On this day in 2008, Lehman Brothers went bankrupt.
When I am asked why I am in Bitcoin I always answer, out of dignity.
It is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways.
Fractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited.
How does it work?
Initial deposit: A customer deposits $1000 with the bank.
Mandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve.
Loans: The bank can lend the remaining $990 to other customers.
Deposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10).
With an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000.
In January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits.
In March 2020 the FED established that the reserves of US banks should be 0% of their total deposits.
Yes, you read that right, 0%.
Do you understand why I am in Bitcoin? DIGNITY.
Cyph3rp9nk
npub1ln…arrnt
2024-09-15 17:04:31
Author Public Key
npub1lnms53w04qt742qnhxag5d6awy7nz6055flnmjkr6jg39hm86dlq7arrntPublished at
2024-09-15 17:04:31Event JSON
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"content": "On this day in 2008, Lehman Brothers went bankrupt.\n\nWhen I am asked why I am in Bitcoin I always answer, out of dignity.\n\nIt is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways.\n\nFractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited.\n\nHow does it work?\n\nInitial deposit: A customer deposits $1000 with the bank.\n\nMandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve.\n\nLoans: The bank can lend the remaining $990 to other customers.\n\nDeposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10). \n\nWith an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000.\n\nIn January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits.\n\nIn March 2020 the FED established that the reserves of US banks should be 0% of their total deposits.\n\nYes, you read that right, 0%.\n\nDo you understand why I am in Bitcoin? DIGNITY.\n",
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}