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So banks create money when lending? So banks get "infinitely" rich as long as people need to borrow money? And what's stopping anyone from opening a bank a do
by pier25 4y ago
So banks create money when lending?
So banks get "infinitely" rich as long as people need to borrow money?
And what's stopping anyone from opening a bank a do the same?
- luxcem 4y agoWhen someone repays their loan, the money does not go into the bank's accounts, it is destroyed. Only interest are effectively added to the bank credit. The bank does not get infinitely rich, because interests are used to pay bank employees, taxes, shareholders. It can get infinitely rich the same way any other company that makes profits can. What's stopping anyone from opening a bank is laws and regulations, you have to get a banking license from the government.