THE SAME TIME, they just spend other customers money)\n\nI think the same is true for today's electronic banking, where banks hold very little physical cash, but balances at FED clearing system\n\nWhen A deposit 100 or received payment at bank X, the bank X would have its account balance at FED clearing system increased by 100. That balance is the money that bank X use to pay other banks. And after B took 100 loan from bank X, that balance would be reduced by 100\n\n\nSo if A is trying to pay another bank Z after that, the bank X will have no money to pay bank Z, since A's money has went to bank Y, thus a liquidity crisis\n\nIn this way, a bank would never be able to pay money to other banks that exceeding their balance at FED system. For if they could, then you just need two banks loaning to each other endlessly to create infinite money, electronically. They would definitely practice this if there is no limitation. And that will make central banks' monetary policy useless overnight",
  "label": "r/bitcoin",
  "dataType": "comment",
  "communityName": "r/Bitcoin",
  "datetime": "2024-05-22",
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