What I
understood in the film "Zeitgeist Addendum" Fractional Reserve
Banking is a system under which bankers keep as capital only a portion of the
funds the hold on deposit. For example the reserve requirement for a bank is
only 10% this means that with a ten million dollar deposit, 10% or 1 million is
held as the obligatory reserve, while the other 1 million is considered an
unwarranted reserve and can be used as the basis for new loans.
Now of
course, it is logical to accept that this 9 million is literally coming out of
the existing 10 million dollars deposit. However, this is actually not the
situation. What really occurs is that the 9 million is simply produced out of
thin air, on top of the existing 10 million dollar deposit (Zeitgeist Addendum).In
conclusion, money created out of dept/inflation and and out of thin air.
In my opinion the Fractional Reserve banking system makes no sense. Banks are essentially loaning out money to people
that doesn't exist. I believe the best economic system is the one with a set
amount of currency. For example, one based on gold or silver coins this way the
value of the currency is stable. A system where the money equals dept is
dumb.
MLA Citation
Zeitgeist Addendum. Dir.
Peter Joseph. Perf. Peter Joseph. YouTube. Www.zeitgeistmovie.com, 2009. Web. 4 Apr. 2014.
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