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Your bank actually has to lie to you to remain solvent. All banks do. The Central Bank also encourage it. Last year you saw both that banks were 'forced' to wi

Your bank actually has to lie to you to remain solvent. All banks do. The Central Bank also encourage it. Last year you saw both that banks were 'forced' to withhold dividends and they were perfectly capitalised. Both cant be true of course. If they hide it from you your money and everyones money is safe. If they tell the truth everyone loses, so it is actually the best outcome for you and everyone else. The fractional reserve system relies on not everyone withdrawing their money at once.

pishpash 6y ago
That's why there should be no banks, only money market funds. Every deposit is an investment decision. You may as well reap the rewards if you take all the risks of lending and cut out the middleman. I've been using a brokerage account for banking for years.
- nly 6y ago
  Taking those risks has trade offs most people aren't prepared to make. The online P2P lending boom here in the UK from financial crisis onward gave people this opportunity. The end result, 10+ years in, has been subdued returns (relative to e.g. stocks) and crippling illiquidity, as you are exposed to all those late payments, defaults, and have no access to a functional secondary market. Honestly you're lucky if you can get most people to even use a separate savings account. I know many people who keep 100% of their savings in their current (checking) account.
shadowgovt 6y ago
Lying in what sense?
- gruez 6y ago
  Fractional reserve.
- jaywalk 6y ago
  Lying about the fact that your money is actually there. Individually, the money in each account is at the bank. You can go withdraw all of the money in your account without any issue. But collectively, all of the money in all of the accounts is definitely not there.
  - shadowgovt 6y ago
    Thank you for the clarification. I've never considered that a lie, because I've never encountered a bank the claims to be holding all the money. They merely claim that I will be able to withdraw my money, and that's on average true. I consider that claim to be in the same category as the grocery store claiming I'll be able to buy toilet paper today. Sure, unless there's a pandemic. But usually? No pandemic.

pishpash 6y ago

That's why there should be no banks, only money market funds. Every deposit is an investment decision. You may as well reap the rewards if you take all the risks of lending and cut out the middleman. I've been using a brokerage account for banking for years.

nly 6y ago
Taking those risks has trade offs most people aren't prepared to make. The online P2P lending boom here in the UK from financial crisis onward gave people this opportunity. The end result, 10+ years in, has been subdued returns (relative to e.g. stocks) and crippling illiquidity, as you are exposed to all those late payments, defaults, and have no access to a functional secondary market. Honestly you're lucky if you can get most people to even use a separate savings account. I know many people who keep 100% of their savings in their current (checking) account.

shadowgovt 6y ago

Lying in what sense?

gruez 6y ago
Fractional reserve.
jaywalk 6y ago
Lying about the fact that your money is actually there. Individually, the money in each account is at the bank. You can go withdraw all of the money in your account without any issue. But collectively, all of the money in all of the accounts is definitely not there.
- shadowgovt 6y ago
  Thank you for the clarification. I've never considered that a lie, because I've never encountered a bank the claims to be holding all the money. They merely claim that I will be able to withdraw my money, and that's on average true. I consider that claim to be in the same category as the grocery store claiming I'll be able to buy toilet paper today. Sure, unless there's a pandemic. But usually? No pandemic.