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> When you put money in the bank, and the bank gives you interest, that's not your money in the bank, that's the bank's money. What you own is a certificate ent

> When you put money in the bank, and the bank gives you interest, that's not your money in the bank, that's the bank's money. What you own is a certificate entitling you to the stream of interest payments When you give money to a bank, the bank owes you money. You are a creditor and you technically own debt (which may or may not give interests). This debt is money. The money supply is not a uniform things. It goes from actual paper money, through bank deposits which are more or less indistinguishable from paper money all the way to short term deposits and bonds. Holding deposits and holding safe bonds is not particularly different. It’s more cumbersome to trade but it doesn’t significantly alter the reasoning about what you will be able to do with the dollars you have.

fsckboy 2y ago
>When you give money to a bank, the bank owes you money. You are a creditor and you technically own debt (which may or may not give interests). This debt is money. the bank does not owe you the money you put in, they owe you the interest payments. look up "valuing a perpetuity", study the equations, that's how it works. If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double. They only owe you the original money if you give back your rights to the interest payments. I did study finance in grad school, I'm not making this up. I am using simplified language to stay focused on the simplicity of what is happening.
- otterley 2y ago
  You must be using a different definition of “owe” than the rest of the world. By any layperson’s and lawyer’s definition, any money you deposit in a bank is definitely owed back to you. And it’s definitely placed in the liabilities column of their accounting books. Any interest is certainly owed as well since it’s a consideration of a deposit agreement, but both are owed, not just the latter.
- StopDisinfo910 2y ago
  A bank account is not a perpetuity. You don’t need to use DCF to value it. Most current accounts don’t even actually give interests let alone an annuity you would need to discount. It is straight debt. > If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double. Even for deposits, the way this works is that you discount future cash flow on top of your principal to get to your net present value. The NPV of a saving accounts above inflation viewed as a perpetuity is infinite thanks to the magic of compounding interests. Sadly, “in the long run, we are all dead”.
  - fsckboy 2y ago
    >The NPV of a saving accounts above inflation viewed as a perpetuity is infinite um... no. and it's just PV, there's no net. look at the pattern of cash flows

fsckboy 2y ago

>When you give money to a bank, the bank owes you money. You are a creditor and you technically own debt (which may or may not give interests). This debt is money. the bank does not owe you the money you put in, they owe you the interest payments. look up "valuing a perpetuity", study the equations, that's how it works. If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double. They only owe you the original money if you give back your rights to the interest payments. I did study finance in grad school, I'm not making this up. I am using simplified language to stay focused on the simplicity of what is happening.

otterley 2y ago
You must be using a different definition of “owe” than the rest of the world. By any layperson’s and lawyer’s definition, any money you deposit in a bank is definitely owed back to you. And it’s definitely placed in the liabilities column of their accounting books. Any interest is certainly owed as well since it’s a consideration of a deposit agreement, but both are owed, not just the latter.
StopDisinfo910 2y ago
A bank account is not a perpetuity. You don’t need to use DCF to value it. Most current accounts don’t even actually give interests let alone an annuity you would need to discount. It is straight debt. > If somebody owed you the interest payments and the money, your net worth (in regard to this money) would double. Even for deposits, the way this works is that you discount future cash flow on top of your principal to get to your net present value. The NPV of a saving accounts above inflation viewed as a perpetuity is infinite thanks to the magic of compounding interests. Sadly, “in the long run, we are all dead”.
- fsckboy 2y ago
  >The NPV of a saving accounts above inflation viewed as a perpetuity is infinite um... no. and it's just PV, there's no net. look at the pattern of cash flows