Why do govts borrow from others? - Page 2 - Politics Forum.org | PoFo

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#14750128
The majority of money gambled away daily by banks is not in the form of loans but in the form of investments in the stock market. Banks collapsed mainly because of their exposure to financial products and not because of bad loans.

And that is also the reason why QE makes no sense and why people like Corbyn talk about QE for the people and they have a point. Because banks are given credit in the form of QE and they gamble it away trading instead of investing.

That is also the reason why people like Corbyn are brutalised by the media more than dictators and people like Trump. That is the reason why Greeks have been vandalised more than leftists vandalise racists and more than racists vandalise minorities, because they dared suggest such things which is hubris for the banks and far more substantial things than partisan mud-slinging.
#14750132
noemon wrote:Greenspan's statement is true and in line with what economists are aware of because a government can indeed print its way out & down, but at the same time impoverish all those with savings. Just because it can do it, it does not mean that it should, nor that it is the optimal solution.

Trump and the neo-cons should be reminded that Caesar and Pericles paid their armies and their navies out of their own pockets and not out of state coffers.


Balance is all. Ceasar and Pericles did not have nuclear weapons. You can't uninvent knowledge. Hard money economics is dead, thank God.

Noemon, you should know better. Spending is not inherently inflationary, although it can be. The other side of the equation is always ignored by hard money cultists. Failure to spend when it is necessary is equally dangerous as overspending.
#14750133
You missed the point and the point is that Ceasar and Pericles provided funding for security and infrastructure out of their own pockets(only these classes were taxed on demand when funding was required, and no other people were taxed except for people among the 1%), funding unprecedented that no modern-day billionaire extrordinaire provides to his/her nation. The invention of nuclear power is irrelevant in this regard because it is not about the warheads but about who pays for them.
#14750135
noemon wrote:The majority of money gambled away daily by banks is not in the form of loans but in the form of investments in the stock market. Banks collapsed mainly because of their exposure to financial products and not because of bad loans.

So the US mortgage sector wasn't the cause of the crash?
#14750140
It wasn't in the sense that you have interpreted it, mortgage holders did not fail to pay back their monthly mortgage payments, Lehman could not make money from its leveraged assets within the housing market which is akin to the stock-market because the value of its assets dropped when the bubble exploded, which is also the same way that all banks have collapsed the past century either through bubbles in the housing market or the stock market, which are merely branches of the market where they gamble their money away.

Banks have never faced a liquidity crisis because of red loans which are most always a tiny amount of their portfolio, they have faced such crises only because of over-exposure in collapsed financial products(which is what sub-prime mortgages also are).

If you ever manage to come across the accounts of a major bank take a look at its Liquid & non-Liquid Assets vs its Gross Loans & Leases and you will notice that the former 2 categories comprise its majority portfolio.

Take a look at this, the total gross loans for the whole of the US banking market are roughly an average of around 5% for the past 10 years. And from this 5% only 2% are non-performing loans with the maximum being 5% over a 10 year period.
Image

5% of the 5%, can you fathom how little non-performing loans affect the banks liquidity?

Where is the rest of the money, yo?
#14750162
noemon wrote:The majority of money gambled away daily by banks is not in the form of loans but in the form of investments in the stock market.


They're mostly in bonds, in fact, not stocks.

noemon wrote:Banks collapsed mainly because of their exposure to financial products and not because of bad loans.


Loans are financial products. I suspect you're thinking of tradeable securities. Which sometimes are created from bad loans.
#14750171
For the purpose of Boycey's argument, I had to draw a notional separation line and as I wrote in the previous post sub-prime mortgages are financial products indeed, by stock-market I also meant the bond-market as well. The purpose of this is to distinguish the exposure of banks to non-performing loans vs their exposure to all the rest so as to determine whether non-performing were the cause of the crash. And that is apparently not true, the exposure of banks to non-performing loans has been miniscule and cannot be considered as the cause of the crisis. See some graphs in the previous post that I edited which I grabbed from bluenomics and the world bank.
#14750557
noemon wrote:The simple & plain answer is lack of available funds.

False. It's because money is borrowed into existence.
When a government lacks funds, she debases the coin, back in the old days, they reduced the weight of gold, then used silver in place of gold, then copper and so on and that created what today we call inflation by devaluing the value of a unit of currency.

That was commodity money. Today we use debt money, which is created by lending.
Governments can either borrow or print money, borrowing vs printing is that borrowed money affect inflation less than printed money because they are money that already circulate within the market while printed money are new money.

No, money borrowed from licensed commercial banks is also new money.
#14750561
You are overplaying the fractional reserve system, you have a point but you fail to notice the obvious question relating to the OP and my reply regarding QE also covers these new fractional reserve banking money as well. They are injected according to demand offsetting the effects of inflation.

That was commodity money. Today we use debt money, which is created by lending.


The inflationary effect is the same, new money is coinage debasing the same as before.

The real issue always is the relationship between inflation, interests on savings and growth rates. And if inflation is higher, then there is a problem. Having a diversified money-creator scheme like through QE, fractional reserve, printing, allows for a better taming of inflation. However nothing works as good for taming inflation as taxes on huge savings accounts.
#14750590
noemon wrote:You are overplaying the factional reserve system,

It has nothing to do with the fractional reserve system, that's a red herring. It has to do with the creation of money as debt by private banks.
you have a point but you fail to notice the obvious question relating to the OP and my reply regarding QE also covers these new factional reserve banking money as well. They are injected according to demand offsetting the effects of inflation.

Excess debt money creation IS inflation.
The inflationary effect is the same, new money is coinage debasing the same as before.

The inflationary effect is the same, but not the purchasing power effect. Debasing specie money enables the issuing government to capture seigniorage, increasing its purchasing power. Private banks' creation of debt money in modern money systems enables the banksters to obtain interest income, but adds nothing to government's purchasing power.
The real issue always is the relationship between inflation, interests on savings and growth rates.

No, the real issue is who gets the additional purchasing power when money is created.
And if inflation is higher, then there is a problem. Having a diversified money-creator scheme like through QE, factional reserve, printing, allows for a better taming of inflation.

Nonsense. Private banksters are always going to create too much debt money because it shovels income into their pockets.
However nothing works as good for taming inflation as taxes on huge savings accounts.

Such a tax has zero effect on inflation, which is determined by the relationship between money creation and economic growth.
AFAIK wrote:If money is just conjured out of thin air when it is lent by banks

Sorry I missed this the first time around. Debt money is not exactly conjured out of thin air. It is created out of the borrower's legal obligation to repay it, and is deleted as the debt is repaid. That is important: when a debtor repays his bank loan, that money is not then available for the bank to lend to someone else. It is removed from the money supply, reversing the process of money creation that occurred when the loan was made. That is one reason the debt money system is destabilizing: if few people want to borrow, banks can't create much money, so debt repayments exceed new money issues, the money supply shrinks, causing deflation, which makes debt even less attractive. In extreme cases, if firms and households refuse to take on additional debt, government has to step in and borrow money from the banksters at interest in order to avert a deflationary collapse. That is what happened in 2008-9.
Last edited by Truth To Power on 16 Dec 2016 18:40, edited 1 time in total.
#14750595
Truth To Power wrote:It has nothing to do with the fractional reserve system, that's a red herring. It has to do with the creation of money as debt by private banks.


Through the fraction reserve. :eh:

Excess debt money creation IS inflation.


Not when it's investment results to growth greater than its inflationary effect.

No, the real issue is who gets the additional purchasing power when money is created.

Nonsense. Private banksters are always going to create too much debt money because it shovels income into their pockets.


You don't seem to get that even when you remove the factional reserve abilities that enable banks to do what they do another industrialist's pockets will line up and the middle, lower classes will suffer from increased inflation which will result from coinage devaluation as it has happened million times in the past resulting to great poverty and even worse social mobility, you also deny potential entrepreneurs easy access to credit. Just because a system is not perfect it does not mean that it is worse than the alternatives.

Such a tax has zero effect on inflation, which is determined by the relationship between money creation and economic growth.


And as such it is ideal for plugging funding holes.
#14750624
noemon wrote:Through the fraction reserve. :eh:

No. Fractional reserves aren't even necessary. It is the PROCESS by which private banksters create money that determines the relationship. If banksters want to create more money and thus more interest income for themselves, all they need is a willing borrower. If there is a reserve requirement, they can always just borrow reserves from the central bank.
Not when it's investment results to growth greater than its inflationary effect.

That's typically just an artifact of incorrect measurement of inflation, which focuses on consumer prices (i.e., mostly wages) and ignores asset prices.
You don't seem to get that even when you remove the factional reserve abilities that enable banks to do what they do

Fractional reserves are not what allow banksters to do what they do. Get that nonsense out of your head. It is the privilege of having their customers' loan proceeds (which the bank created) accepted in payment by other banks that enables them to increase the money supply.
another industrialist's pockets will line up and the middle, lower classes will suffer from increased inflation which will result from coinage devaluation as it has happened million times in the past resulting to great poverty and even worse social mobility,

Nope. Debasement of commodity specie money is entirely different from over-issue of fiat money, which is different from modern banksters' excessive issuance of debt money.
you also deny potential entrepreneurs easy access to credit.

That's just a rationalization of bankster taking. If entrepreneurs' wages, production, and profits were not being taken in taxation to provide unearned income to privileged parasites like banksters, they wouldn't need to go into debt to finance their ventures.
Just because a system is not perfect it does not mean that it is worse than the alternatives.

That depends on the alternatives. In the case of debt money, it is definitely worse than the alternative of government issuing fiat money in sufficient quantity to maintain price stability.
And as such it is ideal for plugging funding holes.

No, because it punishes deferral of consumption and the associated transfer of purchasing power from consumption to production.
B0ycey wrote:So many errors in your post,

The errors are yours.
I can't be arsed to even explain how the banking system works to you.

It is clear that you do not know how it works. Please inform yourself on the matter. A good place to start would be "Modern Money Mechanics," published by the US Federal Reserve.
Noemon has pretty much got it spot on in terms of national debt concepts and repayments plans.

No, quetzalcoatl with his MMT explanation is closer.
However what I will say is, if banks were the system that created global wealth,

They weren't. They are parasites.
how did the 2008 banking crisis occur?

Through banksters' greed for unearned wealth.
After all, banks in your world create fictional national wealth.

No, they create DEBT MONEY, and there is nothing fictional about it.
Why not create new wealth instead of borrowing from governments with bailouts that saved their asses?

Because THEY NEED A BORROWER before they can create DEBT MONEY (not "wealth"). The banks CREATED, at interest, the money that government then LENT them to save their asses (and they promptly pocketed as bonuses for doing such a great job managing risk).
Or why not use this capital they never use?

They have too little to make a difference. It's much more effective used as reserves.
How did Lehmens fall?

By getting too greedy.
#14750646
Truth To Power wrote:It is clear that you do not know how it works. Please inform yourself on the matter. A good place to start would be "Modern Money Mechanics," published by the US Federal Reserve.

Banks can't create fictional wealth. They borrow from clients and with their money they buy stocks, shares, bonds, investments, do loans etc. They might occasionally use stocks and shares as collateral (ie spend more than they have), but they cannot just make digits up and put it into someones bank account. They need the cash reserve first. Anyway, the reason for the financial crisis back in 2008 was bank's bought bad assets. They bought cheap US mortgages (because US banks knew the only way they could get anything from bad mortgages was to sell them cheaply) and when people who couldn't afford to pay off their mortgages defaulted, house prices crashed and global banks were left with junk assets. Then with the US mortgage sectors bubble burst made many more bubbles to burst and today banks are overly strict when it comes to using property as collateral. Now you have a tiny sample of some of the banking mechanics.

No, quetzalcoatl with his MMT explanation is closer.

Noemon is very correct on your twos debating issue. She seems to be a master on nation debt repayments and I have conceded to her once before when it turned out that she was correct on a issue we disagreed on. Because you are so wrong, you might consider this an option when she unravels you fictional concepts as being nothing more than imagination.

No, they create DEBT MONEY, and there is nothing fictional about it.

Banks can only use the capital they have. Why have customers if you can create debt money by putting a few noughts at the end of someone balance? Banks need capital before they can lend. Thinking otherwise is ludicrous.

By getting too greedy.

Every bank would fall if this was the case. They are all greedy. Lehmans fell because they had too much junk assets, and when the value of these assets fell or became worthless, it depleted their reserve to bankruptcy.
#14750718
Truth To Power wrote:No. Fractional reserves aren't even necessary. It is the PROCESS by which private banksters create money that determines the relationship. If banksters want to create more money and thus more interest income for themselves, all they need is a willing borrower. If there is a reserve requirement, they can always just borrow reserves from the central bank.


Banks cannot lend money without the fractional reserve system because if they are required to keep 100% of deposits in their vaults, they do not have any money to lend. Why would they borrow money from the central bank in that case when the borrower can go directly to the central bank who again will have a fractional reserve system to be able to lend money from her vault. And then the creation of another central bank will be required to act as the central bank which you have now rendered into the state-national bank, while the other banks have been demoted to security vaults. You' re just going around in circles ending up at the same spot.

That's typically just an artifact of incorrect measurement of inflation, which focuses on consumer prices (i.e., mostly wages) and ignores asset prices.


The CPI basket of goods does not measure wages but how much value money has in purchasing a basket of goods for sustenance. The more the inflation the less goods a person can buy to sustain himself and his/her family. The CPIH includes housing costs. And the RPIX includes mortgage interest rates.

CPIH – a measure of consumer price inflation that includes owner occupiers’ housing costs (OOH).

O.N.S. (PDF)


Fractional reserves are not what allow banksters to do what they do. Get that nonsense out of your head. It is the privilege of having their customers' loan proceeds (which the bank created) accepted in payment by other banks that enables them to increase the money supply.


It is accepted as payment because of the fractional reserve system.

Nope. Debasement of commodity specie money is entirely different from over-issue of fiat money, which is different from modern banksters' excessive issuance of debt money.


Different nominally, the same substantially, the first 2 are fundamentally the same for a consumer while the last one has more flexible inflationary effects because it gets injected according to demand in a more regulated fashion.

That's just a rationalization of bankster taking. If entrepreneurs' wages, production, and profits were not being taken in taxation to provide unearned income to privileged parasites like banksters, they wouldn't need to go into debt to finance their ventures.


No tax to corporations combined with a non-fractional reserve system will provide magical loans to start-ups? And that money will come from the Fairy God Mother? :knife:

That depends on the alternatives. In the case of debt money, it is definitely worse than the alternative of government issuing fiat money in sufficient quantity to maintain price stability.


Every time government has issued the coin/fiat money it needed, it has issued enough coin to render coin meaningless. That is why we have independent Central Banks to oversee the process because a political party in your scenario can have a bonanza party during its term and leave a mess when the coin is rendered worthless.

No, because it punishes deferral of consumption and the associated transfer of purchasing power from consumption to production.


Yeah I'm sure if you tax the billionaires you will punish their jet-fuel consumption and they will not have enough token to get their 500th pair of golden cufflinks to consume. So, no taxation for the rich, no fractional reserve, no loans for start-ups, just unlimited fiat-money for everybody and the world will be full of flowers...

It is clear that you do not know how it works. Please inform yourself on the matter. A good place to start would be "Modern Money Mechanics," published by the US Federal Reserve.


You should follow your own advice and read your own source:

Modern Money Mechanics-Opening Statement wrote:The purpose of this booklet is to describe the basic process of money creation in a "fractional reserve" banking system.


------

For the record I am a 32-year old male. You guys should visit Gorkiy Park more often. My avatar is to beautify the space and give a smile to my face.
#14750885
The “fractional RESERVE” story is false. That is, a balance in a bank’s RESERVE account at the CB is not the actual source of the bank loan at all, nor is the 10x or 12x multiplier.

The new loan proceeds or deposit is literally created on the bank’s balance sheet (of assets & liabilities) out of the new asset, the signed loan agreement.

BIS sets or suggests a policy that banks should or must maintain a certain level of capital assets vs outstanding risk and liabilities. The role of regulators comes in because banks have to ESTIMATE the value of their assets, because much of their assets consists of receivables — loans they have issued.

This is not the same thing as a non-estimated ACCOUNT BALANCE held in Reserve Acct at the Fed. Big difference. Not only is the Reserve Acct NOT used as a source of loans,
1) the rules for Reserves do not apply at all to commercial accounts (liabilities) the bank holds
2) the rules for Reserves only apply to household accounts
3) the “sweeps” rule allows banks to “sweep” (like borrow, but not formally) customer’s checking account balances into reserves for a few hours overnight to clear payments, then “sweep” those balances back into checking
4) reserve requirements are computed two weeks in arrears
5) some country’s banking systems like Canada (per Mosler) literally do not have ANY “reserve requirement”, no requirement to keep a certain balance in reserves acct (usually not interest-paying) at the Central Bank; they are required to report and maintain sufficient capital assets to be considered ‘solvent’ … which is a stretchy figure.

Insolvency and govt bailouts after 2008 did not arise as the result of depositors coming to withdraw gold or cash en masse, like that Christmas movie “It’s a Wonderful Life”, due to rumor and panic. The problem in 2008 was that bank’s CAPITAL base was stretched fraudulently thin in several ways and from borrowing from and lending to other banks to create “Ponzi” ASSETS many of which were arguably not actually structured to stay “good” for the long term but were (as Black explains) guaranteed to collapse and cause record LOSSES in the longer term, after generating record GAINS in the short-term.

This is fraud pure and simple, and can only be controlled by tight regulation of the financial industry.
#14750903
The new loan proceeds or deposit is literally created on the bank’s balance sheet (of assets & liabilities) out of the new asset, the signed loan agreement.


The loan is being given by the available funds that a bank is permitted to use from her customer deposits because of the fractional reserve. This is quite a fact for anyone to deny. And what is the point of denying it anyway? To claim what exactly?

Insolvency and govt bailouts after 2008 did not arise as the result of depositors coming to withdraw gold or cash en masse, like that Christmas movie “It’s a Wonderful Life”, due to rumor and panic.


Did anyone say they did?

The problem in 2008 was that bank’s CAPITAL base was stretched fraudulently thin in several ways and from borrowing from and lending to other banks to create “Ponzi” ASSETS many of which were arguably not actually structured to stay “good” for the long term but were (as Black explains) guaranteed to collapse and cause record LOSSES in the longer term, after generating record GAINS in the short-term.

This is fraud pure and simple, and can only be controlled by tight regulation of the financial industry.


I agree.
#14751004
B0ycey wrote:Banks can't create fictional wealth.

I don't know what you mean by "fictional wealth." They can certainly create money de novo.
They borrow from clients and with their money they buy stocks, shares, bonds, investments, do loans etc.

No they don't. They use depositors' cash as reserves.
They might occasionally use stocks and shares as collateral (ie spend more than they have), but they cannot just make digits up and put it into someones bank account.

Right: the amount added to the borrower's account has to equal the new loan asset the borrower gave them in return for the increased amount of money in his account.
They need the cash reserve first.

No, they do not. In some countries, no reserves are required at all.
Anyway, the reason for the financial crisis back in 2008 was bank's bought bad assets.

They CREATED bad assets because it was profitable, then played a game of Old Maid with them, but using a deck with mostly Old Maid cards.
They bought cheap US mortgages (because US banks knew the only way they could get anything from bad mortgages was to sell them cheaply) and when people who couldn't afford to pay off their mortgages defaulted, house prices crashed and global banks were left with junk assets. Then with the US mortgage sectors bubble burst made many more bubbles to burst and today banks are overly strict when it comes to using property as collateral. Now you have a tiny sample of some of the banking mechanics.

You clearly know nothing about it.
Noemon is very correct on your twos debating issue.

She is incorrect as a matter of objective fact.
She seems to be a master on nation debt repayments and I have conceded to her once before when it turned out that she was correct on a issue we disagreed on.

So, you know even less than she does. Check.
Because you are so wrong, you might consider this an option when she unravels you fictional concepts as being nothing more than imagination.

Keep reading, son. That will not be happening.
Banks can only use the capital they have.

What does that even mean? "Use" it for what? What do you mean, "have"?
Why have customers if you can create debt money by putting a few noughts at the end of someone balance?

Because they need someone to borrow that money.
Banks need capital before they can lend. Thinking otherwise is ludicrous.

They do not, except to satisfy the required capital adequacy ratio. You clearly have no idea how modern banking works.
Every bank would fall if this was the case.

How?
They are all greedy.

Yes. But they are not all equally stupid.
Lehmans fell because they had too much junk assets, and when the value of these assets fell or became worthless, it depleted their reserve to bankruptcy.

It reduced their CAPITAL to the point where they could not meet the capital adequacy ratio (or pay their liabilities).
noemon wrote:The loan is being given by the available funds that a bank is permitted to use from her customer deposits because of the fractional reserve.

That is incorrect, nothing but a commonly believed fairy tale.
This is quite a fact for anyone to deny.

It's not a fact.
And what is the point of denying it anyway? To claim what exactly?

That the monetary system does not function at all the way you believe it does.
#14751031
Investopedia wrote:

Why Banks Don't Need Your Money to Make Loans


(...)

The truth, however, is that the reserve requirement does not act as a binding constraint on banks’ ability to lend and consequently their ability to create money. The reality is that banks first extend loans and then look for the required reserves later. Perhaps a few statements from some notable sources will help to convince you of that fact:

Alan Holmes, a former senior vice president of the New York Federal Reserve Bank, wrote in 1969, “in the real world banks extend credit, creating deposits in the process, and look for the reserves later.”

Vítor Constâncio, Vice-President of the European Central Bank (ECB), in a speech given in December 2011, argued, “In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”



http://www.investopedia.com/articles/in ... -loans.asp
#14751063
Truth To Power wrote:She is incorrect as a matter of objective fact.


Bruh first of all you may call me 'zie' :excited: but I'm actually a 'he' and a lot uglier than my avatar.

Second, I don't see any an argument in your post, just denial.

Third I am honestly curious as to why someone would argue that the fractional reserve is not what it is. It surely slots somewhere, no? I am not trying to be sarcastic here, I am sincerely curious about it, so I would appreciate it if you could develop that thought a little bit more.
#14751291
Truth To Power wrote:I don't know what you mean by "fictional wealth." They can certainly create money de novo.

Because you said a bank can just alter someone's account by putting money into their account without having the reserve first. The banking system does not work like that. Banks can only spend with the assets they have (read quetzalcoatl post on assets and liabilities and remember the collateral concept we discussed earlier about financing risk until sufficent reserves are executed). But if you were right, why would a bank worry if every customer withdrew their money? In your world, banks create fictional wealth. The only bank who can create money is the nation's national bank in accordance with the government. Noemon explained to you that this wealth is then given to banks to loan out to sectors that need the money.

No they don't. They use depositors' cash as reserves.

Wow. So everyone's money when deposited in a bank sits in a vaulted somewhere never to be used! It doesn't get spend? It doesn't get invested? It doesn't get loaned out? Instead banks create fictional debt (as you put it) to buy assets and lends money out with this fictional created wealth too! Again I ask why do banks have customers if you are right? Where is the logic for a bank to have money it will never use? Do you know how stupid you sound. Banks need capital to buy assets and invest. The money customers deposit gets spent I assure you. And interest is given to depositors because profit is achieved by banks using their money.

Right: the amount added to the borrower's account has to equal the new loan asset the borrower gave them in return for the increased amount of money in his account.

At least we agree on something.

No, they do not. In some countries, no reserves are required at all.


There is a big difference between not having regulation in place to make sure you have a reserve and not having a reserve. If a bank does not have a cash reserve, then their cash machines will be forever empty. Countries that do not regulate are in risk of their banks taking too much risk. Fine in a good economic climate but dangerous if their assets become toxic and they rely on their reserves to refinance and assure customers that their money is safe.

They CREATED bad assets because it was profitable, then played a game of Old Maid with them, but using a deck with mostly Old Maid cards.

Who would create bad assets? Banks bought cheap debt because it was profitable on paper to do so. But if the loanee defaults, assets become toxic. And like the US, property values fell globally and more assets became toxic. This was ultimately the reason for the crash in 2008. However quetzalcoatl is correct on illegal processes that banks took in terms of ponzis that allowed banks to spend money they did not have. And 2008 pretty much highlighted these practices and global banks that allowed the conditions for ponzis to occur were fined and rogues who undertook these actions were sent to jail. This is why western banks are regulated and today the regulations are even stricter. So now you can see why your concept of giving money in the forms of loans without a sufficient reserve does not happen.

You clearly know nothing about it.

You don't know me. How can you make such an assumption? I won't go as far to say you know nothing about banking, however it is clear you have read something and misunderstood it.

She is incorrect as a matter of objective fact.

When discussing with you, he is always correct. I sorry, but he is.

Because they need someone to borrow that money.

So banks take money from customers to loan back to them? Do you know how stupid that sounds? Why wouldn't customers just keep the money they have and not pay interest on it? Banks need capital to invest. The day you understand that is the day you finally get the grasp of basic banking structures. My five year old understands the concept that you need money to invest.

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