When I make a deposit at my bank, am I loaning them my money?

yes and they pay you back with interest

>>1220620
Second question

Do banks place all their funds into the stock market and invest it? They never had money sitting around, right?

>>1220622
>Do banks place all their funds into the stock market and invest it? They never had money sitting around, right?

They obviously have some money sitting to pay their customers if they attempt to make a withdrawl. Read up on fractional reserve banking.

all these questions are very easily google-able, just search them. No point of people typing out long-winded answers when this stuff has been covered at least a few million times.

File: hopo179.jpg (132KB, 650x650px) Image search: [Google]

132KB, 650x650px

>>1220622
>They never had money sitting around, right?
Nigga u serious? What do you think the vault is for?

>>1220634
>>1220630
I didn't mean relatively small amounts of physical cash. I mean millions if not billions. I imagine it'd be wasted if it's not invested.

>>1220618
Yes, but on their terms.

>>1220622
Depends on the country the bank is in. Some nations ban that practice as they see it as being too risky.

They get around this of course by opening a brokerage, and putting them together under one roof. They can then prod you constantly to invest your savings in things that give better interest* rates.

>>1220622
banks are only allowed to invest a certain portion of their capitol on stocks, their investments are divided into other securities

>>1220622
They maybe have te percenr lying around. Money doesnt need paper anymore

>>1220638
Like these other anons said, some is kept around so they can service withdrawals and such, but it can also be invested in stocks, bonds, treasury notes, or lent for mortgages or other loans and such for other customers of the bank.

>>1220630
well maybe people need a more simplified answer or enjoy creating a conversation to learn. maybe thats why they didnt google it.

At the highest levels there is a lot of math estimating risk.

You'd have to read a decent history of banking laws to really understand the full scope.

You're probably going to need to learn some definitions.

Pretty much all banks invest in securities. Rarely do they invest in equities outright. Most of it is bonds. The bond market is over 10x the size of the stock market.
Where they do engage frequently with equities is bringing companies to market, being a primary or secondary source of funds. Its pretty much risk free for an easy couple percent in huge numbers.

If you look at the accounting for a bank. Its all in reverse.
For normal people Cash is an asset. for a bank its a liability.
Loans are assets, while people would like to get out of debt banks want to maximize their debt. because it is both levered and marketable.

At the highest levels the discussions are mostly philisophical filled with special permissions and rhetoric.