Posts Tagged ‘deposit’

Bank Money

Posted: May 1, 2018 in Money Matters
Tags: , , , ,

“You don’t own the money you deposit in a bank. The bank does.” -Ryan Griggs 

“Sound principles of banking are identical to sound principles of warehousing any kind of merchandise, whether it’s autos, potatoes, or books. Or money. There’s nothing mysterious about sound banking. But banking all over the world has been fundamentally unsound since government-sponsored central banks came to dominate the financial system.  Banking all over the world now operates on a “fractional reserve” system.  A banker can lend out a dollar, which a businessman might use to buy a widget. When that seller of the widget re-deposits the dollar, a banker can lend it out with interest again. The good news for the banker is that his earnings are compounded several times over. The bad news is that, because of the pyramided leverage, a default can cascade.

In 1934, to restore confidence in commercial banks, the U.S. government instituted the Federal Deposit Insurance Corporation (FDIC) deposit insurance….  FDIC insurance covers about $9.3 trillion of deposits, but the institution has assets of only $25 billion. That’s less than one cent on the dollar.” -Doug Casey

Money Storage

Posted: February 23, 2016 in Money Matters
Tags: , , , , , , ,

“A borrower takes your money and uses it.  He doesn’t just store it for you; that is what safe deposit boxes are for.  When you deposit your money in a bank, it’s the same thing.  You are making a loan to the bank.  The bank doesn’t store your money in a safe on your behalf; it uses it to balance its books.” -Bill Bonner

Sweden, Denmark, and Switzerland all have negative interest rates.  Negative interest rates mean the lender literally pays the borrower for the privilege of lending him money. It’s a bizarre, upside-down concept.  But negative rates are not some European anomaly.  The Federal Reserve discussed the possibility of using negative interest rates in the U.S. at its last meeting.  When you deposit money in a bank, you are lending money to the bank.  However, with negative rates, you don’t earn interest.  Instead, you pay the bank.” -Nick Giambruno

Money in the Bank

Posted: June 30, 2015 in Money Matters
Tags: , , ,

“You may think you have ‘money in the bank’. You don’t. Your ‘deposits’ are really loans to the bank.” -Bill Bonner