Banking has changed since when a lot of the banking books were written. Read the below statement to understand how banks have been making money with the low central bank interest rates they have been able to take advantage of. The money is coming from the transfer fees to low interest rate accounts, which banks are pushing hard. The book is Rothbard 'The Mystery of Banking'. "Banking has changed a lot since it was written. What was happening when I worked in various banks and still happening today and you will believe me when I tell you this because of all the annoying phone calls banks make. They have been taking low cost borrowing from the central banks and then holding it as short term excess reserves to then lend out to customers. They don't even have to increase the interest rate it is the charges or fees that make them the money. Zero percent balance transfers but with a three percent transfer fee. That is where they make their money. The interest rate doesn't matter apart from the central bank interest rate being less than the transfer fee, it is the only transfer fee that matters. The banks new way of making money is the management of moving money to prevent borrower default and the charges or fees they make in doing it. This is the reason for all of the annoying phone calls. They are pushing these fee charging products on you to use up all of the cheap debt they are getting from the central bank. They are holding short term excess reserves and then setting product sale targets to take advantage of the low borrowing they can get from the central bank. Then they get their transfer fee that is what they want, that is how they make money now. This is modern banking moving money to manage the debt repayments and the fees banks charge in doing it. The low interest rate the bank offers does help and it helps when banks offer zero percent balance transfers but that is what banking has become. The credit cards been maxed out, although some people might be able to get extensions. The modern world of banking is managing the staggering debt so the big debt default everyone is worried about won't hit."
The modern world of banking is managing the staggering debt so the big debt default everyone is worried about won't hit. Unless they fail at managing it obviously.
Yes it has happened before and it will probably happen again. My hope is they can grow the economy out of the debt they are in and use low interest rate accounts to prevent the debt collapse in the mean time.