Why put money in a Bank?
description
Transcript of Why put money in a Bank?
![Page 1: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/1.jpg)
Why put money in a Bank?
interest amount money grows over time
=
![Page 2: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/2.jpg)
Banks
3%bank depositor
$1000
$1030
![Page 3: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/3.jpg)
Banks
6% 3%borrower bank depositor
$1000
$1030
$1000
$1060
Profit: $30
![Page 4: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/4.jpg)
BanksOption #1 (safe):
◦Only lend to people you know will pay the loan back
◦Opportunity Cost: Will not make a lot of money
Option #2 (risky):◦Loan money to people that may not
pay it back◦Opportunity Cost:
Safety
![Page 5: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/5.jpg)
Banks
10%
2%1000
borrowers
bank1000
depositors
$10,000
$10,200,000
$20,000
$20,200,000$10 mil.
![Page 6: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/6.jpg)
What if…Borrowers do not pay back their
loans?
2008 Economic Crisis
![Page 7: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/7.jpg)
Banks
10%
2%
1000 borrowers
bank1000
depositors
$10,000
$10,200,000
$20,000
$20,200,000$10 mil.
$0
$-10.2 million
$0
![Page 8: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/8.jpg)
Biggest ProblemBanks loan money to new
businessesNew businesses create jobsNo Banks = No Jobs
BANK
![Page 9: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/9.jpg)
BANKS
![Page 10: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/10.jpg)
Who is to blame?
![Page 11: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/11.jpg)
Who is to blame?Borrowers that did not pay back
their loans?The Banks for making bad loans?
![Page 12: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/12.jpg)
Who did the US gov’t help?Borrowers or Banks?
![Page 13: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/13.jpg)
The Government helped the Banks
and millions of people lost their homes
![Page 14: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/14.jpg)
The
2008
Fin
anci
al C
risis
Small Bank
![Page 15: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/15.jpg)
The
2008
Fin
anci
al C
risis
Small BanksBorrowers
![Page 16: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/16.jpg)
The
2008
Fin
anci
al C
risis Investors & Pension Plans
Want something to invest inHousing has always been safe
![Page 17: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/17.jpg)
The
2008
Fin
anci
al C
risis
Small Banks
Borrowers
Big Bank
![Page 18: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/18.jpg)
The
2008
Fin
anci
al C
risis
Big Bank
![Page 19: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/19.jpg)
HomeLoansThe
2008
Fin
anci
al C
risis
Big Bank
Bigger Bank
Global investor
![Page 20: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/20.jpg)
The
2008
Fin
anci
al C
risis
Small bank
big bank
bigger bank
globalinvestors
![Page 21: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/21.jpg)
HomeLoans
insurance
If people pay the house loan…I make moneyIf people do not…insurance will pay me money
The
2008
Fin
anci
al C
risis
globalinvestors
![Page 22: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/22.jpg)
The
2008
Fin
anci
al C
risis
Small Bank
HomeLoans
It is worth NOTHING!It’s a Toxic Asset
![Page 23: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/23.jpg)
HomeLoans
insuranceTh
e 20
08 F
inan
cial
Cris
is
globalinvestors
![Page 24: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/24.jpg)
Bankrupt
The
2008
Fin
anci
al C
risis
![Page 25: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/25.jpg)
insurance
HomeLoans
Small bank
big bank
bigger bank
globalinvestors
![Page 26: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/26.jpg)
BANKS
![Page 27: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/27.jpg)
Can’t buy food
Can’t pay bills
Citizens can’t buy food
Farmer doesn’t have money to run farm = no food
![Page 28: Why put money in a Bank?](https://reader035.fdocuments.us/reader035/viewer/2022062410/56815f12550346895dcdd874/html5/thumbnails/28.jpg)
Bankrupt
The
2008
Fin
anci
al C
risis