Time and Demand | Do We have Honest Banking?

#banking #fed #centralbank Money plays a critical role in the economy, functioning as a medium of exchange and solving what economists call the “double coincidence of wants.” This refers to the challenge in a barter system where both parties must want what the other has, a significant limitation on market size and efficiency. As far back as Goethe, the benefits of money were appreciated, particularly its ability to simplify trade and record-keeping. “What advantage does he derive from the system of book-keeping by double entry? It is among the finest inventions of the human mind,” Goethe observed. The system of money not only facilitates trade but also expands the scope of economic activity. In an ideal banking system, there are two types of deposits: demand and time. A demand deposit allows you to withdraw your money whenever you wish without earning interest. Time deposits, on the other hand, lock your money away for a specific period but reward you with interest in return. Time deposits are the foundation of loans. Banks lend out money based on these deposits, and the more time deposits there are, the lower interest rates tend to be. In this scenario, banks charge a fee for maintaining your account, a small price compared to the hidden cost of inflation in today’s system. Read More: https://mrdevinney.com/time-and-demand/