{"type":"rich","version":"1.0","title":"Cyph3rp9nk wrote","author_name":"Cyph3rp9nk (npub1ln…arrnt)","author_url":"https://yabu.me/npub1lnms53w04qt742qnhxag5d6awy7nz6055flnmjkr6jg39hm86dlq7arrnt","provider_name":"njump","provider_url":"https://yabu.me","html":"On this day in 2008, Lehman Brothers went bankrupt.\n\nWhen I am asked why I am in Bitcoin I always answer, out of dignity.\n\nIt is a good time to explain how fractional reserve banking works and its ability to create money, not only the central bank can create money, there are different ways.\n\nFractional reserve banking is a system in which banks are only required to hold a fraction of their customers' deposits as reserves. This means that they can lend or invest the rest of the money deposited.\n\nHow does it work?\n\nInitial deposit: A customer deposits $1000 with the bank.\n\nMandatory reserve: If the bank is required to keep only 1% of deposits, it will keep $10 as a reserve.\n\nLoans: The bank can lend the remaining $990 to other customers.\n\nDeposit and loan cycle: The borrowed $990 can be deposited in the same bank or in other banks, which in turn will keep 1% ($9.90) and lend the remainder ($980.10). \n\nWith an initial deposit of $1000 and a reserve ratio of 1%, the total money that can be created is $100000.\n\nIn January 2012 the ECB established that the reserves of European Banks should be 1% of their total deposits.\n\nIn March 2020 the FED established that the reserves of US banks should be 0% of their total deposits.\n\nYes, you read that right, 0%.\n\nDo you understand why I am in Bitcoin? DIGNITY.\n"}