is my logic wrong here, like shouldnt any sane person then invest virtually all their money?
i suppose the main counterargument is that its safer in a bank, anyway im not too knowledgeable so i wanna hear what people have to say here
is my logic wrong here, like shouldnt any sane person then invest virtually all their money?
i suppose the main counterargument is that its safer in a bank, anyway im not too knowledgeable so i wanna hear what people have to say here
This makes sense yeah. Im curious, does the bank rely on people having “too much” money in their bank? like more than the emergency fund? if everybody followed this advice, would the bank be in financial trouble?
I wouldn’t say they rely on it, but they do take advantage of it. Banks do many things to make money.
They are only actually required to have a certain percentage of the money they “have” on hand not being invested. This amount has constantly been shrinking in the US, and was actually reduced to zero with a lot of asterisks during the beginning of the Covid pandemic.
Realistically, if there was a decrease in the amount of money people were saving rather than investing and it was negatively effecting their business they would just have the reserve requirements lowered even more.
The main function of the banks is to give out loans. All other functions are only there to assist in this main function.