Bank Person

In total, you pay the bank more than they took. But is not that important. When the bank transfers the money into your account, making the loan in an electronic database, the bank does not give you money: it just creates another entry in the database. Then the money transferred to the person from whom you buy something on borrowed funds. Suppose that in our model, this person opened an account with the same bank. Then in the database appears another record. What happened? The Bank does not give you the money, he just wrote the amount on your account, and then this amount appeared on the account of another person, from your account and written off.

Now you need each month to repay your loan before bank (ie you have it), and the person who transferred the money, in principle, they can cash out and pick up from the bank. But if the amount is large enough, and a man convinced that he could withdraw their money at any time, it is usually leave the money in his bank account. Consequently, the bank can already dispose of the electronic money, which never happened. In particular, increase the size of its loan portfolio amounting to multiples of one which lies on the recipient's account. Thus, the bank is not issuing any money, but creates an entry in the database, was able to increase its loan portfolio, has received the debtor (ie you), which will now be monthly must make regular payments.