Goldsmiths' principle
This is an old revision of this page, as edited by Aschlafly (talk | contribs) at 04:10, September 19, 2007. It may differ significantly from current revision.
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.