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TIP574: Broken Money 1/2 w/ Lyn Alden
We Study Billionaires - The Investor’s Podcast Network
The Fractional Banking Reserve System: A Game of Musical Chairs
The current financial system is the exception, not the rule, when looking at thousands of years of financial history./nFractional reserve banking is the predominant type of banking, where banks make two conflicting promises: allowing customers to withdraw money at any time while also lending out the majority of that money./nFractional reserve banking relies on probabilities and the assumption that only a small percentage of people will want to withdraw their money at the same time./nOver-leveraging and a liquidity mismatch can lead to a cascading issue in the financial system, causing massive defaults and problems./nDespite the inherent risks, fractional reserve banking is widely practiced and legally sanctioned in modern banking.
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