The "What is Money?" Show cover image

WiM005 - The Saylor Series | Episode 5 | Channeling Monetary Energy Across Time and Space

The "What is Money?" Show

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Leverage

The fragility comes from two primary metrics, collateral coverage and the market. How frequently is the collateral marked to market? So for example, if you borrow money to buy a house and it's a 30-year mortgage,. There are some loans like a mortgage loan where they'll never get marked down. They might get marked up. But nobody ever went to the bank and said, mark my house to the market after the real estate market crashed. It gets fragile when you buy a million dollars with the stock on $800,000 loan, and you've got loan to value of 80%. And now the stock trades down 20% and the banker marks the collateral every day. That's risky

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