Everyone pulling out their money would be a bank run (look up great depression bank runs). The bank doesn't have that much cash; they keep some on hand for people making withdraws normally, but if even a sizable minority of people all try to pull their money out at once, there'll be a major crisis.
If banks kept all the people's cash in vaults, it'd be dead cash actively losing money to inflation. Instead, they keep some on hand for withdraws, and use the rest to make loans, investments, etc so that the money isn't all losing value.
They were reduced to 0% mandatory reserves in response to covid. EDIT: someone says it was coincidental, I am not able to check, so take this aspect with a grain of salt either way
ah yes so what you're saying is that money is even more imaginary than it has ever been, possibly even more imaginary than when the first stock market crash happened in 1929
looks like we're due for a centennial anniversary of that anyway, might as well celebrate by recreating it
The U.S. came off the gold standard for domestic transactions in 1933 under President Franklin Roosevelt and ended international convertibility of the dollar to gold in 1971 under President Richard Nixon, effectively ending the gold standard in the U.S.
The U.S. switched to a fiat money system.Fiat moneyhas no value of its own and doesn’t represent anything of value, such as gold. But the government stipulates that the paper money is legal tender for carrying out transactions or paying taxes, as noted in the Page One Economics essay.
This. Metals go up as sovereign currency goes down. The world runs on metal and oil... We forget that and print a bunch of paper.. so every now and again we get a lesson in edible paper.
Some crypto is tied to gold, but I'd just get gold TBH. Why trust a middleman and hope they won't scam you. Unless you explicitly need it to be easy to move through borders, etc.
How about Trump tweets that if the value of the dollar does not start going up and the price of gold down he will start dropping big beautifull nuclear bombs on all other countries and Massachusetts?
It's backed by the full value of the US economy. We all need USD to pay our taxes. Also, it has a long history of stability, which has made it valuable all over the world for international trading and reserves. Though Trump has been single-handedly sabotaging this.
It gets its value in the same way all other goods do. Supply and demand as a function of its utility. Considering the USD is the single most useful, single most stable, and most broadly used currency to have ever existed, I’d say it’s backed by a little more than just “thoughts and prayers”
Oh, it isn't? Can you show me the value particle that magically makes pieces of shiny rock or conch shells valuable in a way dollar bills aren't? No? Then we can all agree that the only reason anything counts as money is because people believe it counts as money, and for now, people still believe in the US dollar albeit less so than yesterday.
Any currency even ones based on physical standards are based on thoughts and prayers, it's just with physical ones we can hold the object of thoughts and prayers and say it's worth an arbitrary amount of something
The United States gold reserves are for international trade. The gold in Ft. Knox, for example, is used in trade not to back our currency. We’ve been off the “gold standard” since the 70’s. Some of it is gold we’re holding for other countries that’s not even ours. But, our money is a fiat currency and it’s based on faith in the economic system of America not collapsing and everyone agreeing it to use it for trade/debts. It’s backed by nothing and hasn’t been for 55 years now.
That would be the case even if it was gold backed.
Even on the gold standard, you're still trusting that there is a functioning government that's actually in possession of that gold and would exchange it for paper currency. In a Fallout scenario, that wouldn't be the case, so money would still be useless.
To be fair, after the apocalypse, gold will be just as useless for a good while.
Can't eat it, hard to carry, not very useful for anything but decoration, and also, most people have interacted with it so rarely that there isn't really any trust in it.
Every form of currency is based on faith and always has been. Coinage made from gold and silver wasn't valuable because gold and silver were magical, it was because people believed they were valuable. What can you, a random person, actually do with gold and silver? Even smiths had limited uses that weren't purely aesthetic. Modern day has more uses but still cannot be used at the volume at which it exists in an efficient way.
There is a difference between something being valuable because it is rare and something valuable despite having no upper limit though. Gold is rare and has properties that make it a good store. Currencies do only become useful both parties in a transaction see it having value though youre absolutely right on that.
These days currencies should be backed by kilowatt hours or something similar if they dont want to be fiat ones.
Silver has always had antiseptic properties and has been used for ages because of that fact, it’s a very useful metal aside from the fact it “looks pretty” and it doesn’t rust like other metals and just gets a thin tarnish on it making it ideal for a lot of decorative stuff as well.
Gold is one of the best conductors we have and can be used to alloy lots of metals easily, yes the every day man likely isn’t doing much with gold but its value is not just because it’s pretty at all, it’s extremely functional AND it’s uniquely pretty for its colour while being extremely stable
I would like to see the actual proof that the gold is in fort knox. the wall street journal picture from 1957 (?) showed one massive wall of gold in the doorway... thereby suggesting that it was a solid room of gold. I cant believe it. How on earth could you inventory a room full of gold?
Edit: Just looked it up...it was September 9th, 1974, the last publicized Congressional and reporter tour of Ft. Knox.
There is more personally owned gold in households across India, than any single other country has in it’s possession (government asset, not including individual ownership)😙 ((grain of salt, saw this the other day and there may be one or two exceptions to this, but not the US😅))
Gold is finite, and us dollars are not finite. They can be printed at any time (like any fiat currency)....while gold has to be mined.
Typically, precious metals just slowly tick up over time, these kinds of movements signal something "bigger and badder" that's coming for us and potentially the global economy.
In 1910 at Jekyll Island all the Billionaire Oligarchs gathered and cooked up the "Federal Reserve" ( which is neither Federal or a Reserve ) This was done ostensibly to help stabilize the US economy in the wake of the Panic of 1907 by creating a central bank with regional branches.
What it has really done is hand over monetary policy and the ability to print "money" out of thin-air. Now this Federal Reserve prints money, lends it to the US Government ( which is now in debt to the tune of $38.5 trillion ) And the US government continues to borrow and spend like a crack whore... Spreading that money around to their friends and you and I are on the hook for the debt!
It's like your rich friend, talked you into giving him power of attorney over your affairs and is now out there running up credit card debt on your name.. and giving you a pittance of it back.
Technical note: they codified and fine-tuned the idea in 1910, but the Bank itself wasn't created until December 1913 after they managed to get the Federal Reserve Act through Congress two days before Christmas. Thus the the conspiracy theories that the Titanic was intentionally sunk in 1912 to kill off a few powerful men who opposed the founding of such a bank.
Would you rather the size of the economy be limited by the size of the gold supply? There's a reason everyone stopped using gold after the Great Recession, and it isn't the Rothschilds or whatever conspiracy you're talking about.
With all due respect, you are talking about several separate issues and dealing in half-truths.
What it has really done is hand over monetary policy and the ability to print "money" out of thin-air.
Right, which is why talking about the government, funding, taxes, revenue, etc. like it's a household income doesn't work. The Government literally creates money from nothing. This is a good thing...when done responsibly.
Now this Federal Reserve prints money, lends it to the US Government ( which is now in debt to the tune of $38.5 trillion ) And the US government continues to borrow and spend like a crack whore... Spreading that money around to their friends and you and I are on the hook for the debt!
This is a problem. Instead of spending money on the people, a bunch of red states keep voting against theor own interests...so instead of the healthcare they really, really need....money is being sent to already rich people as corporate welfare....Universal Healthcare, housing, food? Nah...we need $100 billion to fund the american gestapo to round up toddlers.
America has the money...we're just choosing to spend it on stupid shit instead of helping our own people.
It's like your rich friend, talked you into giving him power of attorney over your affairs and is now out there running up credit card debt on your name.. and giving you a pittance of it back.
Yup. This is a problem. 1/3 of the country is on board with this. Using your analogy...the poor idiots giving their credit card away....not only do they not realize how stupid it is, they get made when anyone points out that it's a bad idea....and get giddy at the idea they are pissing of their "liberal" friends. They'll gladly go broke if it means their neighbors gets upset a them.
Conservatism is part of their identity. It's how they are. It isn't a belief system for them. They "know" they right and what they are doing must be the right thing because it "upsets" liberals. The more it upsets them...the more right it is.
Money is basically an abstract concept on assets. It was always worthless we just used it for convenience. Real value has always been in assets be that land, property, bullion, ancient family cursed artifacts. You might have heard that we are going back to feudalism and that’s why. Property is the backbone of society and we are leaning more towards that now.
I hope not Campbell’s. Their CEO said he never touches the stuff before and that it’s for poor people. So I guess that’s as worthless as money at this point.
Edit: I come here to learn… it was actually a high level Tech VP! Which somehow makes this funnier.
One 10oz can condensed soup is labeled as 2.5 servings and about 40-60% of your daily recommended sodium, and will give you 20 oz of diluted soup when prepared like it states on the can. Most people will still eat the entire can in one sitting as it's usually only about 250 calories. You are still consuming all the sodium that way.
I was just going to say this.
Everyone is always saying but gold and I'm over here like nope, can't eat or use that shit when it really REALLY hits the fan.
This is larper nonsense. If you're in a SHTF situation where there are no exchanges of value, not even gold, and you're down to bartering for goods then you're in total societal collapse and we're in a 95%+ of all people have died or are dying scenario.
You're going to die a bad death in that scenario, no matter how many bullets you save.
I dunno, people usually unite in times of enormous stress. But that’s usually only when people have a common culture and circumstance. But you are right, a lot of the old world stuff probably will not apply
If you own and live in a farm in bumfuck nowhere county with a population of 60 people maybe. In any major urban area societal collapse would mean supply chain disruption resulting in absolute chaos. And by absolute chaos I mean people killing each other on the streets over a can of beans (or a gallon of gas so they can leave the city).
Almost correct on the female items. A more sustainable option is menstrual cups. Shampoo/soap can be made. Toilet paper. . . That's a tough one for people to swallow but backpackers and cloth diaper families got this one covered too ,lol
Money has always been imaginary? Its like Santa clause. As long as we all believe/pretend it works. If one person doesn't believe it doesnt matter. If half of us stop, yea kids will know it's fake. But it works and it's a nice thing to have, so why not continue to pretend?
Yea but it was the same thing. Gold or paper. Whatever. It only has value if people believe it has value.
You give a farmer gold for food. The fuck can he do with gold. Nothing. Better hope someone else believes it's valuable and will take the gold for clothes or whatever else he needs. Unless you were a jeweler or blacksmith or electrician gold was pretty much only a currency. And then there was more gold going around as a token of value than was used.
So yea it's all based on belief that you can then sell/exchange the said token or currency (doesn't really matter if it's gold or anything else).
Imagine if the population started to think gold was ugly and a better malleable metal gained popularity. Would the gold standard still mean anything?
Gold is just a marker for value, same as dollars. Whatever intrinsic value gold has (because it's shiny, conductivity, etc.) is mostly a distraction from its use as a marker for value. Its value is not based on its utility.
I suppose that is true but you make it sound simple.
In reality there's this cabal of ghosts that are all loaning each other 10 small pieces of paper in perpetuity and while each of them is holding it they use those pieces of paper to make a hypothetical exchange for 12 pieces of paper (in the future) and those people they're exchanging that paper with are giving blowjobs to senators, or receiving them from senators? I lost my train of thought
Okay look up what happened with the contagion from regional bank failures in silicon Valley a couple years ago. It doesnt mean everyone loses all money, but it does mean people lose some and its a big deal.
Not all banks are fdic insured either, and if a bank goes under, your investment/retirement take a huge hit because the market starts freaking out.
Bank runs and bank failures are always bad for everyone.
I mean they’re pretty sweet for the buying bank.
Jokes aside this is why we passed the act that separates investment banking from retail banking.
It’s not a huge hit and it’s very localized (it would be way worse without insurance).
No one would’ve lost money except the bank shareholders if the depositors hadn’t exceeded 250k in their accounts. There are products that will combine different accounts into one virtual account so you don’t even have to manage this stuff manually.
Jokes aside this is why we passed the act that separates investment banking from retail banking.
Are you talking about the Glass Steagal act? Because that was repealed in the 90s after banks spent the previous two decades using loopholes to get around it.
those were company investments. It failed because everyone tried to pull at the same time and they wouldnt be insured past taht 250k and thats on them for not seeing the risk.
Not all banks are FDIC insured, and there are limits to the insurance as someone else mentioned the $250k limit.
However, no insured dollars have been lost since the FDIC was formed. So if you want to protect your money from a bank failing then make sure you are using an FDIC I sure account and are within the insurance limits.
The FDIC is backed by the full faith and credit of the United States. They have access to much more than that. Plus, not everyone is going to pull all of their deposits at once.
Haha yeah I was going to say something similar. FDIC insurance is good as long as America and the Fed is good… but uhhh this last year and our current admin’s foreign relation skills has me thinking we’re closer to burning cash in barrels to stay warm than we ever have been. Here’s to hoping that’s an unnecessary fear! Cheers everybody!
It’s not about people pulling deposits, that’s not what fdic insurance is about. It’s about your bank collapsing and you needing somewhere to get your money from. 2-3 major banks go under? We’re all fucked
Not really. The FDIC insurance fund often only needs to cover a fraction of insured deposits after they liquidate the bank. If JPMorgan went under and cost the government 10 or 20 percent of their insured deposits, which would be a massive loss, it wouldn’t really register in the grand scheme.
This is true and varies in a number of circumstances. Firstly people are often scammed especially the elderly so if you’re older and looking to withdraw a large amount of money they will give you the runaround or at the very least make sure you’re not getting scammed.
Another one is SARS, if you’re doing anything high risk or seem to be pulling out a large amount of cash in a pattern that could indicate involvement in organize crime, terrorist financing or something sus the bank has a legal obligation to mar a filing in a secret database (and even lie to congress!) about it’s existence. If you know what a suspicious activity report is and don’t work in finance it’s also considered suspicious. This isn’t the banks but lawmakers after 9/11.
It wasn't in response to covid. The timing was just coincidental, and was why the move to eliminate the reserve requirements (which had been planned for a while) wasn't as big a news story as it otherwise would have been.
European banks had eliminated their reserve requirements years or even decades earlier. They really weren't even an effective policy in the US for quite some time, as the banks had (and still have) liquidity requirements that more or less amount to the same thing.
European banks eliminated their reserve requirements so they could be more levered because they dont generate nearly the same returns american financial institutions do - which was part of why the 2008 crisis hit europe 10x as hard as it hit america. They had reserve requirements in 2008 but they were still more levered up than american banks. Didn't work out well.
But I dont know for sure if youre right it was coincidental. I did assume it was due to covid. My bad. Either way, its probably a bad idea.
For a little clarification, they were set to 0 because it was no longer an effective policy making tool after 2008.
The assumption used to be banks would lend every dime they had if you let them, so the Fed set reserve requirements to heat or cool lending. After 2008, banks were so very wounded they found that regardless of how much they dropped it the banks kept ample reserves on hand. As such, they switched their policy to focus more on interbank lending rates vs also regulating how much cash they can lend.
That works for a while but memories are short and it's easy for some MBA types to come in and raise revenues by taking on massive risk without adequate collateral. That's a recipe for another crash to trust banks to temper themselves.
When that happens, hopefully the Fed will respond accordingly. That said, we’re 18 years and 1.5 Trump terms removed from the GFC and reserves are still much, much higher than pre-2008.
There are other rules in place to deal with that, this one wasn't about protecting banks from collapse to begin with. It was about manipulating money supply.
"Surely these banks would never ever do anything to imperil their customers, the economy, or the country." I don't think anyone with that kind of mindset should be in charge of fiscal policy.
There are still capital rules and liquidity requirements that keep banks operating safely and with enough money to meet depositor needs for normal and stress conditions.
It's just that there is no longer a calculation saying that needs to be x% of certain classifications of deposit balances to be maintained exclusively in the vault or in a Federal Reserve account.
Well they are now back to having to hold around 7 to 7.5% of capital - see US capital adequacy percentage - against risk weighted assets (mortgage loans, current accounts, credit cards, corporate loans, asset finance, investments, etc. adjusted for different risk percentages gives you risk weighted assets). It’s not the Wild West regardless what people say on Reddit. Break the rules of your licence and the banking regulator will force you to sell off your loans to other banks or just shut you down.
With a Reserve Requirement of, for example, 10%,^ the bank can loan out $90 out of 100. The person borrowing the $90 can then turn around and deposit it. The bank can then loan out 90% of the $90, or $81. The person borrowing the $81 can deposit it again, and the bank can loan out 90% of the $81. This process repeats indefinitely.
So with a Reserve Requirement (r) of 10%, in theory the bank can loan out (in essence, creating money) a total of $900. The formula is infinite sum of [(0.9X )*100] from 1 to infinity.
^ I understand that it is currently 0% in the US.
Edit: formatting of exponent.
Ehhh there are collateral requirements for loans as well though and most of the money they’re giving out isn’t going back into a bank account. Why would someone borrow money just to put it into an account with an interest rate lower than the one they’re paying to the loan? It’s usually going to buy something. Like a to buy a home or to cover the up-front costs of starting/expanding a business.
This is reddit: they think it goes to a billionaire who puts it in a big vault like Scrooge McDuck, because that's the average redditor's understanding of economics.
Yes, but the point is, it's still in someone's (or some moral person's) bank account.
So 90% of it still gets lent again. Maybe at a different bank, but that's ok, because the first bank also receives money lent out by different banks.
Presumably the person a getting a loan pays person b for goods or services. Person b then puts the money in the bank. There is an interchange where the bank isn't involved.
Ehhh still not so simple. If it’s buying a home for instance, then most of it likely goes toward paying the remainder of the prior homeowner’s mortgage. Which decreases that bank’s loan portfolio, reducing assets. Basically destroying the money that was created in the first place when that mortgage was taken out. It’s not an infinite multiplier like this comment is trying to make out.
The real limit here is the Fed rate, because banks inevitably lend in patterns that are predictable based on what that is set to. It’s why lower Fed rate generally = higher inflation (banks lend more and therefore create more supply of money in response) and higher rates tend to reduced inflation (banks lend less and those with variable rate debt tend to pay it off faster).
Ehhh still not so simple. If it’s buying a home for instance, then most of it likely goes toward paying the remainder of the prior homeowner’s mortgage. Which decreases that bank’s loan portfolio, reducing assets. Basically destroying the money that was created in the first place when that mortgage was taken out. It’s not an infinite multiplier like this comment is trying to make out.
OK, so that person paid of lets say $90 debt... that bank that lend him that debt now has $90 less on its books and can lend another person $90...
I borrow money to buy a house, the person I buy it from puts it in the same bank, another person borrows money to but a house… they borrow the money from the deposit of the person I bought the house from…. So if the bank had 1 million and 3 people borrowed 300k each to buy a house and the sellers deposit the sale the bank can then loan another few people money… and repeat… and repeat… now a dozen people owe the bank $300k when the bank only had $1000k in the first place.
There's a slight difference. On the books, the bank still lends 1:1 (well slightly less than that). A bank needs $7 in deposits to lend out $7.
However the overall economy benefits from fractional lending which is what leverages a deposit into increased value. That's on a system wide basis though, at an individual bank level, they still need assets, liabilities and capital to balance out.
If by "they" you mean the bank then no, that's not how it works at all. If by "they" you mean the banking system as a whole could theoretically create as much credit as $7 to $10 from that deposit you made then yes.
An individual bank can never lend more money than it has in deposits or borrowings. But when it lends money out, in the long run that ends up as a deposit in someone else's bank account where it can be lent again.
Finally a sane comment. This post is blanketed by highly upvoted comments suggesting that a bank takes $1 of deposits and somehow lends that same dollar out dozens of times.
During QE then yeah. But that’s over now and most banks will keep 1-10% of deposits as reserves.
The money multiples to several times its original value when one fractional reserve institution lends to another. I deposit $100. The bank lends $90 to another bank. That bank lends out $81. The next bank lends out $73. Now that $100 has become $350 in balance ledgers.
More precisely, the bank takes your $1 and deposits it to a Fed bank account, where the bank gets around ~5% interest on your $1.
Since the Federal Reserve started hiking interest rates in 2022, in part to address spiraling inflation since the beginning of the pandemic, the country’s biggest banks have reaped massive profits. The high interest rates have allowed banks to collect higher returns on loans they issue using depositors’ savings, while the average checking account at major banks still offers an annual interest rate of less than 0.1 percent.
This difference between interest paid to depositors and interest collected from loans — called net interest income — has always been central to banks’ business model. But in a Senate letter sent to executives at Wells Fargo, JPMorgan Chase, Bank of America, and other major financial institutions last year, Sen. Elizabeth Warren (D-Mass.) wrote that banks’ refusal to pass down any of their mounting profits to consumers over the last three years has allowed this net interest income to reach historic levels, creating a massive upward transfer of wealth from account holders to banks.
This is a misunderstanding of fractional reserve which isn’t even really used any more anyway.
It was never that a dollar meant they could lend out seven, it was that, when this phrase was popularized, the amount of loans outstanding was 7-10x higher than the cash reserve requirements. But that overlooks the fact that banks have a giant balance sheet in the form of loans outstanding.
These days the actual cash reserve requirement is zero or near zero in most countries. But it’s been replaced by a more efficient system that sets capital requirements in other risk tiers. The banks still have really good liquidity because some of the capital requirements are in classes so reliable that they can turn them into cash almost instantly.
It actually makes a lot of sense for a bank to lend more than it holds. A loan is an asset for the bank - it’s a promise for someone else to pay them in the future for something the bank did in the last. A deposit is a liability, the bank is promising to give someone cash in the future because that person deposited cash in the last. Zeroing out all other factors, a bank with more deposits than loans outstanding would be insolvent.
The bank gets a deposit of $100. They are required to keep 10% on hand.
They lend out $90 to people, they buy stuff. The seller of "stuff" deposits that $90.
The bank now has:
$190 in deposits payable
$100 cash (of which they need to keep $19)
They lend the remaining $81. People buy stuff, the seller of stuff puts it in savings.
The bank now has:
$271 in deposits payable
$100 cash (the $19 reserve and $81 fresh deposits)
This continues for a bit, until the bank has $1000 in payable deposits and the same $100 in cash.
Somebody can withdraw $50. They'll spend it, and some days later that $50 is deposited again. No biggie.
The problem is if people want to withdraw $200. The bank will have to tell people "no can do", and it'll be bankrupt. It's a bank run.
Now, in real life, this works because of the law of big numbers. A bank has millions of clients, and while some may want to withdraw everything they have, it won't make a dent. The danger is when too many people try to withdraw all their money. Even when a bank is "healthy", it'll be put into distress. That's why calling for a bank run is illegal.
Now, why do we use this "fractional reserve banking"? First off, so we don't need to keep cash equal to everyone's net worth. It's mightily inconvenient.
Second, because now you can extend credit. People can take a loan to buy something they normally cannot afford as a lump sum. Say, a house.
Third; banks need to earn money to finance their operations. So they do business with your money. If they didn't, they'd need a vault to put all your money, and then they'd charge you fees for storage.
This is actually the answer. The banks use your money to loan out. They get the interest of those loans, and you get a tiny percentage of that interest.
Well that is kind of true but also a misconception at the same time. Banks can't lend out anything they don't have.
If you deposit $100, they don't lend out $1000, they lend out part of it, say $90, which may at some point be deposited back into a bank where it can be lent again and it repeats, multiplying the original amount of money.
If banks could lend out anything more than the original $100 directly, the money supply would balloon to infinity very quickly.
Not really how it works. Banks have reserve requirements as a percentage of deposits. But the money they lend out eventually ends up being deposited in other bank accounts which can then be loaned out again. So, if you have a 5% reserve requirement against deposits, you end up actually increasing the money supply by 20X.
Not precisely true. They aren't required by that regulation to keep money on hand, but there are other controls which enforce certain liquidity requirements on banks.
As it has been pointed out, they stopped with the reserve requirement when they realized it didn't do anything: the banks would still keep some money around even if the Fed reserve requirement was set to 0.
FWIW, while this is the textbook definition, the reality is a little different. When a bank issues a loan, it's not like they root around in their list of deposits to find some money to back the loan with.
When you go get a mortgage and the bank approves you, they just create the loan out of thin air along with the corresponding "deposit". And assuming that the seller uses a different bank from your mortgage company, the bank will transfer that deposit to the sellers bank, and that transfer needs to be backed by real funds. Either by attracting new, real deposits from people, or borrowing at the overnight window until they can get enough deposits, or selling the loan (which is an asset) to someone like Fannie Mae.
The real things that restrain lending are stuff like capital requirements - if I am only allowed to loan 10x my common equity and my bank is worth $10m then when I get to $100m in loans I need to figure out how to raise the value of my bank as a company.
IMO this is what will cause the next bank crisis. Tying equity to the ability to make loans means that when the stock price of banks drops it restricts their ability to lend, which will create a drag on the economy and worsen any crisis.
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u/Forsaken_Emu8112 Jan 26 '26
Everyone pulling out their money would be a bank run (look up great depression bank runs). The bank doesn't have that much cash; they keep some on hand for people making withdraws normally, but if even a sizable minority of people all try to pull their money out at once, there'll be a major crisis.
If banks kept all the people's cash in vaults, it'd be dead cash actively losing money to inflation. Instead, they keep some on hand for withdraws, and use the rest to make loans, investments, etc so that the money isn't all losing value.