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The money that banks loan out is not entirely their money.
by Macross8299 8y ago
The money that banks loan out is not entirely their money.
- black-tea 8y agoBanks are not like a giant piggy bank with your savings in it. They create money when they create loans. They're not protecting "your money" with things like this, they are protecting their profits.
- cam_l 8y agoOr even money at all.
- coldtea 8y agoA large percentage of it is entirely their money. And in fact, not even actual money somebody at the bank owns, just numbers on their ledger (that they still make interest from borrowers off). In fact, there's most of the money the banks loan is not "somebody else's" at all, it's "loan money". https://opentextbc.ca/principlesofeconomics/chapter/27-4-how-banks-create-money/ https://opentextbc.ca/principlesofeconomics/chapter/27-4-how...
- ddingus 8y agoMoney created at the time of the loan. There is (in simple terms) as much money as people can reasonably borrow.