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You need to re-read those articles. They don't say banks "don't lend depositor funds" At least the first couple on that page explain that banks don't "need" de

You need to re-read those articles. They don't say banks "don't lend depositor funds" At least the first couple on that page explain that banks don't "need" depositor money to lend and in fact they generally lend out money they borrow from a central bank since their loan outlay tends to outpace their deposits. But outside of the central bank reserve requirements the banks are free to loan our or otherwise invest their depositors cash, which is in fact prudent since cash "loses" value from inflation. Putting that excess funds into loans or other investments can all lead to what happened to SVB if a run on the bank over runs the reserves.

jessaustin 4y ago
...banks don't "need" depositor money to lend... This seems like one sort of thing, in which money that used to be in a depositor's pocket is now in the bank and available for lending. ...and in fact they generally lend out money they borrow from a central bank... This seems like another sort of thing, in which money that previously did not exist has been created by the Fed changing a number in a spreadsheet so it's now available for lending. You might point out that in our system, these different-seeming things are essentially the same. If so, you're really agreeing with GP.