How the banks steal your money in the form of a loan

I did run over a small rabbit a few weeks ago. I felt bad about that.

Other than that, I don't see any downside to my auto loan. I have a new car to drive to work and I am very happy with the interest rate.

The banking system is happy because as a whole, they did not only get the interest on the loan, they also got the cash when the person selling the car banked it. This cash originally came from the loan. So the banking system actually created money which ended up back in the banking system.

They didn't take some of the deposited money to make the loan.

Of course they did. Where do you think the deposited money goes?

Are you willing to concede the point that the banks put up no real money for their loans, and that the money exists only by virtue of a bookkeeping entry?

By law, they are not obliged to use the deposited money. They can lend out 90% worth of the deposited money in addition to the deposited money.

Person A deposits 1oo pounds. The banking system lends out 90 pounds with 100 pounds still recorded as deposited. The borrower buys something from a seller for 90 pounds. The seller deposits the 90 pounds into the banking system. Now the banking system has 190 pounds deposited. Repeat.

I'm with you 100% engineer.

I seldom touch money. Literally months can go by where at the most I pick up a coin off the floor where it dropped out of my husbands pocket.

Money isn't backed by anything. It's just a number.

I also don't use debit cards. Everything I do is on credit cards. Even something that cost a dollar. It's paid off every month, and I benefit by getting points. On a small scale I'm doing what the bank does. I spend exactly as much as I would be I had pieces of paper in my hand, but I gain points which I trade in for gift cards for places I need to buy things.
Each time I spend money using a credit card, the vendor is charged a percentage for the privilege of accepting my card. They don't mind because they get my business. I can buy from them today, and it's not their problem how I intend to pay for it.
Everyone benefits.
They made a sale,
I got my product and a bonus,
The credit card company made money off the fee.

The problem comes in when someone buys something, like a car in this case, without being prepared to meet their obligation of paying back.

I'm in the position of the bank on a small scale also.

I sell stuff. I don't actually need to be in physical possession of the stuff until after someone buys it. When they give me their money, I go out and get what they want, and send it to them.

Not only that, but the method of payment I use to get what the customer wants has been purchased at a 25% discount.

Everyone's happy.
Me,
The customer,
The vendor I get stuff from
The vendor I purchased a discounted form of payment from
The person who provided that vendor with the discounted form of payment.
The vendor which originally sold that form of payment (which is the same vendor I get stuff from), at the full price, and it ended up in the hands of someone who wanted to sell it.
Even further back, the business that physically produces the products.
The people who work for the company that produces the products.

and so on.....

Someone takes out a car loan, how many people were employed making and selling that car? What about the people who will in the future service, and sell you gas and other items the car needs?
You need to take that car to get washed, and you might want aftermarket window tinting, etc.

Just think of all the services, products, and employment generated because the bank gave a car loan.

Stating the bank is stealing your money is ridiculously oversimplified.

You are significantly confused.

- Yes, they loan out 90 pounds and then record 100 pounds deposited and 90 loaned out. Both are recorded. They are loaning out money on deposit.
- No, the seller doesn't have to deposit anything. They can bury it, or spend it or buy gold and hoard it.
- If the seller does deposit it, then the bank can loan it out again, now paying interest to the original depositor and the seller. Both benefit by the bank making loans. This is the standard wealth multiplier effect you should learned about in free enterprise class when you were a child. This is not a bank effect, it is an economic effect. The same thing would happen without a bank with pounds being recycled around the economy if the seller decides to spend it without a bank involved.

By the way... I print money all the time. Every month I write a check to my landlord... which he accepts as payment for my apartment. He doesn't cash the check right away. I have just literally written money.

I could get rich if I applied the same system. Would you like me to look after your money? If you do so, I will lend you 90% of your own money on the condition that whoever you buy from with the loan money deposits the proceeds with me. Also, you will have to pay the loan back with interest. That is how the banking system as a whole works.

Well then why don't you?

If you let me look after your money, I will be more than happy to loan it to you at a very low interest rate.

No you didn't. You drew from what you have deposited into your checking account. It already existed.
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Again, direct me to the specific segment from the link below that gave you trouble.

http://www.thetwofacesofmoney.com/files/money.pdf

No it didn’t exist. It’s not backed by anything. It has a specific worth because we agree what that worth is. Money is simply a concept

No, when I write a check, the money exists in two places. The landlord has it. The bank has it. I keep earning interest on the money (albeit very meager) until the check clears.

That link gave me trouble because it is cloddish propaganda and it bored me to tears. I did look for any attempt to answer what I consider to be the two important questions.

The big question is.... I have my new car that not only benefits me, but also creates jobs. Who cares about this ideological nonsense? Being able to buy on credit improves my life.

Unfortunately you you, I don’t need a loan at the moment. I also know how to take care of my own money and grow it. Fortunately for you a lot of people don’t know how to do this, and would find your service valuable.

So again, if you could do that, why aren’t you?

Yeah, that was my point; it exists. However, the money a bank loans a borrower did not exist.

Again you have failed to point to anything specific from that link that gives you trouble.

Perhaps you might have better luck pointing me to the segment that you've identified as propaganda.

Actually, this is a good thought experiment. You aren't going to lend her back her money because she already has excess, but you can lend you money to Max for his car. Max will pay you a fair interest, you will pay Chai some interest, less than Max is paying you. All three of you are happy, but Chai is taking some risk going with such a small term banker and you are taking a huge risk.

So after a year, Chai comes to withdraw her money? Max hasn't paid it all back yet, so what do you do? If you refuse Chai, she confiscates your property to get her money back. The answer is you pay her with your own money and wait for Max to make his payments. What if Max decides to stop paying you? Well, you can sue Max (good luck there), repossess the car (probably not worth what it was when it was new) or just take the loss. As the "bank", you are assuming a lot of risk. That is what you get paid for.

At no time did you use imaginary money.