How do banks work, and what happens to money you save?
Money's Day Job
How do banks work, and what happens to money you save?
Imagine you slip a ten-dollar bill into a bank, then walk away. You picture it sitting in a little drawer with your name on it, waiting patiently for your return. It's a cozy idea. It is also completely wrong. Your money does not sit still — the moment it lands, it goes to work.
Here's the trick at the heart of banking: not everyone wants their money on the same day. On any given morning, only a few people come in to take cash out. Most people leave theirs alone. So the bank looks at the giant pile everyone has saved and thinks, "Almost all of this is just resting here. Why not put it to use?"
