Quote from: freetx on July 03, 2011, 03:05:10 PM

Quote from: Hawker on July 03, 2011, 02:48:01 PM

Thats not how banking works. The bank acts as a middleman between the borrower and the lender and the bank's profit is the spread between the two.

If you deposit $100 into the bank and they lend it out....how come you can go withdraw $20 to buy some lunch?

Because the money lent is largely 'created' on the borrowers signature.

False question as you assume the money you have deposited is put into a drawer called "freetx cash" and then lent out again as a lump sum with your name on it. But in real life, you know that's not how banks work. The $20 you take back for lunch is just cash from the pool of funds the bank works with. Its not part of the $100 cash you deposited.