I did not realize that the banking sector was so fragile...
Until last week Saturday I had to put my final notes to my Lesson 4 of the Fiat system of the My First Bitcoin 10 week program.
How does a bank work? How does it create loans? How do loans relate to deposits.
I wanted to create a great interactive exercise out of the Mi Primer Bitcoin book.
So I decided to create the Kura Piedra Bank Fiat Show.
A show and game where you are not the main actor. The banks, the governments, the ones closest to the government and the central banks. Those are the main actors. And you, you watch the show.
You can have a credit card, a loan, a car loan, a business loan.
So there I was, creating my spreadsheet.
Here is how it worked 
First you have your own balance sheet of your Family (Bo Familia). And you got your assets and your liabilities. You got your house, your car, your business (Negoshi).
Then on the liability side you got your Mortgage, your car loan, and your business loan, and your credit card loans.
These liabilities are all the assets of the banks. You will soon see them at the Asset's side of the bank.
But lets move to your Earnings Statement of your Family.
Here you see how much money flows in and out because you have either assets or liabilities.
First lets look at your revenues of your Family.
You receive interests because you have a deposit at the Kura Piedra Bank. They pay you a lower interest rate then the interest you have to pay on the credit cards, the mortgage, the business loans and the car loans of course.
Kura Piedra Bank has to make money. We will see that later.
On the Expenditures side of your Earnings Statement you see what you need to pay on interests on:
Your mortgage, your car loan, your business loan and your credit card.
Here you see a very large credit card payment. Why: Because Kura Piedra Bank has maxed out on Credit cards. Everybody can get a credit card at 20% interest rate.
Now lets see how the Balance sheet and the Earnings Statement of our Kura Piedra Bank, the bank we created during the Lesson 4 looks.
You can imagine that your liabilities are their assets. An asset is something that brings them money, a liability is something that takes money out of your wallet.
So here you see that your mortgage, your car loan, your business loan and your credit cards is the Kura Piedra Bank's assets.
Yes. they all bring the bank money.
You pay interest so the bank receives money, your money, on all these assets.
When you look at the Kura Piedra Bank's Earnings statement below you see how:
You see that on the Revenues side of the Kura Piedra bank they get interest on your mortgage, your car loan, your business loan and your credit card.
This is exactly the money that flows out of your expenditures side of your Family's Earning statement.
And then on the Expenditures side of the Kura Piedra Bank, Earning statement you see the money they pay you for your deposits.
The bank makes a profit by deducting the money they pay you on your deposits from the money they receive from you from all those loans.
Finally how does this work? The multiplier.
This resource we used during Lesson 4 of the My First Bitcoin Education of 10 weeks, sponsored by BTC Curacao Institute of Family Peter Kroll, also has a general overview of the fractional reserve system.
You see how if you put a deposit of 1 million, how with a percentage of 10% the Kura Piedra Bank has to hold as reserves it can create loans of 900.000. The cost is the deposit times the interest paid. The revenue is the loan times the interest received. The profit is the revenues minus the costs.
You see the Earnings of Kura Piedra Bank and you see the multiple, which means how many times the loans created are compared to the deposits.
If you decrease the fractional percentage to 5% or to 1% or to 0% like the USA, your numbers go crazy.
This is when I realized how fragile fiat banks can become.
None of the above is financial advice. Do your own research. This is only for educational purposes. We created this resource ourselves and this resource is not yet recommended or approved by the My First Bitcoin community. We welcome any improvements.
I will share this resource in the github folder of Node Curacao of the My First Bitcoin. If you have any questions or suggestions how we can improve this resource let me know.
You can create your own bank and your own Family Balance Sheet and Earnings Statements.
So your assignment, like our students is:
How does your real balance sheet of your family look like? And your earnings statements?
PS: the reason why these numbers look so large are: they are assuming only one bank Kura Piedra Bank for the whole island. And they assume all the families of all the citizens are shown in two statements.
Runy
My First Bitcoin Educator
Curacao
Island Wealth
Runy
My First Bitcoin
First you have your own balance sheet of your Family (Bo Familia). And you got your assets and your liabilities. You got your house, your car, your business (Negoshi).
Then on the liability side you got your Mortgage, your car loan, and your business loan, and your credit card loans.
These liabilities are all the assets of the banks. You will soon see them at the Asset's side of the bank.
But lets move to your Earnings Statement of your Family.
Here you see how much money flows in and out because you have either assets or liabilities.
First lets look at your revenues of your Family.
You receive interests because you have a deposit at the Kura Piedra Bank. They pay you a lower interest rate then the interest you have to pay on the credit cards, the mortgage, the business loans and the car loans of course.
Kura Piedra Bank has to make money. We will see that later.
On the Expenditures side of your Earnings Statement you see what you need to pay on interests on:
Your mortgage, your car loan, your business loan and your credit card.
Here you see a very large credit card payment. Why: Because Kura Piedra Bank has maxed out on Credit cards. Everybody can get a credit card at 20% interest rate.
Now lets see how the Balance sheet and the Earnings Statement of our Kura Piedra Bank, the bank we created during the Lesson 4 looks.
You can imagine that your liabilities are their assets. An asset is something that brings them money, a liability is something that takes money out of your wallet.
So here you see that your mortgage, your car loan, your business loan and your credit cards is the Kura Piedra Bank's assets.
Yes. they all bring the bank money.
You pay interest so the bank receives money, your money, on all these assets.
When you look at the Kura Piedra Bank's Earnings statement below you see how:
You see that on the Revenues side of the Kura Piedra bank they get interest on your mortgage, your car loan, your business loan and your credit card.
This is exactly the money that flows out of your expenditures side of your Family's Earning statement.
And then on the Expenditures side of the Kura Piedra Bank, Earning statement you see the money they pay you for your deposits.
The bank makes a profit by deducting the money they pay you on your deposits from the money they receive from you from all those loans.
Finally how does this work? The multiplier.
This resource we used during Lesson 4 of the My First Bitcoin Education of 10 weeks, sponsored by BTC Curacao Institute of Family Peter Kroll, also has a general overview of the fractional reserve system.
You see how if you put a deposit of 1 million, how with a percentage of 10% the Kura Piedra Bank has to hold as reserves it can create loans of 900.000. The cost is the deposit times the interest paid. The revenue is the loan times the interest received. The profit is the revenues minus the costs.
You see the Earnings of Kura Piedra Bank and you see the multiple, which means how many times the loans created are compared to the deposits.
If you decrease the fractional percentage to 5% or to 1% or to 0% like the USA, your numbers go crazy.
This is when I realized how fragile fiat banks can become.
None of the above is financial advice. Do your own research. This is only for educational purposes. We created this resource ourselves and this resource is not yet recommended or approved by the My First Bitcoin community. We welcome any improvements.
I will share this resource in the github folder of Node Curacao of the My First Bitcoin. If you have any questions or suggestions how we can improve this resource let me know.
You can create your own bank and your own Family Balance Sheet and Earnings Statements.
So your assignment, like our students is:
How does your real balance sheet of your family look like? And your earnings statements?
PS: the reason why these numbers look so large are: they are assuming only one bank Kura Piedra Bank for the whole island. And they assume all the families of all the citizens are shown in two statements.
Runy
My First Bitcoin Educator
Curacao
Island Wealth
Runy
My First Bitcoin