Tl;Dr, Goldman Sachs makes money off consumer financing, aka, people owing them debt, which they can use as collateral to invest. People having savings accounts means that when Goldman gets people’s money, instead of saving that money Goldman invest it. Unlike owed debt, this is money that it has to have on hand to pay back people. Therefore it is money they shouldn’t invest, but they’ve invested anyways.
If only there was an example in America’s past, approximately 96 years ago, where financial institutions not having the money on hand for savers caused a domino effect of economic implosion.
approximately 96 years ago
My brother, this is exactly what bankrupted AIG in 2008.
Um, that’s how banks work. You give them your money. They invest your money. They credit your account with some of the profits from those investments. They don’t just put your money in a vault. Well they can, some banks do offer vault services. But you pay them to stash your valuables in a lock box in their vault.
