I used to watch the Lone Ranger TV series from the fifties. Often they would feature a bank robbery from what I now call a Lone Ranger Bank. There was usually a room which the customers used and a back room with a safe. Everyone in town and round about would put their spare cash, savings and valuables in that safe.

When you had saved up enough money for a horse you would go to the bank, take out the money, go to the stables, swap your money for a horse and the stable owner would take the money right back to the bank.

Eventually the bank would realise that it always had so many thousands of dollars in it that were doing nothing. Then they hatched a plan, what if they gave that money to someone else to buy a horse. The money would still come straight back. That turned into a business plan.

Hire out the money, it doesn't matter that it isn't the bank's money. Hire it at so much a week and expect it to be returned at the end. Now you have a nice little earner and you needed no money of your own to get it going. It will fail if everyone tries to take their money out at the same time but not otherwise.

Eventually, they do not even need to move any cash. They just have paper accounts for everyone and change numbers on pieces of paper to make it work. When was the last time you went to a bank for a loan and they said sorry, we won't have new stock until Thursday? No, they just invent money out of thin air.

It does have advantages. That town can now do much more trade even though the money is pretend money.

Further, inflation can be good for banks as well. Imagine if when you put $1,000 into your account the bank did not keep the cash but bought $1,000-worth of gold. If inflation was 10% and you went back the following year to take your money out that gold would be worth $1,100. The bank would sell that gold for $1,100 and give you $1,000 - maybe with some interest. The difference would be pocketted by the bank.

I don't expect that they actually buy gold but they will have some way to invest it.