Banking and finance is not something we often think about, we're too busy either making money or spending money to care about the in-between and banks like it that way. The fewer questions you ask, the better but unfortunately I am not one of them.
If something doesn't make sense to me, I need it to be explained exactly why they are this way and it is, what it is, or we've always done it this way is not a good enough reason for me.
One of those financial misconceptions that really throws me for a loop is a bank deposit. We all know what that is right? You have spare money you don't want to keep on you so you put it in the bank for them to take care of it but you can get it back at any time, or so we've been told and believe.
According to investopida
Bank deposits consist of money placed into banking institutions for safekeeping. These deposits are made to deposit accounts such as savings accounts, checking accounts and money market accounts. The account holder has the right to withdraw deposited funds, as set forth in the terms and conditions governing the account agreement.
We think that a deposit is used for safekeeping but in fact, the banks are using your funds in a range of ways regardless of the type of account it is kept in.
Image path - investopedia.com
Giving the banks an unsecured loan
Bank deposits are no different than any secured loan as they're taking your money to do something else with and a promise to pay you back (when you try to withdraw your funds) and make a profit on this transaction. It's no different from loaning money to a friend but with a markup/interest payment.
When you loan your money to the bank you're not given any collateral by the bank only a promise that they assume the liability for what happens to your funds.
A promise that is not often kept, ask the people who have been the victims of bail-ins like in Cyprus.
It doesn't go both ways
The funny thing is if you have to approach the bank for an unsecured loan with no collateral you would most likely not get it or if you do you're subject to a high-interest rate.
Yet when they pay you for the loan you give them, they paying you peanuts based on the same premise. This is the business you're trusting your money with and let's not get me started on how they misuse those deposits to drive more profit and paper wealth without any production.
Locking you into the system
There was a time when we could do bank runs, we could take our money and value out of banks if we didn't like what they are doing. However, with inflation and crime and legislation we cannot practically hold out money without the help of banks, they're even the custodians of our salaries.
Banks have supreme power over the circulation of money and those who are supposed to be the ones who keep them in business are now slaves to their service, which is a service that is detroirating by the day.
It's for this reason why I'm in crypto and move more of my net worth into space regardless of the losses or gains. I know this space is immature, I know the risks but I also know the risk of what everyone else is doing and I'm willing to hedge my bets.
Owning crypto isn't a loan, it's owning your purchasing power and in many cases, you have the ability to influence the strength of the purchasing power by backing your favourite project.
Have your say
What do you good people of steem think? Do we need more competition on where to store our money?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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