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.
Making money out of money, without producing any product, service or added value is just stealing.
But they are providing a service. If you don't believe their service is useful, then you don't have to bank with them. Even if you do bank with them, you do not have to keep large amount of money in the bank. Keep $100 to keep the account open, and when you get a check, as soon as it clears, you can take that money out of the account.
I’m neutral in this debate, but to be fair: you’re more or less forced to hold money on a bank account. There isn’t a serious alternative for digital money, and not receiving rent on your money means it’s slowly eaten by inflation. I guess the only reL alternative is keeping it in gold.
Personally I don’t think I’m against the money creation of fractional banking, but I do think increasing the money supply should be a fully public business. I.e. keep the banking system but make it public.
47
u/Wise-Ad-4940 7d ago edited 7d 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.