RE: The Mathematics of Fractional Reserve Banking

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The Mathematics of Fractional Reserve Banking

in mathematics •  8 years ago 

"At the end of the day, nothing is being created though... the assets and the liabilities always zero out."

Not true. An asset and a liability are created. During 'normal' conditions they do zero out. But if the party with liabilities defaults then the party holding the 'assets' will experience real losses.

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