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I think the parent is talking about an ideal situation in which saving accounts do actually pay off a nice interest that beats the inflation and sprinkle some e

I think the parent is talking about an ideal situation in which saving accounts do actually pay off a nice interest that beats the inflation and sprinkle some extra profit on top. Not a lot but it is risk free. Isn’t the idea that banks make the money flow by circulating it around a good one? A saver who doesn’t need it now can park it in a bank and when their time to retire comes they get their actualized money plus some profit. And since the interest compounds, with a nice rate it could be both safe and profitable. I agree that this is not feasible now but that is only becaus of the low interest. That dynamic would change if the interest is dialed up.

Alupis 6y ago
The only way a bank could afford to pay enough interest on a savings account to meet inflation would be to... wait for it... invest that money in something that would beat the inflation rate. We've just re-invented the stock market.
- runarberg 6y ago
  No. That is not the only way... Alternatives include: charging more interest on loans then on savings, charging service fees for each transaction. Also just think about this for a second. If the economy keeps growing (which is what inflation really is) more people will have more money, they would want to keep that money somewhere. They put it in a savings account. The bank now has more money to pay more interests. We don’t need the stock market.