As I wrote in, MIKE "MISH" SHEDLOCK vs MICHAEL PETTIS, OR THE UNREALITY OF SAVINGS, INCOME INEQUALITY AND ECONOMICS,
savings is mere rhetoric.
People don't put savings in a savings bank or any other kind of bank. Depositors buy bank credits and sell cash, other bank credits or debt in property trades each known as a purchase and sale.
In a purchase and sale, a customer, known as a depositor sells property in cash or receivables to a banker and buys property in bank credits. With property in bank credits, the bank customer has a right of action to demand an amount of cash from a banker at a future date. Evidences of such right includes checking account bank statements and passbook savings books.
A bank is a firm that seeks profit through the business of selling its own credit. A bank transmutes property into a form, which can get traded. A bank facilitates the trade of merchant credit for bank credit, the trade of cash for bank credit and the trade of property in future profit for bank credit by holding lien against extant property.
A bank stands as the medium of exchange by making credit negotiable from one holder to another so that credit might work the same as money once did and as cash does now. Thus, a bank is a refinery for credit. As a refiner of credit, bankers transform the credit of depositors. In so doing, the guaranty of bankers upon this transmuted credit lets depositors trade upon this guaranty.
Enjoy the latest bickering between Mish and Pettis here: Michael Pettis Responds; Fantasyland Thesis vs. Reality; Counter-Challenge!
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