You can’t withdraw all your money from your bank account because it is constantly being invested and reinvested, but how come banks are never ‘down’ on these investments in the same way the average person is with their investments? Are they protected by government guarantee so they can just reap huge profits by investing constantly without risk?
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They loan it out to people who have good credit and are likely to make on time payments. Then they also have insurance in case people default.
The numbers are setup in a way that even if some people default it’s still a net positive.
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