The Absurd Business of Banking

Stuff I use & recommend:

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Banks are not only able to print money, but they’re actually encouraged by the government to do so

Banking is one of the least understood businesses throughout history, and yet, they are the very places that people dump their life savings into

So how does the business of banking work?

What’s the purpose of a bank?

It’s to have a safe convenient place to store our money

But bankers don’t open up a bank out of the kindness of their hearts to make our lives easier.

The purpose of a bank is to the make the owners money.

But unlike every other business model out there, banks are the only ones that are legally able to print money out of thin air.

Today, it’s a little different because the world doesn’t base it’s money on gold anymore

Fiat money - money that’s really nothing more than paper that the government says is money.

And it’s in this fiat money system that bankers have become the modern day alchemists with the ability to literally create money out of nothing.

You deposit $10,000 into your bank account

Banks are required by law to only keep around 10% of that $10,000 you deposited as “reserves”

Why would they just let your money sit there when it could be out collecting interest for them and making them money?

So they lent out 90% of your money, or $9,000 as a loan to Frank at a 5% interest rate

All of a sudden, Frank has $9,000 to spend, you still have your $10,000 and what started out as only $10,000 in the money supply has magically increased to $19,000

Before Frank spends it, the $9,000 loan he got goes directly into his bank account

Sources:

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Copyright © 2019 Jake Tran. All rights reserved.

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[digital-rain]

What I find interesting is that because of interest, there's more debt in the world than there is cash. So it's physically impossible for everyone to pay off their debts because there just isn't enough to go around.

[wolfofdubai]

How was the saying about banking?

Thieves do not rob a bank, they own a bank!

[xandercorp]

I wonder when people are going to figure out that you're literally just teaching economic literacy using a conspiratorial tone and a sinister track playing in the background.

[JosueGarcia-vezc]

As an American president once said, "If the common man found out how our economy system functioned tonight, there'd be riots by morning."

[loganlaj]

I love the South Park scenes that popped up😂😂 it’s gone” great video🙌🏼

[appleislander]

all my homies keep our life savings in bullion

[samarthsingh]

This was in our school curriculum for the commerce stream here in India and when this topic popped up the class basically lost its mind over how banks are able to just create this credit money. It took a solid 2-3 classes for the teacher to address all our questions and by the end either the kids got their heads fried because they understood the scheme or they got their heads fried and didn’t understand how it was possible. Great vid!

[iedi]

Update: as of 26 March 2020 the minimum required reserves for the banks is 0%.

[presadisticlaw]

Employer: What do you know about the Monetary System?
Me: Money Machine go Brrrt.
Employer: You're Hired.

[WhiteBoardFinance]

Fractional Reserve Banking + Non-Government Federal Reserve Central Bank + Fiat Currency not backed by anything = Funny Money

[astrochild]

I'm a buff commerce student and I swear I've learned more from these videos than from my actual lectures

[LANDSHARKK]

And they give you .01 % interest. So generous they are after making tons of money off yours.

[PerfectorZY]

The money supply doesn’t increase. In the first clip you had a banker explaining to the guy as to why he can’t take out the money he has because it’s tied up in other loans. So the money supply doesn’t increase, the bank is hoping (really a lot of psychological, stat, and math is at play) that not everyone will want to take all of their money out at once. There is probably some critical value that if hit the bank will cease lending and/or try to start getting their (your) money back if they predict that you along with some other amount of people may want to withdraw your money. It only seems like they create money due to how many people they are borrowing from. So if you decided in a week to get your $10, 000 out you could. Just the other $9, 000 will be from a pool of others people who probabilistically won’t withdraw theirs.

[hbarudi]

That calculation is taught in macroeconomics class in college. The problem is people borrowing too much money and the lack of good jobs for so many people who need them.

[liligloo]

This guy's gonna be at 1.5 million subs soon YouTube algorithm has been boosting you in Canada. Good voice love the morals of this guy. Easy to watch and fun!

[razornightling]

*gets an ad from a bank before watching*

[justaninja]

“The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again.”

“

Josiah Stamp

INDUSTRIALIST & BANKER

[john.minelli]

Instead of forcing high school students to read Macbeth, we should be showing them this video.

[dom]

This is why I keep all my money in said to much.

[hunterking]

That khan academy clip gave me flashbacks of wanting to die during school