I'm kind of confused about how interest works, can anyone clarify this for me? (details below)?
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considering the practice of "fractional reserve banking"- when the bank loans me money, the money they loan me (or at least a large percentage of it), in reality- doesn't exist. why, then, does the bank not only make me pay the money back (which would yield a profit for the bank, since the money they loaned me didn't really exist in the first place), but also makes me pay INTEREST as well?
to take it a step further, why can the bank re-posess my property for not paying them the "real" equivalent of the "fiat" money they loaned me?
it kind of seems like i (along with many other people) are getting f*cked on this one...
I'm kind of confused about how interest works, can anyone clarify this for me? (details below)?I wasn't expecting such a sophisticate question on interest rates. This is truly beyond typical concepts in banking.
I wonder what makes you believe that there isn't actual money involved? If you are thinking of this in an intuitive fashion, your intuitions are very impressive.
One of the answers you got that this balances out is not exactly true. It is just the sophostication of your question is beyond what they are interpreting it as. You are on the right track with your question and should likely work as an economist.
I know I haven't answered your question and I'm not going to. If you continue this line of questioning you will arrive at your own conclusions.
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