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this is a poor analogy. first of all, the parents (depositors) may not have their kids (money) right now, but the school (bank) definitely does. real banks defi

this is a poor analogy. first of all, the parents (depositors) may not have their kids (money) right now, but the school (bank) definitely does. real banks definitely don’t it would be like if at the end of the day the parents came to pick up their kids and—on a good day—10% of them were available to be picked up a more appropriate analogy would be if the school was handing out the kids to random people that very possibly wouldn’t give them back, or if they would, possibly not for at least a few years once they’ve grown up a bit the whole concept of a modern bank is ridiculous and a lot of people need to seriously reset their thinking around it. if you want a high risk investment than you can put your money in a fund. high street banks should not be high risk investments, especially for the measly interest rates they give out

comicjk 4y ago
In my analogy, parents = banks and school = bank loan recipients (the federal government, if the bank has bought government bonds). The money isn't missing when it's loaned out by the bank; the bank knows when it will get it back, and can estimate the cost of getting it back early. The concept of a "modern" bank (federally-insured fractional reserve banking) is 90 years old now. Its faults are well understood and, for all the drama, it isn't high-risk for ordinary depositors.