ELI5- how exactly do ‘bankers’ become the richest people around(Jp Morgan, Rockefeller, rothschilds etc.), when they don’t really produce anything.
In: 17100
Loans are basically if you made an entire company the ones who are working to pay you
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Even big companies like ones the size of IBM or Microsoft might take out small loans to fund day to day expenses for projects instead of having a high input and high output corporate bank account.
Though the more tangible example is GE, while maybe GE has enough cash on hand to avoid it, it’s much more likely that a company like that making windmills would take a loan to buy the raw materials for a windmill, then pay back the loan over time.
Projects costing a few million dollars over 10 years, those companies don’t usually have 10 years worth of materials and costs stockpiled.
Most corporations would have their “savings” money in stocks to mitigate inflation and maximize profits.
So instead of raiding that fund you get a loan against it or other means of credit. Then use that to find the company till payday arrives.
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