An anonymous investment banker explains why the banking system is just big enough to fail, and will collapse soon, to be replaced by peer-to-peer networks.
Many people have a misconception of banking; they think that we take money from depositors and give it out for mortgages, for small business loans, for student loans. But in reality, banking is the creation of money out of credit.
So when we extend a loan, it's not that we take existing money from someone else and give it to a borrower; it's really the creation of new money from credit. And when we talk about the end of banking, we are saying that this model no longer works.