Originally Posted by
helmuth_hubener
Pedagogically, for teaching new people my explanation is better, because it's much simpler than the traditional 90, 81, 72, 65,... series explanation. Salerno does go into 90, 81, 72, 65,... in the video above, right? My explanation is also superior for being closer to actually how it really works in reality. If a bank has a million dollars sitting in reserve, it does not cash out $900,000 of it to hand to people as dollar bills for loans. No, if it has a million dollars sitting in reserve, it has -- in reality -- ten million dollars of checking account balances on its ledger. That's how it works! It really, really is. Go ask your local bank president.
My explanation's shortcoming is that it's sometimes hard for people who have already learned a little about fractional reserve banking to accept it, because it's presenting things differently. But it really is true, and no, you're not an idiot, and neither is Professor Salerno and in fact I'm very sure that if I were to explain to him how I explain fractional reserve banking as I did in those other two threads, he would agree completely with it and pronounce it entirely sound.