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Surely the implication is not that they are spending them but behaving like banks and lending out the underlying capital.
by jahewson 4y ago
Surely the implication is not that they are spending them but behaving like banks and lending out the underlying capital.
- legutierr 4y agoBut that’s not how banks work. They don’t lend out the capital of depositors. Rather, when they lend money, they record a receivable from the borrower, and at the same time credit the borrower’s account at the bank. Bank lending creates money.
- lupire 4y agoYes, things are mostly virtualized, but if what you say were true than then it would be impossible for a bank run to collapse a bank. Money in your account a debt the bank owes you. It's not money you can spend until after you withdraw it and the bank has liquidity to honor the withdrawal. https://en.m.wikipedia.org/wiki/Fractional-reserve_banking https://en.m.wikipedia.org/wiki/Fractional-reserve_banking
- fsckboy 4y agobanks lend out capital because the return interest more than makes up for risk (not least because they pool risk)