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>For example, let's look at your checking account. A banker's not a middleman here

Yes, he is. He takes your money and lends it out to others, whom he charges for the privilege. That's how fractional reserve banking works.

Of course, these days since interest rates are zero, that's not really a profitable line of business. It's mostly used to upsell the more profitable products like mortgages or credit cards.



Yes, but the service that he provides is a secure place to store your money. You pay for it by giving the bank money that it can use as "collateral" (in the fractional reserve banking sense) for the loans it gives out, instead of paying with fees.


The banker actually creates brand new money to give to whoever is approved for a loan - he/she doesn't use your money for that purpose.


Not sure why you're getting downvoted. A fractional-reserves system does create more money than what is deposited.[1]

[1]http://en.wikipedia.org/wiki/Fractional-reserve_banking#Exam...




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