Thread: Is the E.U. on the Brink?
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Old 11-19-2011, 01:07 AM   #14 (permalink)
Acting Like Godot
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No, you don't understand.

Every company has capital. Eg let's say you and a business partner decide to set up a company to bake cakes and sell cakes.

You contribute $20,000 and he contributes $20,000. So now the company has $40,000. You decide to use some of it to hire employees; buy baking equipment; renovate the shop etc.

And you also decide to set aside some of the capital, for emergency purposes, by placing it on fixed deposit or investing it in a low-risk money market fund. That's "capital reserves".

Would you say that the government printed that money for you? If you insist. All money is printed by the government anyway.
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