Explain why the banking system stops suddenly - and the reason is not because the banking system stops.
A banks or a few, but not the banking system.Banks might stop lending when they are no longer able to meet their obligations, become bankrupt, and no longer exist.
You attribute a massive systemic event but explain it by pointing to a few banks and say "see, like that".
A few banks going belly up is one thing - but the whole system going belly up is wholly something else, and you cannot explain it away with the same brush.
No, they lend in both and as the other is deposited, it is converted.In the case of two currencies, however, with one being phased out and another in transition, the banks which are solvent stop lending out the dying currency, and start lending out only the prevailing currency.
Or did I miss the utter collapse of the banking systems in Europe when they moved to the Euro?
I did.I don't care. I'm not on a kick to quibble over how you want to define money, and I'll go with your definitions for the sake of discussion. And I said that I didn't care how or if you created the money needed to satisfy all outstanding principle plus interest debts in the scenario, as long as you showed it in the process.
You earn it.
Somebody pays you.
You take your pay and pay off your loan.
I take $100 out of my account, I lend it to you and said to you, pay me back $110, what would you do?
You take my $100 and buy a bike. The guy trades his bike for you money. He deposits the money in a bank.
You'd go and do a job with that bike, like deliver newspapers that earned you $110,
You get that money from people who take money out of their account and give it to you in trade for you newspaper.
They take a buck out of their account and give it to you for your newspaper.
You take that buck and give it to me and I deduct a buck from your debt.
I deposit that buck into my account.
You do this 110 times.
After you gave me $110, I declare you "repaid".
You have a bike, so you can earn more.
I have an IOU from the bank that says "pay $110 on demand".
Where are you lost in all of this?
$200 DD "A", $200 DD "B", $200 DD "C", $ 200 DD "D", $200 DD "BF", $0 DD Steven
$1000 in demand deposits
$100 in cash reserves
I withdraw $100 to give to you on promise you repay $110.
$200 DD "A", $200 DD "B", $200 DD "C", $ 200 DD "D", $100 DD "BF", $100 DD ($110 Loan) Steven
You buy a bike from "A"
$300 DD "A", $200 DD "B", $200 DD "C", $ 200 DD "D", $100 DD "BF", $0 DD Steven ($110 loan)
$299 "A", $199 "B", $199 "C" , $199 "D"., $100 "BF", $4 Steven ($110 Loan)
$275 "A", $175 "B", $175 "C", $175 "D", $100 "BF", $100 Steven ($110 Loan)
$272, $172, $172, $172, $100 "BF", $112 Steven ($110 Loan)
You pay me back
$272, $172, $172, $172, $210 "BF", $2 Steven ($0 Loan)
Please note, the money supply has not changed - the $100 is still in the reserve, happy and just fine and so is the economy.