robbo203 wrote:I am currently

[ALB]

robbo203 wrote:

I am currently reading Paul's Mason's book, "Post Capitalism: A Guide to our Future".  In it, he makes a number of startling claims such as that "banks have always lent out more cash than there was in the safe"  (p.11)  and since 1971 no longer have to contend with legal limits in the form of a fractional reserve.  What are the facts and figures to substantiate or repudiate this claim?

That statement of his is ambiguous. It could mean that banks can lend out more cash than has been deposited with them or that they have borrowed. In which case it would be wrong. Or it could mean that the amount of money banks lend is more (much more) than what they choose to keep as cash. Which would be true but trite. Figures can be produced to show the latter but that's what banks do — re-lend money lent to them; they are not just safe deposits,It is true that in Britain there are no longer any legal or regulatory limits on the amount of money banks must hold as cash. Banks naturally want to re-lend as much of what they have as they safely can because lending brings in money as interest while cash in vaults doesn't. It is up to those running a bank to make a judgement, based on experience, as to what is safe.