Is Cersei’s “Golden Bank of Lannisport” notion really a good idea? From the text is always assumed it was another silly, unattainable pipe dream like her thought about building a new castle across the river???

marxism-leninism-memeism:

racefortheironthrone:

It’s an incredibly good idea. Casterly Rock has an enormous, enormous amount of gold that’s sitting in the vaults not doing anything or at most being used for the Lannister war machine and nonproductive political loans. If you turn it into the liquid reserves of a bank, through the magic of fractional reserve banking, you can create many, many times more money than is in the Rock while still retaining a fairly conservative reserve rate (i.e, what percent of your reserves aren’t lent out so that they’re on hand to pay depositors who want to access their money). 

The Lannisters lent 3 million gold to Robert Baratheon without blinking, paid off Jaehaerys II’s war debts without breaking a sweat. Their yearly income is at least a million a year, given how much they gave to Robert on a yearly basis. Forbes thinks that they have around 2.1 million gold in the Rock; I’ve seen estimates of up to 200 million gold. As a max figure, based on 6,000 years of earning a million a year (not considering any interest), they may have around 6 billion gold dragons in the vaults of the Rock. 

So let’s take an average of these estimates and say they have 2 billion gold saved up. To begin with, that 2 billion equates to 380% of Westeros’ GDP. If they lent it out at a relatively conservative 10% reserve rate, they’d generate 20 billion in deposits and 17 billion in loans. In other words, just by putting the money into circulation instead of sticking it under a big rock, the Westerosi economy would grow by almost 4,000%. 

in all fairness while medieval economies often were severely depressed due to lack of coinage assuming that a growth in the money supply would automatically result in aggregate increases in consumption and investment is… pushing things a little

Well, yeah, you want to avoid a 16th/17th century Spain situation, where the sheer flood of gold leads to a massive wave of inflation that kills domestic manufacturing. And yes, there’s an underlying limit to economic growth depending on population growth, natural resources, and the level of technology. 

But, in so far as access to capital is a key determinant of development, yes the Golden Bank of Lannisport would be a huge boon to Westeros.