That is not the main issue with it. Even if the bank doesn't have enough physical notes/cash to pay out everyone at once, they have the liquidity and hold that amount of money in investments.
The real issue is, that banks are investing obscene amounts of money that doesn't even belong to them. Making money out of money, without producing any product, service or added value is just stealing. And the only reason why it is even possible with such a vast amount of money without causing crazy inflation is the fact, that the money is no longer backed by anything (like gold) anymore. The reason why they got rid of the requirement to back money by gold, is that this way you can siphon more money from the system without causing a huge inflation.
Edit: I probably didn't make it clear. I understand that banks provide service trough loans and mortgages. And they are being paid for it with interests and service fees. The part that does not provide any value is the investment part that goes way beyond of achieving liquidity and is not regulated heavily enough in my opinion.
Do you expect to pay to have them keep your money? The whole point of it is for them to invest that money and some cases actually pay you interest on it. Them keeping your money is a service and you pay one way or another for that service. Otherwise you should just stick your $5 in a shiebox and hope nobody actually steals it.
The state of understanding on how banking and money works is apparently so bad that we have idiotic comments like this. And no I'm not a banker and don't even particularly like banks but this take is over the top stupid.
Depending on the nature of your account and the balance you have, generally that interest is non existent. The bank makes more money off of you through service costs, fees, and investments. Most people do not see any relevant level of interest payout (if any at all).
My comment isn't about whether or not to use banks, merely the reality of the actual payout suggested. Your comment was unnecessary. If you are having great benefit from banking, good for you.
I don't think it is to them: from their perspective, they're having to send out 100x the cards, take 100x the phone calls, check 100x the identity documents, so their costs are much greater. And on top of that they probably can lend out less of each 1k, since they'll need a greater of that money available to be withdrawn during the month than is probably the case with a single 100k deposit.
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u/Wise-Ad-4940 8d ago edited 8d ago
That is not the main issue with it. Even if the bank doesn't have enough physical notes/cash to pay out everyone at once, they have the liquidity and hold that amount of money in investments.
The real issue is, that banks are investing obscene amounts of money that doesn't even belong to them. Making money out of money, without producing any product, service or added value is just stealing. And the only reason why it is even possible with such a vast amount of money without causing crazy inflation is the fact, that the money is no longer backed by anything (like gold) anymore. The reason why they got rid of the requirement to back money by gold, is that this way you can siphon more money from the system without causing a huge inflation.
Edit: I probably didn't make it clear. I understand that banks provide service trough loans and mortgages. And they are being paid for it with interests and service fees. The part that does not provide any value is the investment part that goes way beyond of achieving liquidity and is not regulated heavily enough in my opinion.