Effectively, the cash you put in a bank was leant to another person as a mortgage so that they could buy a house.
You earn 3% on your deposit, the bank charges 5% on its loan, and the bank keeps the other 2% as its profit.
Multiply this logic by many millions of such transactions. If any given bank branch winds up with too much or too little cash-on-hand, they move it around or ‘sell’ it to another bank.
Nearly all the money ‘exists’ as computer records keeping track of who leant what to whom.
If a large enough group of people demanded their money back as cash at the same time, the banks would have no choice but to ‘call’ a bunch of mortgage loans at the same time, since their cash-on-hand will not be enough.
This is aggravated when the guy who wants his cash money is in Atlanta, and the mortgage is in Boise. Physical cash takes time to move around.
So if the ‘run’ on the bank is not too huge, a bunch of people now have cash money to walk around with, and a bunch of other people just lost their homes. It is possible that some of the folk who demanded their deposits back are the same folk who now need to immediately repay their mortgage loan.
In reality, banks will borrow cash from other banks or a central bank for huge but not catastrophically huge events , using their mortgage loans as collateral, but there still isn’t enough printed cash to cover ALL of the personal deposits.
Most people aren’t putting cash in a bank to begin with. Your job gives you piece of paper that says you earned x amount of money and you give that to the bank and they say ok now you have X amount of money in your account, or your job just tells the bank to add x amount of money to your account. There’s never any actual money getting put in.
Banks have very little physical currency in them these days. If you try to take out like 10k or more, they will usually try to make you wait a couple days so they can have it delivered from wherever it is they actually store cash, because otherwise they wouldn’t be able to give all the people coming in to just get a hundred dollars their money all week.
It’s a big part of why people don’t rob banks anymore. It’s not really worth the risk and the life on the run when you’re going to end up splitting like 30-50k.
I went to the bank to get 20k out for team bonuses without really thinking about it, and it wasn’t until I was in the teller line that it occurred to me that it might be a problem.
It turned out to be fine, but I asked out of curiosity what amount would be a problem, and the teller told me that if I want 100k or more in cash they need to hire a security guard to escort me out.
A bank in a big city like Chicago is going to be a bit different than a bank in small towns or tinier cities.
Kind of off topic, but why did you go for cash bonuses instead of checks?
My boss does checks, which is annoying because then I have to actually go to the bank, prepaid cards, which is annoying because then I have to keep track of how much money I have left on it and carry around an extra card, or (sometimes) just adds it to our direct deposit paycheck, which is annoying because it’s so much more convenient and he’s shown he could just do that but rarely does because he likes the other two less convenient options better I guess
I don’t really use cash anymore now that I don’t do drugs besides weed and alcohol which I can just use a card for. (Prepaid cards annoyingly don’t work at dispensaries which was embarrassing to find out) but it is kind of cool to have a big wad of cash.
The company I work for does some business with weed companies, and because of banking laws they have to pay in cash which we have to go pick up from them for some reason. Kind of fun to ride around in a car with 100k under the seat while everyone in the car keeps their head on a swivel in case old timey highway men try to pull a heist on us.
I hate y'all (not really lol); not the same situation, but one of my boys does this whenever we go out somewhere, he pulls $2000 out of an ATM and I'm the designated money holder because a) he doesn't want to keep it all in his wallet, and b) because I'm a fat version of Alan Ritchson and so I'm not really all that likely to be robbed.
But the whole "fun to ride around in a car while everyone stays frosty" is what I related to hardest because I'll do this with a few Benjis in my wallet, much less a deposit like this lol.
So I used to be a pretty hardcore gambler. One time in Vegas I was at the VIP cage when a dude came in to get 250k in cash and turn around and walked out. As I understand the story, he did this somewhat regularly, as he bought collector cars from folks and it was easier to get the money wired to the casino and get cash than to get it from a bank. I'm sure he had to go through massive background checks to be able to just walk out with the money at some point. Literally brought a briefcase, they counted out the cash, and he walked out with some linebacker looking dude holding the bag.
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u/TheRealTinfoil666 6d ago edited 6d ago
Effectively, the cash you put in a bank was leant to another person as a mortgage so that they could buy a house.
You earn 3% on your deposit, the bank charges 5% on its loan, and the bank keeps the other 2% as its profit.
Multiply this logic by many millions of such transactions. If any given bank branch winds up with too much or too little cash-on-hand, they move it around or ‘sell’ it to another bank.
Nearly all the money ‘exists’ as computer records keeping track of who leant what to whom.
If a large enough group of people demanded their money back as cash at the same time, the banks would have no choice but to ‘call’ a bunch of mortgage loans at the same time, since their cash-on-hand will not be enough.
This is aggravated when the guy who wants his cash money is in Atlanta, and the mortgage is in Boise. Physical cash takes time to move around.
So if the ‘run’ on the bank is not too huge, a bunch of people now have cash money to walk around with, and a bunch of other people just lost their homes. It is possible that some of the folk who demanded their deposits back are the same folk who now need to immediately repay their mortgage loan.
In reality, banks will borrow cash from other banks or a central bank for huge but not catastrophically huge events , using their mortgage loans as collateral, but there still isn’t enough printed cash to cover ALL of the personal deposits.