Let’s say I start out owning a bank with ten billion in assets, and the bank’s value comes entirely from its assets so it’s worth ten billion.
The bank loans its ten billion to you, and you pay me those ten billion for the bank. Now I have ten billion in cash instead of a bank that was worth ten billion, and you have a bank worth ten billion to which you owe ten billion. No one’s net worth has changed.
You default on your loan to your own bank. Now the bank is worthless (its worth came entirely from the loan) and you have no debt, so your net worth still hasn’t changed. Effectively nothing has happened.
It’s not actually ridiculous in principle.
Let’s say I start out owning a bank with ten billion in assets, and the bank’s value comes entirely from its assets so it’s worth ten billion.
The bank loans its ten billion to you, and you pay me those ten billion for the bank. Now I have ten billion in cash instead of a bank that was worth ten billion, and you have a bank worth ten billion to which you owe ten billion. No one’s net worth has changed.
You default on your loan to your own bank. Now the bank is worthless (its worth came entirely from the loan) and you have no debt, so your net worth still hasn’t changed. Effectively nothing has happened.
But now you can lobby the government to bail out your bank using tax money.
Right, which is why it’s not some hero-swaggers-triumphantly maneuver. That’s the ridiculous part.
Is capitalism real?!?!n1?
Except that there is also value from other clients and from the brand, which is then helping you to actually earn money