The Student Room Group

How the banks steal your money in the form of a loan

Mr A takes out a bank loan to buy a car. The bank simply types the sum out of thin air into his bank account, despite the fact that they don't actually have the money in their reserves. Mr A then gives the cash from the loan to the person selling the car. The person selling the car then banks the cash. At this point the cash becomes real money. Mr A then pays back the loan. The original loan money disappears back into thin air again, but the interest is banked by the bank as real money that they now own. So the bank now owns both the interest and the cash that the person selling the car banked, neither of which they owned before giving the loan.
(edited 6 years ago)

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Move along, nothing to see here, oh look whats that over there? Its a kangaroo riding a bicycle, hahaha, a kangaroo riding a bicycle, how funny is that.
So the receptionist, cashier, building, bills are all free?

Nice bait attempt too.
Original post by Appleorpear
So the receptionist, cashier, building, bills are all free?

Nice bait attempt too.


Why is it a bait attempt mate? I think the point he is raising is why have private banks got the right to make money and then gain interest from the usury on that money? I might be wrong but the problem seems to be 'private bank', creating money and then profiting from it. I guess its no different to you or me creating money and then loaning it out, how far do you think we'd get before being arrested?
The Central Bank system is designed to keep everyone in debt for their own gain.

Car loans
Mortgages
Student loans

Almost everyone is in debt. Those that aren't are either too young or too old or are wealthy enough (which leaves a large amount of people).
Original post by Chaz254
The Central Bank system is designed to keep everyone in debt for their own gain.

Car loans
Mortgages
Student loans

Almost everyone is in debt. Those that aren't are either too young or too old or are wealthy enough (which leaves a large amount of people).


Nobody is forced into debt, typically speaking. It is in our interest to contract such loans, without the credit facilities our lives would be much more frugal. Supply and demand, banks are as exposed to such natural dynamics as any other sector.

The State is in itself a bottomless pit for our taxes and the trend points in one direction only, all we ever hear is demand for more money on every front. With a going tax-take of 3/4 of a trillion pounds, plus all the extra we still have to borrow to make ends meet, add all liabilities and hidden costs for the fuiure and there are more noughts than we could count. The State itself is totally dependent on credit and has to resort to any means to generate it. The Fed and our very own Central bank emerged when the State went cap in hand to those with money to beg for a bailout, of course it came with strings attached. It would be insane to trust the State with it.

Only form of debt I find myself having to finance is that of the State, that is one share everybody carries everywhere.
(edited 6 years ago)
Reply 6
Original post by akka444
Mr A takes out a bank loan to buy a car. The bank simply types the sum out of thin air into his bank account, despite the fact that they don't actually have the money in their reserves. Mr A then gives the cash from the loan to the person selling the car. The person selling the car then banks the cash. At this point the cash becomes real money. Mr A then pays back the loan. The original loan money disappears back into thin air again, but the interest is banked by the bank as real money that they now own. So the bank now owns both the interest and the cash that the person selling the car banked, neither of which they owned before giving the loan.


The money lent by the bank does come out of their reserves. Not thin air. It will be on their balance sheet.

I stopped at that point.
I think I've seen you in the wall street protest in 2009... Nice trolling
Original post by akka444
Mr A takes out a bank loan to buy a car. The bank simply types the sum out of thin air into his bank account, despite the fact that they don't actually have the money in their reserves. Mr A then gives the cash from the loan to the person selling the car. The person selling the car then banks the cash. At this point the cash becomes real money. Mr A then pays back the loan. The original loan money disappears back into thin air again, but the interest is banked by the bank as real money that they now own. So the bank now owns both the interest and the cash that the person selling the car banked, neither of which they owned before giving the loan.


Exactly right, most people don't realise what a scam this is that bankers get richer while sucking money out of public economics. Because they always pay less in interest on savings, money is always owed, and there are more losers than winners.
Banks don’t magic money out of thin air, they lend money to people and companies, which means they lose money, and gamble on getting more back from the debtor in payments with interest than they lent.

Banks cannot lend more money than they own, they can’t even lend out all the money they own due to fractional reserve regulation. If someone needs to withdraw money and the bank cannot give them their money due to having lent enough to hit the reserve threshold, they can borrow money from the central bank at their interest rate, which means they have to pay more back than they borrowed.

I don’t think you really understand finance
Original post by zhog
Nobody is forced into debt, typically speaking. It is in our interest to contract such loans, without the credit facilities our lives would be much more frugal. Supply and demand, banks are as exposed to such natural dynamics as any other sector.

The State is in itself a bottomless pit for our taxes and the trend points in one direction only, all we ever hear is demand for more money on every front. With a going tax-take of 3/4 of a trillion pounds, plus all the extra we still have to borrow to make ends meet, add all liabilities and hidden costs for the fuiure and there are more noughts than we could count. The State itself is totally dependent on credit and has to resort to any means to generate it. The Fed and our very own Central bank emerged when the State went cap in hand to those with money to beg for a bailout, of course it came with strings attached. It would be insane to trust the State with it.

Only form of debt I find myself having to finance is that of the State, that is one share everybody carries everywhere.

Actually, state run companies like the BBC generate a huge amount of money for the taxpayer through producing shows and selling the rights for them to be broadcast. Not to mention the merchandise.

State run companies in China perform rather well too.
Reply 11
Original post by D3LLI5
Banks don’t magic money out of thin air, they lend money to people and companies, which means they lose money, and gamble on getting more back from the debtor in payments with interest than they lent.

Banks cannot lend more money than they own, they can’t even lend out all the money they own due to fractional reserve regulation. If someone needs to withdraw money and the bank cannot give them their money due to having lent enough to hit the reserve threshold, they can borrow money from the central bank at their interest rate, which means they have to pay more back than they borrowed.

I don’t think you really understand finance


They all do exactly that... ironically enough they do the exact opposite of what you just said. I presume you're familiar with their policy of lending money before they actually have it? As the ECB vp said “In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”

Give Frank Partnoy a read, his work is rather informative on the matter
Original post by Napp
They all do exactly that... ironically enough they do the exact opposite of what you just said. I presume you're familiar with their policy of lending money before they actually have it? As the ECB vp said “In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”

Give Frank Partnoy a read, his work is rather informative on the matter


Lending more money than is allowed by fractional reserve regulation is illegal
Reply 13
Original post by D3LLI5
Lending more money than is allowed by fractional reserve regulation is illegal


So? That doesn't stop a wee bit of jiggery-pockery taking place. I think you'll find it is an incredibly common practice.
Not everything relates to Islam you know and this isn't a meme...this is what happens.
Reply 15
Original post by Napp
They all do exactly that... ironically enough they do the exact opposite of what you just said. I presume you're familiar with their policy of lending money before they actually have it? As the ECB vp said “In reality the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.”

Give Frank Partnoy a read, his work is rather informative on the matter


They can make the decision to lend, but they can't then provide the finance unless they have the reserves (or otherwise fund the loan).

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(edited 6 years ago)
Original post by Doonesbury
The money lent by the bank does come out of their reserves. Not thin air. It will be on their balance sheet.

I stopped at that point.
You'd have to be very simple not to realise that. :hahaha:
Original post by D3LLI5
Lending more money than is allowed by fractional reserve regulation is illegal


So is rigging the LIBOR rate, rigging the gold price, running the stock markets by algorithms, running derivative books that are 10x your nations GDP, and so on and so on and so on. Since when did banks give a monkeys about the small matter of illegalities?
Reply 18

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