Zamerican Zanking

I live in a country called Zamerica.

In Zamerica, the national currency is the zollar.

It is used to facilitate the exchange of goods and services.

In Zamerica, we also have two types of special institutions.

We have banks, and we have zanks.

A bank, is where I can deposit my zollars for safe keeping. If I don't feel like spending my zollars, I can save them in a bank. The bank will keep my zollars, safe and sound in it's vaults.

A zank on the other hand is a very different type of institution with a very different purpose.

Let me explain:

If I have some zollars, but don't wish to spend them in the present, I could just save them in a bank, and retrieve them later when I wish to spend them. However, I could, if I wanted to, loan my zollars to somebody else who could make use of them, while I'm not using them. That seems like a nice thing to do. However, I don't want to go through all the trouble of figuring out who needs a loan, and who is most likely to pay me back and all that sort of stuff. That's not really my area of expertise.

That's where the zanks come in. A zank, is an institution that brokers loans. I give them my zollars, and they find people to lend my zollars to. In other words, the zank, matches people who need zollars, up with people who have zollars.

Here's where it gets interesting. Zanks have figure out a way for me, if necesarry, to

get my zollars back, in part or in full, even before the the loan is officially due.

The do this through system called fractional reserve zanking.

When I deposite my zollars into the zank, they don't really loan out all of it. Rather,

they loan out most of it, and put a portion of it into their vaults, much like a bank does.

Due to the fact that zanks broker loans for many, many people, and retain a portion of each persons zollars in their reserves, they are almost always able to pay back a loan, before the loan is actually due, by using the zollars, stored in it's vaults.

"How can that be?", you ask. Doesn't the amount of outstanding loans far excede the amount of zollars in the zanks vaults?

Yes, it does. However, by definition, people who deposite zollars into a zank, are people who don't need their zollars in the present, nor at all times. As such, as long as the zank maintains an adequate portion of each zollar deposite, the system seems to works fairly well.

Of course, loaning one's zollars, is never as safe as saving one's zollars, but there are always ways risk can be managed, and often with risk, comes certain rewards.

Now... some people listen might feel that Zamerica is a metaphore for America. If that's

what you think, you are quite wrong. Zamerica is a real place, and America doesn't have

any banks (so it wouldn't even be a fitting metaphore).

Category:

Education

Tags:

• fractional
• reserve
• banking
• zanking
• zamerica
• zanks

[thefrankenchrist123]

no, do not keep them coming

[SHAWNONOMICS]

You can't stop me from forcing you to watch my videos!

[theVAGINAntichrist]

MAKE MORE VIDEOS

[KagarBeardtooth]

Bank/Zank coexistence is only possible under a system of competing currencies (or zurrencies if you want, haha) which correspond to each Bank/Zank respectively, correct?

[sharperguy]

Zebras in Zamerica!

[D4Shawn]

I intend to, but I want to make sure everyone understands the basic concepts I'm working with.

I want to explore velocity (of money), spending, and how that all relates to supply and demand, and inflation... but right now, most people are confusing velocity with quantity, so we need to clear that up first.

[freedominsomalia]

same old shaun.. move on

[JahLoveOnline]

thanks 4 writing in the vid description. it helps understand it

[AdolescentAntiTheist]

Keep 'em coming.