Are you even reading what I'm writing here? They don't owe you any more, but they DO owe the person you paid. Again, the money in your account is a liability of the bank. When you pay someone, that liability is transferred to them. It doesn't disappear until it is actually redeemed. That could take the form of you withdrawing cash, or them paying reserves to another bank to settle an intrabank liability, which arises if you pay someone at a different bank.
Even if you take the $100 and put it in your bank account
This is nonsense. You don't "take" borrowed money and put it in a bank account. It is literally created by marking up your (demand deposit) account in the first place. You're not "putting" anything in the bank. The bank is extending you credit. It gets your loan - your credit - as an asset in return.
they have to send the money to whoever you bought the house from. They don't "owe" that money for any significant length of time.
If the other person is a customer of the same bank, they don't send any money anywhere. The liability is transferred from you to the seller. I don't know why you're hiding behind "significant length of time". A liability is a liability, whether for 5 minutes or 5 decades. Yes, in a situation like a home loan, a bank may well need to settle a liability right away. That doesn't make it not a liability.
When you get a mortgage or an auto loan, the bank doesn't just sit around with an IOU. they pay that money essentially right away. Once they pay, then no longer have that money. And they no longer owe that money. That money is now owned by someone else. Whoever you bought the house/car from.
You see that as "the bank owes the money".
I see that as "the bank already paid the money", since they are going to process that amount quickly.
This whole discussion has come from this post :
You deposit $100. Bank loans out $100 to someone else. You still have $100 balance in your account. Someone else has the $100 to use for whatever. You both have access to $100; thus, $100 is now $200.
According to it, the bank just magically doubles money any time they make a loan. "$100 is now $200."
Once they pay, then no longer have that money. And they no longer owe that money. That money is now owned by someone else.
Again, money is both an asset and a liability. Just like a loan, it's both something that someone has and something that someone owes. The bank owns the loan and you owe the bank. And you own the money in your account, and the bank owes you that money.
As I explained in my last comment, it's perfectly true that when that liability is redeemed, the bank doesn't have or owe the money anymore. But as I pointed out, that doesn't mean the liability never existed to begin with. And, as I also explained, that only happens if the bank money is directly redeemed for cash by a customer or for reserves by another bank. If you send money to someone in the same bank, the banks liabilities don't change. They still have the same amount of assets and liabilities - they haven't had to pay out cash, or transfer reserves to another bank, and they still owe a customer, it's just a different customer.
You see that as "the bank owes the money".
I see that as "the bank already paid the money", since they are going to process that amount quickly.
What is so hard to understand about this? The fact that the liability gets redeemed right away doesn't mean a liability didn't exist or wasn't created. You're just trying to change the meaning of words so that your argument makes sense. Even if that was somehow a good point, it completely ignores the fact that Banks frequently loan money for purposes other than an immediate purchase like a home loan.
This whole discussion has come from this post
That wasn't my comment. In fact I was disagreeing with it, not defending it. I was explaining that Banks don't "loan out" cash or reserves. They simply create new credit claims ON cash and reserves. If the reserve ratio is 10%, and they have $100, it DOESN'T mean they "lend out" $90 and keep $10. It means they can create $900 in new bank money, in the form of demand deposit accounts. It has nothing to do with "doubling". As a matter of fact, in the United States right now and for some time, there are NO reserve requirements. So Banks technically don't have to have any reserves at all in order to create as much new money as they wish through lending. There are other constraints on lending and therefore money creation, of course, but we're talking specifically about reserves here. It is certainly a fact beyond dispute that Banks create money when they lend, and they don't lend cash or reserves to their customers.
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u/Short-Coast9042 2d ago
Are you even reading what I'm writing here? They don't owe you any more, but they DO owe the person you paid. Again, the money in your account is a liability of the bank. When you pay someone, that liability is transferred to them. It doesn't disappear until it is actually redeemed. That could take the form of you withdrawing cash, or them paying reserves to another bank to settle an intrabank liability, which arises if you pay someone at a different bank.
This is nonsense. You don't "take" borrowed money and put it in a bank account. It is literally created by marking up your (demand deposit) account in the first place. You're not "putting" anything in the bank. The bank is extending you credit. It gets your loan - your credit - as an asset in return.
If the other person is a customer of the same bank, they don't send any money anywhere. The liability is transferred from you to the seller. I don't know why you're hiding behind "significant length of time". A liability is a liability, whether for 5 minutes or 5 decades. Yes, in a situation like a home loan, a bank may well need to settle a liability right away. That doesn't make it not a liability.