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Originally posted by Billmeister
[The way I see it, banks only have to hold the minimum reserve in real cash, so when they lend out, let say $1,000,000 they really only need $100,000 in their coffers (examples only... obviously), so the collateral need only really cover this amount.
Originally posted by Crakeur
Originally posted by Billmeister
[The way I see it, banks only have to hold the minimum reserve in real cash, so when they lend out, let say $1,000,000 they really only need $100,000 in their coffers (examples only... obviously), so the collateral need only really cover this amount.
on the contrary, if you go to a bank to borrow a million for a home, you will need all of the funds to pay the seller. if you need a million dollars so your company can produce enough inventory to stock the shelves for the back to school shopping season, you might need all of that money if your advance sales don't provide you with the cash flow to cover the cost of production, shipping etc.