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Banking analogy of Linux memory managementBanking analogy of Linux memory managementPosted Feb 6, 2010 4:24 UTC (Sat) by giraffedata (subscriber, #1954)In reply to: Banking analogy of Linux memory management by bronson Parent article: Quotes of the week Thanks for the banking background. However, I don't think we're talking about capitalization ratio, which has to do with how much a business borrows to fund its operation (its leverage), but rather the reserve ratio, which is how much cash a bank keeps on hand to pay back depositors who wish to withdraw their demand deposits. Overcommit off is a 100% reserve ratio. Wikipedia says the legal minimum reserve ratio in the US is 10%. I heard it was once 3%.
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Reserve ratios Posted Feb 7, 2010 22:02 UTC (Sun) by man_ls (subscriber, #15091) [Link] You are probably right. Note that if banks were required to have 100% reserve ratios then they would not be able to invest the money that people deposit there, not even to lend this money to other people. So essentially the money would be frozen and would generate no wealth at all. What Cox calls "proper banking" would be a disaster.Also note that money deposited in a bank has a non-linear behavior that memory does not have. The Wikipedia article shows why: lent money can be deposited again, and then lent again, and so on. As others have pointed out, maybe Cox naïvely refers to the gold standard, not noticing that the price of gold is an arbitrary measure, as artificial as any other. Nowadays money creates itself and is properly accepted by all as the imaginary magnitude it really is.
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