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Talking To A Banker

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Q: What are banks for?

A: To make money.

Q: For the customers?

A: For the banks.

Q: Why doesn't bank advertising mention this?

A: It would not be in good taste. But it is mentioned by implication in references to reserves of £249,000,000 or thereabouts. That is the money that they have made.

Q: Out of customers?

A: I suppose so.

Q: They also mention Assets of £500,000,000 or thereabouts. Have they made that too?

A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?

A: Not at all. They lend it to customers.

Q: Then they haven't got it?

A: No.

Q: Then how is it Assets?

A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?

A: Yes, usually £500,000 or thereabouts. This is called Liabilities.

Q: But if they've got it, how can they be liable for it?

A: Because it isn't theirs.

Q: Then why do they have it?

A: It has been lent to them by customers.

Q: You mean customers lend banks money?

A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?

A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?

A: Yes.

Q: Then Assets and Liabilities must be the same thing?

A: You can't really say that.

Q: But you've just said it. If I put £100.00 into my account the bank is liable to have to pay it back, so it's Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same $100.00, isn't it?

A: Yes, But...

Q: Then it cancels out. It means, doesn't it, that banks haven't really any money at all?

A: Theoretically....

Q: Never mind theoretically. And if they haven't any money, where do they get their Reserves of £249,000,000 or thereabouts?

A: I told you. That is the money they have made.

Q: How?

A: Well, when they lend your $100.00 to someone they charge him interest.

Q: How much?

A: It depends on the Bank Rate. Say five and a-half per cent. That's their profit.

Q: Why isn't it my profit? Isn't it my money?

A: It's the theory of banking practice that......

Q: When I lend them my £100.00 why don't I charge them interest?

A: You do.

Q: You don't say. How much?

A: It depends on the Bank Rate. Say half a per cent.

Q: Grasping of me, rather?

A: But that's only if you're not going to draw the money out again.

Q: But of course, I'm going to draw it out again. If I hadn't wanted to draw it out again I could have buried it in the garden, couldn't I?

A: They wouldn't like you to draw it out again.

Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad if I reduced their Liabilities by removing it?

A: No. Because if you remove it they can't lend it to anyone else.

Q: But if I wanted to remove it they'd have to let me?

A: Certainly.

Q: But suppose they've already lent it to another customer?

A: Then they'll let you have someone else's money.

Q: But suppose he wants his too...and they've let me have it?

A: You're being purposely obtuse.

Q: I think I'm being acute. What if everyone wanted their money at once?

A: It's the theory of banking practice that they never would.

Q: So what banks bank on is not having to meet their commitments?

A: I wouldn't say that.

Q: Naturally. Well, if there's nothing else you think you can tell me...?

A: Quite so. Now you can go off and open a banking account.

Q: Just one last question.

A: Of course.

Q: Wouldn't I do better to go off and open up a bank?

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Guest Charlie The Tramp
Q: Wouldn't I do better to go off and open up a bank?

Did he not answer that ? :)

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Q: What are banks for?

A: To make money.

Q: For the customers?

A: For the banks.

Q: Why doesn't bank advertising mention this?

A: It would not be in good taste. But it is mentioned by implication in references to reserves of £249,000,000 or thereabouts. That is the money that they have made.

Q: Out of customers?

A: I suppose so.

Q: They also mention Assets of £500,000,000 or thereabouts. Have they made that too?

A: Not exactly. That is the money they use to make money.

Q: I see. And they keep it in a safe somewhere?

A: Not at all. They lend it to customers.

Q: Then they haven't got it?

A: No.

Q: Then how is it Assets?

A: They maintain that it would be if they got it back.

Q: But they must have some money in a safe somewhere?

A: Yes, usually £500,000 or thereabouts. This is called Liabilities.

Q: But if they've got it, how can they be liable for it?

A: Because it isn't theirs.

Q: Then why do they have it?

A: It has been lent to them by customers.

Q: You mean customers lend banks money?

A: In effect. They put money into their accounts, so it is really lent to the banks.

Q: And what do the banks do with it?

A: Lend it to other customers.

Q: But you said that money they lent to other people was Assets?

A: Yes.

Q: Then Assets and Liabilities must be the same thing?

A: You can't really say that.

Q: But you've just said it. If I put £100.00 into my account the bank is liable to have to pay it back, so it's Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same $100.00, isn't it?

A: Yes, But...

Q: Then it cancels out. It means, doesn't it, that banks haven't really any money at all?

A: Theoretically....

Q: Never mind theoretically. And if they haven't any money, where do they get their Reserves of £249,000,000 or thereabouts?

A: I told you. That is the money they have made.

Q: How?

A: Well, when they lend your $100.00 to someone they charge him interest.

Q: How much?

A: It depends on the Bank Rate. Say five and a-half per cent. That's their profit.

Q: Why isn't it my profit? Isn't it my money?

A: It's the theory of banking practice that......

Q: When I lend them my £100.00 why don't I charge them interest?

A: You do.

Q: You don't say. How much?

A: It depends on the Bank Rate. Say half a per cent.

Q: Grasping of me, rather?

A: But that's only if you're not going to draw the money out again.

Q: But of course, I'm going to draw it out again. If I hadn't wanted to draw it out again I could have buried it in the garden, couldn't I?

A: They wouldn't like you to draw it out again.

Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad if I reduced their Liabilities by removing it?

A: No. Because if you remove it they can't lend it to anyone else.

Q: But if I wanted to remove it they'd have to let me?

A: Certainly.

Q: But suppose they've already lent it to another customer?

A: Then they'll let you have someone else's money.

Q: But suppose he wants his too...and they've let me have it?

A: You're being purposely obtuse.

Q: I think I'm being acute. What if everyone wanted their money at once?

A: It's the theory of banking practice that they never would.

Q: So what banks bank on is not having to meet their commitments?

A: I wouldn't say that.

Q: Naturally. Well, if there's nothing else you think you can tell me...?

A: Quite so. Now you can go off and open a banking account.

Q: Just one last question.

A: Of course.

Q: Wouldn't I do better to go off and open up a bank?

I prefer the original version from 'The Creature from Jekyll island' - G.E.Griffin

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Despite the attempts of numerous VI's on this forum to obfusticate the issue of how banks really operate, it is actually very simple. If a private citizen tried to run a business operating on the same principles as a bank they would be arrested for fraud. The banking industry has been given license to commit fraud on a truly enormous scale, and all bankers face by way of censure is a slap on the wrist from a toothless regulator.

Edited by BoomBoom

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Despite the attempts of numerous VI's on this forum to obfusticate the issue of how banks really operate, it is actually very simple. If a private citizen tried to run a business operating on the same principles as a bank they would be arrested for fraud. The banking industry has been given license to commit fraud on a truly enormous scale, and all bankers face by way of censure is a slap on the wrist from a toothless regulator.

is that so..........

if they can print money out of thin air then why do they pay you interest for your money? why, if they can just "print money out of air"?

why do some banks go tits up if its so easy and they just printin the good ole mohneyyyyyy?

the truth is, the banks are not the root of all sin

the truth is, usually speaking, goverments try their best to keep credit bubbles from busting and that hurts us, but infact helps the banks.

so, if we had a central bank that simply increased interest rates when money supply was growth was positive and decreased interest rates when it was negative we would have no problems

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Guest Charlie The Tramp
so, if we had a central bank that simply increased interest rates when money supply was growth was positive and decreased interest rates when it was negative we would have no problems

Yes, Finance is simple only those who control Finance bugger it up. :)

They will eventually have to return to the norm. ;)

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is that so..........

if they can print money out of thin air then why do they pay you interest for your money? why, if they can just "print money out of air"?

why do some banks go tits up if its so easy and they just printin the good ole mohneyyyyyy?

the truth is, the banks are not the root of all sin

the truth is, usually speaking, goverments try their best to keep credit bubbles from busting and that hurts us, but infact helps the banks.

so, if we had a central bank that simply increased interest rates when money supply was growth was positive and decreased interest rates when it was negative we would have no problems

The money is created against a promise to repay made by individuals or businesses.

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Despite the attempts of numerous VI's on this forum to obfusticate the issue of how banks really operate, it is actually very simple. If a private citizen tried to run a business operating on the same principles as a bank they would be arrested for fraud. The banking industry has been given license to commit fraud on a truly enormous scale, and all bankers face by way of censure is a slap on the wrist from a toothless regulator.

it is the central bank that controls how much money circulates in the economy.

the problem of the banking industry is not the creation of money - their mistake was simply in making bad loans.

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it is the central bank that controls how much money circulates in the economy.

the problem of the banking industry is not the creation of money - their mistake was simply in making bad loans.

Bzzt.

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  • 292 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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