Simply put, when enough people deposit money into their accounts, banks will simply take the money and lend it to someone else. It is not “their” money, but crunch enough numbers and do enough predictions and you might make it out.
That’s why “run on the bank” is such a feared things - if everyone starts withdrawing cash or sending it to a different bank, the bank can’t really do that because they don’t have the money.
They dream up money? How does that work? I’d like to do that.
You should read about how banks work. Most of their “assets” don’t actually exist, they’re counting borrowed money as still being theirs.
Source?
Any basic book on banking. When I say basic, I mean the sort you’d read to get an entry level job at one.
Here’s a push in the right direction for the cripplingly lazy.
Landlord stans havent read Smith after a 200 year head start, what makes you think they will read anything?
This is less for the benefit of the willfully stupid than it is for bystanders that would be taken in by the unchallenged ignorance.
Well put.
🌈Fractional reserve banking
Simply put, when enough people deposit money into their accounts, banks will simply take the money and lend it to someone else. It is not “their” money, but crunch enough numbers and do enough predictions and you might make it out.
That’s why “run on the bank” is such a feared things - if everyone starts withdrawing cash or sending it to a different bank, the bank can’t really do that because they don’t have the money.
Yes, it’s the largest way money is created in modern democracies