Goldsmiths' principle

From Conservapedia
This is an old revision of this page, as edited by Barikada (Talk | contribs) at 19:30, 4 March 2008. It may differ significantly from current revision.

Jump to: navigation, search

The Goldsmiths' principle, discovered centuries ago by English goldsmiths, is that banks need not maintain 100% of the deposits on hand as reserves. Customers are not likely to withdraw all their money at the same time, so banks need keep only a fraction of the deposits on hand at the bank, and can loan out much of the deposits to earn interest.