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18. April 2018

Who owns the money in your bank account?

Who is  the owner of the money in your bank account?

Silly question? On the first impression yes, but lets have a look at what is really happening when you bring money to a bank.

“Amazing how people suddenly realize they don’t own their data on Facebook. Let’s see how they react when they find out they don’t own the money in their bank accounts either!”

Banks creating money

Fact is when you bring $100 to your bank to deposit in your bank account the bank can then lend $90 of our $100 to someone else. This person might buy something from a friend for $90. The friend then goes to the bank to deposit the $90 to his bank account. From that the bank can lend $9 to someone else and so on… Now if you arrive at the bank to pick up your $100 they are not there.. They will give it to you only if they have it in reserve from someone else that is not requesting it at the moment.

This is business and it works as long as everybody is paying back the loan. In the moment of crisis it will not be working. The reason is simple, there is more money out there then the amount that really exist.

Now back to the question, Who is the owner of the money in your bank account? Legally it might be you but in reality it is the bank. You will only be able to get your money back if the banks business is working or there are 9 other people who deposited $100 but have not requested it. In this case you get $10 of each of them plus the $10 that are still reserved for you in your account.

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, „there’d be a revolution before tomorrow morning“.

 

Do you think there might be a strong reason why the potential of Bitcoin is huge? Do you know the difference?

Let us know your thoughts.

15 Comments on “Who owns the money in your bank account?

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16. Juni 2018 um 19:09

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