[gruez]

>>Charging 0% interest means the bank is losing money.

> I don't get how people can keep saying this. Is it that people are told banks lend out money from depositors in school?

They don't? Where is the money from? Due to complicated reasons (ie. bundling mortgages into mortgage backed securities and selling them), it might not be the case that the mortgage issued by Bank A is funded by Bank A's depositors, but it is the case that it's funded by depositors/investors somewhere.

[imtringued]

From a technical perspective you need deposits but from a practical perspective deposits never leave the system except in the case of a bank run where everyone tries to withdraw their money. If we assume a cashless system then banks can never run out of deposits and deposits never limit loan creation. Saving doesn't increase the number of deposits, it just shifts them around. Borrowing money increases the number of deposits.

https://www.investopedia.com/articles/investing/022416/why-b...

However, saving does have one important function. It creates a hole in the economy and that hole can then be used for investment spending (motivated by a borrower taking on a loan) without causing inflation.

[gruez]

>If we assume a cashless system then banks can never run out of deposits and deposits never limit loan creation

...except for reserve/capital requirements, right?

>However, saving does have one important function. It creates a hole in the economy and that hole can then be used for investment spending (motivated by a borrower taking on a loan) without causing inflation.

In other words, capital isn't free as the parent poster suggests.

[dragonwriter]

> Where is the money from?

It is created ex nihilo, limited by reserve concerns (which include hard requirements for some banks)

Note that the most of the money never exists in the form of currency, it is just accounting entries in the banking system.

[6510]

> Where is the money from?

https://youtu.be/b6_SLwReMqo