Page 204 - THE PATH

The basic function of banks consisted of taking money
from individuals and legal entities as savings. Natural or

legal persons deposit money in order to get interest.
Another function of the bank is to invest this money in the

form of loans to natural or legal persons (companies,

citizens, states, cities, investors and others) who need
money.

Investing money earns more money. By lending money
through so-called loans banks receive interest. The

interest rate on deposited money is lower than that of the
loans. Banks provide other services as well, such as

payment operations, credit cards, etc.

In the beginning, this worked in a normal and logical way.

Presented in figures, it would look like this.

For example, in 1975, $1,000 savings in a bank would

have 8% interest per annum, which would mean $1,080 at
the end of the year, of which $1,000 is the basic deposit

and $80 interest money.

The bank invested this money in companies, investors and

individuals who needed money to purchase houses,
apartments, machinery, raw materials and other

necessities.
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