In today's financial landscape, many of us are advised to invest our money for the long term. Business owners and banks often advocate for financial strategies that seem beneficial. However, a closer look reveals a different story. Let's break down how banks utilize our money and create systems that benefit them significantly, often more than their customers.
How Banks Leverage Our Money
- They set up financial systems such as CDs and accounts that penalize us for withdrawing our funds early.
- Banks aim to gather as much money from us as possible and are reluctant to give it back easily.
- By using leverage, banks generate substantial profits not from their own money, but from ours.
The Strategy Behind Banking Operations
- Banks require us to put up collateral, minimizing their risk exposure.
- They ensure a velocity or flow of money, treating loans as actual assets.
- This concept leads to "money in motion," where every loan becomes an asset that can be leveraged.
- Banks loan out this money to various individuals or businesses, earning profits off our initial deposits.
In summary, banks have devised a clever system where they benefit from the money we deposit. They play by rules that they have created, allowing them to maximize their profits while minimizing their risk. Understanding this system can help us make more informed decisions about where and how we invest our money.
Full Transcript
A lot of these people running businesses and a lot of these banks are telling us to invest our money for the long term. They set up systems, whether it's CDs or it's accounts that penalize us for using our money. They want as much of our money and then look at them. They don't want to give it up. They use leverage and so they're making a killing off of our money not theirs. That's brilliant. They make us put up collateral so they're not taking on any unnecessary risk. Then they're getting a velocity, a flow and their loans are actual assets. It's an idea of their money in motion and so every loan is like an asset for them and they're loaning it out to different people and getting money in all off of our money. It's brilliant and they know that since they have all the money they can make their rules.
