[quote=ucodegen][quote davelj]First problem: the only reason a bank has to hold back a percentage of its assets as “reserves” (or, my preference, “liquidity”) is because those reserves are there to ensure adequate liquidity for depositors. In the example above, you assume no deposits, therefore no reserves would be necessary. So we’ve got a fundamental misunderstanding to rectify before moving forward.[/quote]
As I mentioned, I drastically simplified it.. maybe too much. As I was going down the path to try to describe why a bank would require more fed money than their ‘market cap’, I realized that if I threw a lot of stuff in, I loose the ‘banks are making a mint off the loan’ people, so I had to isolate the description to the bare minimum to show what would happen. [/quote]
It goes beyond “simplification” – your accounting’s incorrect. You clearly don’t understand what a bank’s balance sheet looks like or what’s required to increase leverage.
[quote=ucodegen]
The initial all ‘paid in capital’ could also be the starting/founding position for a bank before the doors open. – so at this point I’m done. I am not going to continue this game of yours.[/quote]
It’s not a game. You started this whole discussion and I’m trying to help you reduce your confusion. But if you don’t want to continue the discussion it’s perfectly alright by me.
[quote=ucodegen]
You have the floor, you can decide to show an accurate rendition that average people could follow, or continue to try to berate me on this public forum. What you decide to do probably reflects more on you than me.[/quote]
I’m not berating you. And I’ll be happy to show “an accurate rendition that average people could follow”. But first you have to admit that you don’t know what you’re talking about, which you’re resisting in the extreme.
