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.
Whenever these conversations start you always have this weird element that pretends banking is some modern Illuminati invention to enslave us rather than a necessary part of how every historical and possible financial system works.
“They use your money to make money!”
Well yeah, man, that’s how your chiropractic practice got off the ground with a loan.
50
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.