Ah, but that's the problem, isn't it? Do you think that a bank with assets of, say, a million dollars, has a big vault filled with thousands of $100 bills?

No, they have maybe 10% of that amount, the rest of their assets being promises from the people they lent the other 900 thousand dollars to that someday they'd pay the money back. But it gets worse -- that $900K dollars is likely to get recirculated through other (or even the same) bank and re-lent to the point where the original million dollars is magically transformed into ten million dollars (more or less) and the only tangible backing for it is the original $100K held as reserve at the beginning. Go back and read Music's post from a few days ago in this very thread, he explains it much better than I. When the promises backing the other 90% are supported by mortgages on seriously over-valued real estate it's possible we could have problems in the financial world. Oh. Wait... Didn't I see something not too long ago in the newspaper about that?

tanstaafl.