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 don’t. They make more than they lose. That doesn’t mean it’s consistent. Also, plenty of banks have gone out of business.
Some of their income is also risk free. Fees on accounts for example. Or it’s loans secured by collateral that they’d get to keep and then sell and make a profit on anyway if the loanee defaults.
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