Banking 2: A bank's income statement

[UnchainTheNight1]

Sal, If everyone had you as a teacher, there wouldn't be a recession.

[anudude]

Very well explained. Great work. keep it up.

[dadac123]

This is the best course I ever take!

And I never thought I would enjoy a banking class like this.

Your explanation made it simple and clear.

OMG! How I wish I could have a teacher like in my real life.

And I'm feeling lucky that I can take your course through Internet.

Thank you! I really love it! I wanna take all of your courses, just can't wait to see the next lecture :)

[eXoudOne]

OMG THIS IS AWESOME! BE MA TEACHER PWEASE!

[lakerboy4lyfe]

that was so easy to follow, thankyou!

[FoodTech41]

why didn't you pick up the phone? it's me. just wanted to say thank you. :D

[adulby]

teeth cleaning? lol. nice work. 

[niinja2]

MACHINE GUNS

[universalmusac]

Wow I wish I would have taken this instead of spending $500 on an accounting class at a community college. Actually my prof was pretty good and they cover a lot more than this but still

[boyraceruk]

How come there is only $10m in deposits when they have been paid $500k? Shouldn't that go on the end of year balance sheet?

[Anothercoilgun]

30% is just as evil and criminal as 0.0003% The amount is irrelevant.

[krusaderkrusader3]

Why don't you treat the bank building as a starting equity also? (when you calculate the relative income at the end? What implications would there be if you'd include that building as a starting equity?

[whartanto2]

@krusaderkrusader3 The equity in this example is only $1 million of Shareholders' capital. This starting equity is then used to purchase the bank building for $1 million. You could not count the building again because that will be counting the same thing twice. Easy way to think about it is if I have $10,000 in cash that my dad gave me and use it to buy a car worth $10,000, I dont end up with $20,000. I ended up with $10,000 just in different form.

[krusaderkrusader3]

@whartanto2 Thanks for the response. This was actually the reason why I asked the question - I thought that besides the bank building the entrepreneur also has 1m in cash. So my predictions were kind of right I guess.

[killsomething2]

PICK UP THE PHONE!

[Nat13gt]

what about rocket launchers

[hedonism13]

Yup, machine guns.

[vanskiid]

very helpful dude. I love you and these videos !

[frankxxx]

in what village can I get my teeth cleaned for 1 dollar?

[jasmac04]

Haha that is one hell of a straight line at 0:55. Im wondering if he found the magical shift key that could have done it. I like the magical Alt+F4 combination that is a useful one

[TheMEK3]

That's one hell of a straight line @ 0:55

[dewijones92]

Thank you Sal for this video.

[LudwigDeGieter]

There are incorrect data in your vision. The 9 mil that the bank created is also being deposited so you also need to pay 5% interest on those promised 9 mil.

[shyampsunder2003]

@LudwigDeGieter He is right, he has taken the 9 million dollars which he uses are working capital to calculate the interest income ie 900k whereas he takes 10 million dollars which he has as deposits as interest expense ie 500k

[arseneremy]

banks and machine guns

[NomanJhan]

The Bank keeps the $1m in vault and rest $9m is invested in different projects. Now about $ 1,000,000. $100,000 is kept in bank branch whereas remaining is kept in the BIG Vault at state bank.

[pizza621]

Dear Sal,

I'm 30 yr old and working Fulltime in IT industry. Career wise there is no need to watch any of you Math or Finance videos, but I just enjoy watching the way u present short lectures in a funny way, and in laymans' terms. I could watch you videos for hours and don't get tired... learning is never tiring, especially with teachers like you..

Request - In the Finance section, could you pls make a video on "Budgeting and Forecasting" process in a big organization?

[vickiormindyb]

@pizza621 My friend used to do the same exact thing Sal did-in New York City instead of California. He worked w/ hedge funds, or did something w/ hedge funds profiles. I really can't remember, but hedge funds was in there.

He likes Sal's videos too, especially the one where he said 'There are a lot of fancy terms being thrown around, but the basics really aren't all that confusing.'

He thought that was hilarious and so typical of how certain economists act. He watches all the time now.

[vickiormindyb]

Ten of your friends that gave you $100,000 each.

I want your friends.

I can't help liking money after I spent a few days w/ my friend, who's an economist.

He had a BMW, but he wouldn't let me drive it. He had a penthouse too. I THINK that's what it was. It has a view of the harbor. And it was QUIET.

In NYC, in Manhattan, he lives in a quiet place.

That's amazing.

[vickiormindyb]

I'm really confused about this. How is it possible that a bank keeps all that money in their vault?

I was in my bank once, trying to cash a check-minding my own business-and the bank was robbed by 3 goons. They asked for all the money in the vault, and one of the bank employees told them there's never more than 100,000 in the vault. There was less than that in my bank.

So where are they keeping the remaining $8,900,000?

Can someone please answer this?

[kiwisafa]

@vickiormindyb

He answered that in the video - he invested it and paid taxes and other expenses with it.

[nickname4200]

@vickiormindyb in the federal reserve

[vickiormindyb]

Is an income statement that letter Social Security sends you every year, and which shows how much you've, in my banker friend's words, paid to the piper?

Or is the check you get from work every two weeks?

[marxian00]

People forget what money represents- goods and services. These services require human labor to perform- if them just fell from the sky they would have no value. Money and the economy is a social relation and it arranges the social productivity of human beings.

Have you read much of Marxist economics? Marx talks alot about the fetishism of money and commodities and how it hides the social relations behind an economy.

[JackoWacko0087]

You are a god in mouse writing.

[jhtv5757]

"I have to buy my security guards machine guns" LOL Great Video!

[puddingpimp]

Should point out that the change in equity is only equal to the aftertax income if no dividends are drawn. Say you decide to buy a yacht with $100k of the income, then your delta equity would only be $100k.

[ralliart2000]

Very well explained, helpful videos - and all free. Excellent, thanks.

[javanomic]

I liked the way you explain the balance sheet.

[frenchtouchful]

That's brilliant, many thanks

[99999999999999999198]

thank u

[nriab23]

God I should start a bank if one can make soo much money

[jamesallen74]

Sal, GREAT VIDEOS!

1. Do you mention anywhere in your videos about the goal and need of the Glass-Stegall Act?

2. Do you ever talk about the differences between different types of banks?

[DulciJubilo]

Not sure banks are safer than mattresses in some places these days....

[mcapps1]

@DulciJubilo

Hard commodities are going to hold their value, not FIAT currency. Invest in tools, guns, ammo, gold or silver etc. Think of what you would NEED if say the world as we know it ends and walmart isn't open anymore. That xbox or LCD TV is really worthless if you have no power.

[biagiolembo]

sorry,

what happens to the cash when it is used to pay back loans?? does the bank keep that cash for itself??

[goodluckpeace44]

you give away money but you charge interest, so you get more money than you have.

[njneopatriot]

Hmmmm .... How is a borrower considered an asset? I believe it is an educated gamble to believe I will get paid back the money I loaned out. It appears to be a system based on faith in getting a return

[riccati2012]

pretty good for beginnners

[sniped101]

so... how does this help the little guy out?

[jceja24]

Start a business? work for someone who got a loan? ... I people didn't need banks, there wouldn't be any

[blahdelablah]

This video is interesting because it helps to demonstrate how the rich get richer faster than the rest of us, as banks (for example) can make investments from their own equity without requiring a loan, i.e. no interest to deal with.

[00dfm00]

They aren't really using their equity, but rather other people's money. Equity is a claim against assets; here that is initially the $1m building, then the $200k interest that came in for total $1.2m. Also, in the purest sense, the interest is payment for matching up people's savings with borrowers and assuming all risks, as still owe savers their money + promised interest.

[markg2000in]

Thank you so much. All your videos are very helpful. I know I might be demanding too much but can you post some basic videos on electronics and computers...

[Giovanni2666]

I wish my Economics teacher could teach like you. Great video, thanks for posting.

[sniped101]

lol, my teacher worked at coca-cola factory so my teacher knows what he is talking about... im just here for the fun :P

[ScholarMusic]

WOW! You should teach teachers how to teach...

[damos92]

thanks for this man.

[pjblabla]

everybody - please also watch the Crash Course by Chris Martenson - simply a brilliant compilation

[Donnie2020]

Pretty basic but worth watching ; )

[mms4uk]

"the graphics are shit?" what is wrong with you

this is a perfect explanation of how you are being stolen from

WAKE UP FOR ALL OF OUR SAKES

if you are too stupid to understand something simple then please watch tv you deserve it

great vid thanks !

[ananiasacts]

I agree. It seems lame to use a computer to draw text by hand. Why not just type?

[Donnie2020]

you fool!

hes trying to help you out and teach you something and all you two can do is whinge and call him a "baby"?

miserable prick!

[sigur90]

There videos are amazing. My econ teacher is terrible and I've been watching a lot of your videos to make up for his terrible lectures. You're a much better prof ;)

[rfry]

I love the rawness of the drawings... Its more about what your trying to explain then it is about the pretty pictures.

[brco2003]

Great vid., once again! Perhaps "Interest Revenue" would be a better term than "Interest Income".

[efh0888]

Revenue is income, NET income is revenue (income stream) - expenses

[VictimOfBoredom]

Thanks so much for making these finance and banking videos. I'm an accounting minor so these are very helpful. :)

[gonjamon99]

There are three ways of making money: marry it, inherit it, or steel it.

[gonjamon99]

s/steel/steal/

Doh!

[pongman]

Lol, machine guns. Where's the golden parachute? Oh I get it your bank didn't hand out any credit cards or checking accounts yet with all the added services.

[daejinko100]

will you talk about investing?