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> you’re loaning them your money. This is mostly wrong in modern economies. In Denmark you are not able to to buy a car with cash (Yor are legally required to
by madsbuch 4y ago
> you’re loaning them your money.
This is mostly wrong in modern economies. In Denmark you are not able to to buy a car with cash (Yor are legally required to use banks when transacting more than DKK 20.000, ~USD 2.700).
This has promoted the banking system to nation critical infrastructure, and the money in the bank is not a representation of "paper money". It is the money.
- epgui 4y agoAre you arguing that you can’t avoid using a bank, or that your deposits are not a loan to the bank?
- madsbuch 4y agoI am arguing that it is futile to see it as a loan to the bank. * There is no "lending" risk by depositing your money, only the currency risk (government insured deposits) * Banks provide critical infrastructure to transfer funds mandated to be used by the government. * It is even called deposits when you add money to you account, not a loan. * In Denmark we, still, have negative interests on deposits (at -0.6%, also for consumers) -- lending out is mandated to cost interests as in the tax authorities will force me to add interests at ~2.5% when I give a loan to somebody. All in all, depositing money in a modern bank should not be seen as providing a loan.