econ

Banks and Strategy... Because That's What Strategy Is (Bloomberg, Matt Levine)

denlillaapan

> The advantage of borrowing the money from banks is that banks have cheap funding: The banks get a lot of their money from depositors, and they can pay the depositors a very low rate of interest.

Let me rewrite that:

_The advantage of borrowing the money from banks is that banks have cheap funding: The banks get a lot of their money from depositors that are guaranteed by the government, so it doesn't matter what happens with it. The bank then takes a wholesome 1% fractional reserve (or less) and can thus just... print money._