A big bank run spooked him - the day after he announced the asset freeze, big bank runs started - it was in the WSJ last Thursday. "However, unlike the US banks, where they must maintain a liquidity reserve requirement of 10%, Canadian banks have a 0%reserve requirement, thus affording them the ability to create a virtually unlimited amo…
A big bank run spooked him - the day after he announced the asset freeze, big bank runs started - it was in the WSJ last Thursday. "However, unlike the US banks, where they must maintain a liquidity reserve requirement of 10%, Canadian banks have a 0%reserve requirement, thus affording them the ability to create a virtually unlimited amount of money “out of thin air” (see: “Fractional Reserve Banking System“). In the end, when banks create money due to the fractional reserve system, debt is also created. For instance, when you are approved for a mortgage at a bank for $500,000, that artificial money was a digital entry into your bank based on the promise to pay it back with interest. It did not come from their reserves or deposits.
The problem with this system is that it exponentially increases credit–and consequently debt–while living in a finite world with finite resources. Credit has grown so significantly over the real hard cash that you carry in your wallet that our economy is dependent on credit for its necessary expansion. If credit doesn’t expand, the economy comes off its “high” and needs to return to equilibrium and rid itself of all the mal-investments. Sounds like a debt Ponzi scheme? That’s because it is.
The Canadian Deposit Insurance Corporation
What about the Canadian Deposit Insurance Corporation (CDIC) which insures your money at the bank up to $100,000? According to the CDIC’s 2011 Annual Report, the CDIC protects $604 billion CAD in total eligible deposits, and has $2.2 billion CAD in assets to meet insurance claims. This amount represents 0.36% of total eligible deposits." http://www.economicreason.com/economiccrisisexplained/canadian-banking-system-exposed/
A big bank run spooked him - the day after he announced the asset freeze, big bank runs started - it was in the WSJ last Thursday. "However, unlike the US banks, where they must maintain a liquidity reserve requirement of 10%, Canadian banks have a 0%reserve requirement, thus affording them the ability to create a virtually unlimited amount of money “out of thin air” (see: “Fractional Reserve Banking System“). In the end, when banks create money due to the fractional reserve system, debt is also created. For instance, when you are approved for a mortgage at a bank for $500,000, that artificial money was a digital entry into your bank based on the promise to pay it back with interest. It did not come from their reserves or deposits.
The problem with this system is that it exponentially increases credit–and consequently debt–while living in a finite world with finite resources. Credit has grown so significantly over the real hard cash that you carry in your wallet that our economy is dependent on credit for its necessary expansion. If credit doesn’t expand, the economy comes off its “high” and needs to return to equilibrium and rid itself of all the mal-investments. Sounds like a debt Ponzi scheme? That’s because it is.
The Canadian Deposit Insurance Corporation
What about the Canadian Deposit Insurance Corporation (CDIC) which insures your money at the bank up to $100,000? According to the CDIC’s 2011 Annual Report, the CDIC protects $604 billion CAD in total eligible deposits, and has $2.2 billion CAD in assets to meet insurance claims. This amount represents 0.36% of total eligible deposits." http://www.economicreason.com/economiccrisisexplained/canadian-banking-system-exposed/