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Originally Posted by Walkabout
The money that "you have in a bank account" is no longer yours.
By putting it on deposit into the account you become a creditor of the bank and the bank is a debtor to you.
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That is correct. Unfortunatelly that relation is rarely understood by the people. However, you are a creditor to the bank, this being, the bank must pay you back what you borrowed it. The main purpose of this rubish is that, if the bank is in trouble, that contract is severed and you don't receive a part of what you borrowed to the bank.
There are ways around this state of affairs, of course. However, mostly these are not available to the main street by a long shot. Therefore, when worst comes to happen, it will be the middle classes the ones who will end up hurting much. Those who can afford it already took the necessary steps to protect the bulk of their assets.
Quote:
Originally Posted by Walkabout
It may be a matter of "if interest rates return to normal levels" whatever we may define as normal.
Arguably, the world cannot afford the historical interest rates and so they won't occur despite what the USA Fed tried to do recently.
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The world can not afford them... today. Give it time. The return of the interest rates to normal levels, however, is just one of the things that can start a cascade of events. There are others. A new crash which deplects further the value of bank's assets, another example.
If this thing of the cashless society moves forward (DNB in Norway said something on that particular yesterday which should be read carefully) it won't be a transitory thing. It will be permanent. Can you say how will the world be in, say, 10 years?
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