What are banks doing with their depositors' money?

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investorzzo's picture
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
What are banks doing with their depositors' money?

There have been numerous reports about the sharp decline in bank lending since the beginning of the financial crisis. The Wall Street Journal, for example, on Wednesday reported that last year's decline in lending is the biggest since 1942.

So if the banks are not making loans, what are they doing with depositor money?


Baywork's picture
Status: Bronze Member (Offline)
Joined: May 3 2009
Posts: 85
Re: What are banks doing with their depositors' money?

Well, we know very well that almost all our money is debt. We also know that almost all our money today is electronic money. Thus we know very well that bank loans accord to deposits in the very same system right away…

Did the article author realize that it doesn’t necessarily need a bank, nor another bank loan to invest existing deposits? The author claims banks don’t use depositor money ‘to stimulate economic activity in the private sector by lending to businesses and consumers anymore’.

What a stupid claim when the current crisis is established by a shortage of borrowers with good prospects.

‘The banks are helping to fund the growing federal deficits.’

The article’s author seems understand why the bank of the banks went into quantitative easingYell

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