Buy custom How Banks make their money
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| Topic: |
Business
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| Number of pages / Number of words: |
4 / 1059 |
Essay's paper body
That $90 finds its way back into the economy through purchases and usually is deposited into another bank. Now this new bank can lend out $81 of the $90 deposited and the ripple continues to drift that way. So obviously this hundred dollars has more than tripled its value from beginning to end. However if everyone decided to pull his or her money out at one time there would not be enough money in the Reserve to counteract this catastrophe...
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However if everyone decided to pull his or her money out at one time there would not be enough money in the Reserve to counteract this catastrophe. Therefore Banks have more trust in us then we have in them.
There are several different types of banking institutions and it used to be that each of these institutions were quite distinct, however over time that has changed...
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