For example, when we buy things at a store say Wal-Mart, do they have a bank account themselves at an institution? Where does the money of our debit or cash transactions post to? I know cash gets picked up by an armored truck, but to where? Thanks in advance for assisting my curiosity!
In: Economics
Well for one thing: *yes*, businesses themselves have bank accounts. There are personal bank accounts and there are commercial bank accounts for businesses.
But more importantly, loans are supposed to be *paid back*. That’s why fractional-reserve banking (usually) works out. The banks loan out 90% of their deposits, but it’s not like that money doesn’t come back. They’re loans. The people receiving those loans are going to be gradually paying the loans back, replenishing the banks’ reserves.
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