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In addition, banks don't precisely lend out "money they don't have." They lend out cash they don't have against outstanding loans that are rationally expected t
by tom-thistime 4y ago
In addition, banks don't precisely lend out "money they don't have." They lend out cash they don't have against outstanding loans that are rationally expected to be repaid. If those loans are bad and the bank conceals it, or if they misrepresent the amount of those loans, then that's fraud. (IANAL)
- dheera 4y ago> expected to be repaid In other words, they don't have the money. They just have an IOU, but that isn't money. What I deposited into the bank, that's money. And it's my money, not theirs.
- tom-thistime 4y agoIf you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. If you're just drawing some kind of distinction between valuable things that aren't money and valuable things that are money then ok. I don't understand the point, but ok.
- dheera 4y ago> If you believe that IOUs by definition aren't valuable, then stay away from treasury bonds. IOUs are like a lottery. Treasury bonds, OOM call options, they all aren't valuable on their own, there's just a chance I might win. In the case of treasury bonds, that chance is more like 99.99%, in the case of the call options, it might be 20%, but it's a spectrum, and never 100%. At the end of the day, my landlord isn't going to take a treasury bond for my rent payment, and neither is my supermarket. IOUs are not the same as hard cash.
- rhaway84773 4y agoMoney is literally an IOU.
- discreteevent 4y agoWould you accept a handwritten IOU from me for your car or would you rather cash?