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Why can’t I just give people money in exchange for their goods/services, rather than give the bank money, which then gives people money, that they then pay off
by jakear 7y ago
Why can’t I just give people money in exchange for their goods/services, rather than give the bank money, which then gives people money, that they then pay off by providing goods/services. What macroeconomic value does the bank provide serving as a middleman?
- Retric 7y agoSafety, as having large quantities of cash in transit, at homes, or at business is risky and dangerous. Even banks try and avoid this as much as possible. Convince, as writing a check or using a bank card allows for large and specific transactions. Paying rent every month via check for 1234.56$ is easy, with cash you need to count and recount etc. This is especially true for transactions over the internet. Scale this up and you get into Logistics for large transactions like buying property. Verifying a 1,000,000$ Bill is not fake is one issue, as is trying to get change for huge denominations. On it’s own this would creat an ecosystem of bank like entities such as money exchanges with associated fees. Efficiency, banks make use of deposits for loans which allows them to offer services at a discount. Remove that and people end up directly paying for this stuff. Banks provide other services like transactions between physical and digital currency at ATM’s. The large unbanked population ends up paying high fees for many services banks provide.
- jtbayly 7y agoBy all means, if you desire to live paycheck to paycheck, immediately spending all of what you get, go for it. If you don’t, then you’ll have your answer as soon as you figure out why you don’t.