07-03-2021, 04:44 PM
Is the global banking system based on a lie?
<!-- SC_OFF --><div class="md"><p>Hi, allow me to explain myself with a (hopefully) simple example that has a lot of assumptions. I want to fully understand this concept. It will be long but please bear with me. Thanks. </p> <p>Imagine Mr Evil lives in Sin City and there is currently no bank there. Let's imagine he has all the permits and money necessary to open his own bank. Mr Evil's Bank and Trust.</p> <p>Now currently he has no clients or liquid cash in his bank. But along comes Bob the builder who wants to open up an account with Mr Evil and deposit 1 million dollars.</p> <p>Mr Evil agrees to pay him 1% interest (I'm making that number up) monthly on his money.</p> <p>Where does Mr Evil get the “extra" money to pay Bob his 1% interest? Because currently Bob and his 1 million are the only liquid cash Mr Evil has in his bank.</p> <p>Now let's imagine Susie also lives in Sin City and she wants to open up a store selling seashells. So she goes to Mr Evil for a business loan of 1 million dollars and is approved.</p> <p>Now she takes her million and hires Bob the builder to renovate her store. (Mr Evil used Bob's 1 million dollars to loan to Susie because that is the only liquid cash he has)</p> <p>What happens if Bob wants his 1 million dollars but Mr Evil has already lent it out to Susie?</p> <p>What happens if Bob tells Susie the final price of the renovation will be 2 million dollars instead of 1 million? Can Mr Evil loan her another million dollars that he doesn't currently have, so Susie can pay Bob?</p> <p>For the purposes of this example Susie and Bob are Mr Evil's only clients. </p> <p>I know this was super long but if you made it this far, I hope my example makes sense and someone can answer my questions. Thanks.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Own_Interaction4617"> /u/Own_Interaction4617 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/octej5/is_the_global_banking_system_based_on_a_lie/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/octej5/is_the_global_banking_system_based_on_a_lie/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Hi, allow me to explain myself with a (hopefully) simple example that has a lot of assumptions. I want to fully understand this concept. It will be long but please bear with me. Thanks. </p> <p>Imagine Mr Evil lives in Sin City and there is currently no bank there. Let's imagine he has all the permits and money necessary to open his own bank. Mr Evil's Bank and Trust.</p> <p>Now currently he has no clients or liquid cash in his bank. But along comes Bob the builder who wants to open up an account with Mr Evil and deposit 1 million dollars.</p> <p>Mr Evil agrees to pay him 1% interest (I'm making that number up) monthly on his money.</p> <p>Where does Mr Evil get the “extra" money to pay Bob his 1% interest? Because currently Bob and his 1 million are the only liquid cash Mr Evil has in his bank.</p> <p>Now let's imagine Susie also lives in Sin City and she wants to open up a store selling seashells. So she goes to Mr Evil for a business loan of 1 million dollars and is approved.</p> <p>Now she takes her million and hires Bob the builder to renovate her store. (Mr Evil used Bob's 1 million dollars to loan to Susie because that is the only liquid cash he has)</p> <p>What happens if Bob wants his 1 million dollars but Mr Evil has already lent it out to Susie?</p> <p>What happens if Bob tells Susie the final price of the renovation will be 2 million dollars instead of 1 million? Can Mr Evil loan her another million dollars that he doesn't currently have, so Susie can pay Bob?</p> <p>For the purposes of this example Susie and Bob are Mr Evil's only clients. </p> <p>I know this was super long but if you made it this far, I hope my example makes sense and someone can answer my questions. Thanks.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Own_Interaction4617"> /u/Own_Interaction4617 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/octej5/is_the_global_banking_system_based_on_a_lie/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/octej5/is_the_global_banking_system_based_on_a_lie/">[comments]</a></span>Kind Regards R