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Cash just isn’t a zero sum recreation. Banks and funding firms create “worth” out of skinny air whereas including no precise substantive value. If a financial institution loans 1000 {dollars} out at 10% curiosity, the place did that 100 {dollars} they’re getting as positive aspects come from? It wasn’t already within the financial system, the financial institution simply created it. That is very true since most banks do not need money reserves readily available to really again the 1000 within the first place.
Definitely your assertion that many individuals lose is true, however it’s a lot worse than that. Banks and finance autos are setting individuals as much as pay them again cash that does not exist within the financial system (this consists of arbitrary inventory valuation will increase). If the market does nicely, they win, as a result of they’ve made again their cash, with curiosity. If the market does unhealthy, they nonetheless win, as a result of they haven’t misplaced something of actual worth. Typically there’s an asset used as collateral on behalf of the “little man” that monetary establishment can repossess. BOOM. Now they’ve a tangible asset in addition to any cash they might have been paid again and a foul mortgage they’ll write off their taxes as a enterprise loss!
A financial institution would not want that further 100k to feed its children, however the loanee may have misplaced their complete life financial savings.
If that is not an deliberately fucked up system, I do not know what’s.
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