Short excerpt from a YouTube video explaining how commercial-bank capital circulates through real estate transactions: a borrower gets a loan and makes a down payment to close a purchase, the seller receives those funds and places them back into a bank, so capital leaves one bank’s pool but quickly returns to the banking system—illustrating the cyclical flow of deposits and loans.
Commercial banks. Think about it. They have a giant pool of capital, and capital always leaves their pool, but it comes back to them. I'm going to buy that real estate property and what am I going to do? Oh, I'm going to get a loan from a bank and then I'm going to put a down payment down, and then I'm going to use the loan to close. And guess what? The person that I'm closing with is receiving the capital. And where does that person put in a bank? Back in their bank. And it's just switching. Right. So it's always leaving, but it's always coming back.
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