Title | : | How Banks Make Money (And How Interest Rates Really Work) |
Lasting | : | 15.01 |
Date of publication | : | |
Views | : | 3 rb |
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Why did SVB get into trouble because they parked "deposits" into long term instruments?brBecause banks do not "lend" "deposits"brIn fact banks, by law, do not take deposits nor do they make loans!brBanks are in the business of buying securitiesbrWhen you go to the bank and sign the loan contract you have created a security, a debt instrument, secured by the collateral put forth in the contractbrThe bank puts the contract on its ledger as an asset and on the debit side, it will type in the amount owed to you as an accounts payable liability, which they will call a customer deposit!brThe amount that the bank owes you is typed in out of thin air!brOf course the money is cleared at the FEDbrOnly banks can do this because of the banking licensebrYou and I cannot hook into the FED banking systembrBanks are not limited in lending by deposits Comment from : Jon Swanson |
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As a finance and accounting major, I learned this in college However it is not accurate today This concept was used before the modern banking system almost 100 years ago today is much different with the federal reserve Comment from : mcjoetaco |
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Where can I get that calculator format he is using as I’m not getting how he’s getting those percentage amounts Comment from : JT |
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Thank you Todd, appreciate that Comment from : Johnny Situ |
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