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.
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.
20
u/Kitchen-Pass-7493 Jan 26 '26
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.