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Saving is not 'not doing anything at all with your money.' Saving is lending your money to a generally low risk debtor, called bank.
by raincole 8mo ago
Saving is not 'not doing anything at all with your money.' Saving is lending your money to a generally low risk debtor, called bank.
- globular-toast 8mo agoThat's not how banks work and hasn't been for decades.
- gzread 8mo agoWhat is a deposit if it's not a loan from you to the bank?
- globular-toast 8mo agoNothing. It's just a number in an account. It's what we call money basically. Banks don't profit from keeping your deposits, they profit from running the money supply which empowers them to create new money which they tax or, in other words, loans on which they charge interest. Go and try to withdraw something tangible with intrinsic value from a bank and you'll see they don't owe you anything at all. The most you'll get from them is paper, but even then you'll find it withdraw all your money in paper. I just opened an account for you in my own bank, in fact. You have one million credits. You are free to send and receive credits from anybody else with an account (which is nobody, unfortunately). I owe you nothing.
- gzread 8mo agoSo when you go to the bank teller and hand them $100 in cash, the bank doesn't receive $100 in cash?
- globular-toast 8mo agoWhen was the last time you went to the bank teller and handed them $100 in cash? I haven't done that in well over 20 years now. Notes and coins represent less than 3% of the money supply in countries like the UK and US. It's not what money is any more.
- gzread 8mo agoSo when you transfer $100 to your bank from another bank, the bank doesn't receive $100 credited to your bank's bank account?
- globular-toast 8mo agoWhat does that mean? You think someone is physically wheelbarrowing something around between banks when you make a transfer? The banks settle up at the end of day and the net amount moved between banks is far smaller than the total transferred. What do they settle up in? Another layer of electronic funds you don't have access to. If even the smart people on HN can't understand this it's little wonder the finance industry has such a stranglehold on society. The banks just run a ledger. That's all they are doing. But it's a ledger they control and they are allowed to create new money in it. In fact 97% of money is created by the banks when they issue loans. It's a fundamentally different model to the antiquated "banks lend out your deposits" one.
- gzread 8mo agoYou don't understand what it means for a bank to receive $100 in its bank account? This has nothing to do with lending, except that deposits are loans from you to your bank.
- bulbar 8mo agoIn a deflation based economy as invisioned by crypto currency enthusiasts, there is no incentive to lend your money to anybody. Neither a private person nor banks would have strong incentives to do that, because you have a guaranteed increase of value if you just sit on your money. No investments would take place because of that.
- raincole 8mo agoNo one is talking crypto. You seem to be fixated on crypto.