Re: Why do banks give loans?
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+10%, +10%, +10%, -20% does not average out to 10%
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Seriously, when a bank loans money it is not lending savings it has on its books, it is literally conjured out of thin air.
How can you not know this? This is how Fiat money works.
Edit to add, though the amount of money the bank can create is related to the currency it holds on its books.
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Exactly. Fractional reserve banking. They are loaning out 10 times or more of what they have in reserves. Why would they want to risk their $$$ in the volatile markets when they got a sure thing?
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What are you guys talking about? Wells Fargo has $374B in loans but a net $380B in deposits and debt (subtracting out cash & securities owned).
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