Comment by fyi1183 | Hacker News Reader

Comment by fyi1183 | Hacker News Reader

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The 10x thing is a common misconception generated by the fact that 10 is a nice round number that works well for this type of just-so story.

The Wikipedia article on reserve requirements has a handy table by country, from which you can see that the required ratio is actually less than 10 in most of the developed world.

In fact, several countries have no reserve requirements at all! Following your logic, those countries should be even more volatile than whatever is going on in crypto currency land. I think we can safely conclude your logic is flawed.

Mind you, I still think the whole tether business is extremely fishy. I'm just annoyed by the spread of monetary just-so stories that pretend to apply to the real world. Reserve requirements are a red herring in modern monetary systems, because central banks will always guarantee liquidity by acting as a lender of last resort.

10% isn't a fact, it's an example that is close enough to illustrate the thought experiment but allow you to do the math in your head (I originally learned about this years ago in a personal finance podcast).

And of course the fact that I have $65 in my wallet right now instead of in the bank takes $650 out of the cycle. If you're in a country where people don't trust the banks that much, or people have almost no money, a big fraction of all the money in play may be in cash, in someone's pocket, a safe, a cash register, an ATM, a briefcase, or hiding under their mattress.

Banks usually don't lend money out to just anybody, so the worst case scenario never actually happens. Or only happens once every 70 years. If there aren't too many banks in your country then you oversee more of the money supply and the house of cards effect should be more obvious than here.

If you really meant for the 10x to only be an example, you should have clearly stated that.

You're being exceedingly rude and we're done here.

Don't try to make yourself in to a victim, no one was being rude.

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