Although there are ample arguments on both sides. Unfortunately, it doesn’t always make it all the way down. And, as the theory explains, that investment will eventually reach the rest of us. Please note that this is not the same as trickle down theory, where rich folks get the money so they can then invest it.
In a way, they are creating money that goes into the economy and helps create even more money. But meanwhile, the bank puts it to work in all kinds of bank products, earning them money. And even though you can get it when you want it. Your money doesn’t just sit there resting, even if you see it in your checking or savings account. And they are a good example of how a bank really operates.
Obviously, Jimmy Stewart’s character was explaining mortgages. No, you’re thinking of this place all wrong. If you remember the film It’s a Wonderful Life, there’s a scene where Jimmy Stewart is trying to stop a run on the bank. Banks use your money to make money for themselves by creating all kinds of loan products. And your money isn’t really just sitting there.ĭo you ever wonder what happens to your money? And what the bank gets in return? Drum roll. But they don’t offer you a safe haven just out of the goodness of their hearts. And if it’s a savings or checking account (demand deposits), you can use it whenever you need (demand) it. We all know that you can put your money in a bank. And you may even surprise a few people with what you do know! Let’s start with how banks work I want you to never again feel that others can take advantage of you for what you DON’T know. But there are some basic finance concepts that absolutely can help. In fact, I haven’t used a lot of what I learned. I also threw in a few economic concepts, for some extra MBA flavor.Īlthough it took me two years to get my MBA, most likely you don’t need all that. So with that idea in mind, I put together this basic financial literacy guide to help you strengthen your business savvy. Especially knowledge of basic finance concepts. Do you ever wonder what a Finance MBA knows that you don’t know? Is it really all that special? Well, I believe that knowledge truly is power.
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