syne   10 #37 Posted January 31, 2012 (edited) The divisions may be separate, but if the retail customers weren't providing deposits, the banks would have no means to make money with which to trade, if that is what you are saying the money the banks do use to trade comes from. Money deposited doesn't get stored in a vault does it? The point of a bank is to act as an intermediary in financial markets, so the depositor gets a per centage of the return on the interest made by the bank by lending the money. It's not rocket science.  fractional reserve banking is commonplace.  http://www.basicincome.com/basic_banks.htm nothing has changed.  A government that borrows with interest from private banks, when it can create its own interest-free money, is a government of idiots or thieves. Edited January 31, 2012 by syne Share this post Link to post Share on other sites Share this content via...
Cyclone   10 #38 Posted January 31, 2012 http://www.bbc.co.uk/news/business-14831156  This is what I was referring to.  PS - All governments borrow from private lenders, they do it by creating gilts (on which they set the interest rate) which they then sell (I'd guess that in the UK they sell it to the central bank). It is effectively a way of printing money, but less destabilising (and inflationary) than literally just doing that. Share this post Link to post Share on other sites Share this content via...
samuk1000   10 #39 Posted February 3, 2012 Oh so people dont actually buy shares in banks then. People dont actually use investment accounts then? Businesses dont have deposit accounts then? variable source savings accounts? Pension trusts? Local council and government investment schemes?  There is far more income to banks than just current account customers  It's a fair point. I still think retail customers are taken for a ride though because the spread between borrowing and lending interest rates for those particular customers is absurd.  It would just be good to know exactly what customer money is used for, in a transparent way. Share this post Link to post Share on other sites Share this content via...