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by imtringued
2707 days ago
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When a bank lends you money the money lands in your bank account which means the bank can lend it out again. Even if you spend it, the money is going to land in someone else's bank account again. If we assume that 100% of the money is in the banking system without any potential for a bank run then in theory the bank could lend out an infinite amount of money. |
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Banks, just like all institutions have to account for their money, hence the reason they employ accountants.
Those accountants all use the same accounting rules, rules that were in fact invented many centuries earlier by the monk, Luca Pacioli.
Those rules form the basis of double entry book keeping, which boils done to a very simple rule that for every credit there must be an equal debit.
What you are describing does not follow that rule because you are saying one credit can result in many other many other credits.
What you describe reads more like a pyramid scheme than a banking system.