Give a man a gun and he can rob a bank ...

Give a man a bank and he can rob the world.

I normally consider myself a knowledgeable person. No brighter or dafter than any other average person. Yet, this whole bank and mortgage game has me stumped.

I simply do not understand how it works.

So, a "bank" can lend money to me and charge me an interest rate for that money. 

OK

That "bank" can lend out 10 times the amount of money it actually has in it's vaults.

TEN TIMES? 

How does it lend out money it does not have?

Then, I have to pay interest on that amount I borrowed - not at the rate at which it was provided at the time of lending (the cash rate) but at a variable rate that alters as the cash rate alters.

Why?

Assuming that someone can explain that to me - can someone then explain how a bank can take a world-record beating time of 43 minuutes to increase the home loan rates when the Reserve Bank cash rate was last increased but three days after the last decrease still has not passed on the cut?

Why is it OK for them to then charge exorbiant fees on top for missed fees? to compound the interest payable and to charge us for statements on the state of ouyr accounts?

Why is this ok?

Why the hell do I feel so stupid trying to understand this?

[Reposted from xntrek]