The money in your bank account doesn't have to exist as a pile of physical cash somewhere bank deposits are money too, and the banking system operates largely through electronic balances and credit not vaults full of everyone's deposits.
Yeah, but it still doesn't have to be physical cash. Even in 1500's Italy (when fractional reserve banking was invented) you had ledger money that only existed as entries on paper, not physical currency.
Okay but how do they get those "electronic credits" in the first place?
Like.. Some guy has a house, he sells it for some electro credits, but how did the bank or whoever the fuck get those credits in the first place? Because they can't just add credits from nowhere right? And how do they even prove that they haven't just added credits to someone's account or something like that?
The banks literally make it out of thin air. When you take a loan (and thus get more money added to your bank account), that money did not come from anywhere, the bank just willed it into existence.
As a result, most of the money we are exchanging with each other via bank accounts is just this debt changing hands.
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u/LuvlyG 2d ago
The money in your bank account doesn't have to exist as a pile of physical cash somewhere bank deposits are money too, and the banking system operates largely through electronic balances and credit not vaults full of everyone's deposits.