The Five Roles of Banking Nobody Taught You (And How to Become the Bank Owner)
If you've ever felt like banking is something that just happens to you, deposits go in, loans come out, interest rates move up and down for reasons no one explains, Episode 040 of Between The Lies is built for you. Hosts Luke Tatum and Rob Brayton of Perfect Spiral Capital sit down for what starts as a simple diagram and ends as one of the clearest walkthroughs the show has done of how banking actually works, and how you can occupy a very different role inside it.
Between The Lies is a weekly financial education podcast built on Austrian economics and the Infinite Banking Concept (IBC,) the idea that a properly structured, dividend-paying whole life insurance policy can let you take back control of the banking function in your own life, rather than renting it from someone else. If this is your first time here, welcome. No prior knowledge required.
“What Nelson Nash would say is banks create money out of nothing and then lend it at interest, and that is evil.”
What We Covered
The Five Roles Inside Every Banking Transaction Rob built out an image identifying five distinct roles at play in the banking process: the depositor, the borrower, the lender, the banker, and the bank owner. Most people, over the course of an entire lifetime, only ever occupy two of them, depositor and borrower. That's not an accident. It's exactly why most people never see the profitable side of banking, only the cost side. Understanding all five roles is the first step toward deciding which ones you actually want to play.
How a Single Deposit Becomes Nearly Double the Money Using a simplified 20% reserve requirement, Luke and Rob walk through what happens when you deposit $10,000: the bank keeps $2,000 on reserve and lends out $8,000 to someone else. That $8,000 is brand-new money that didn't exist before your deposit, meaning your original $10,000 and the new $8,000 loan are, functionally, both in circulation at the same time. It's why Nelson Nash, author of Becoming Your Own Banker, described the practice bluntly: banks create money out of nothing and lend it at interest.
“Most of the time... in our conventional or traditional types of financial systems, we’re only taught about two of those parts... the depositor and the borrower.”
Why Your Deposit Is a Liability, Not a Favor It's a subtle but important reframe: the money a bank holds for you isn't an asset to the bank, it's a liability they're obligated to return on demand. That's precisely why banks profit more from lending activity than from simply holding your deposit safely, and why the entire system is engineered to keep money moving rather than sitting still.
The Bank Owner: Capitalizing a System You Control The episode's real destination is the fifth role: the bank owner. This is the person who put up the capital, waited years for the operation to become profitable, and now collects the dividend. Luke and Rob explain that you don't need an FDIC charter or tens of millions of dollars to occupy this role. A dividend-paying whole life insurance policy through a mutual provider makes you a participating owner in that company, with a dividend history stretching back more than 120 years, uninterrupted through the Great Depression, the Spanish flu, and the 2008 financial crisis.
“We are not talking about creating a bank, we’re talking about taking over the banking process.”
Key Takeaway
You are already participating in the banking system, whether you realize it or not, as a depositor and a borrower. The actionable shift this episode offers is recognizing that a third path exists: capitalizing your own banking system through a properly structured whole life policy, so that the interest and dividends that would normally flow to someone else's institution start flowing back into a system you own and control.
“The companies that we work with... have been paying dividends for over 120 years. They haven’t missed a beat... the Great Depression, Spanish flu, 2008, you name it.”
Related Episodes
"Nelson Nash's Warning: What FDR's Housing Policy Got Wrong" - Episode 15
"Why Your Credit Score Is a Profit Score, Not a Health Score" - Episode 9
"How We Actually Used IBC in 2025" - Episode 19
Ready to Occupy a Different Role in Your Own Financial Life?
Explore the free toolkit and Luke's book, Between the Lies: How to Reclaim Your Future From the Banks and Wall Street, at PerfectSpiralCapital.com/podcast.
“It’s actually bad for them to provide what we think of as the function of the bank, which is to hold my money and keep it safe.”
FAQ
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A: Under fractional reserve banking, banks are only required to keep a fraction of deposits on hand, the rest gets loaned out to other borrowers. Your deposit and the new loan money created from it are both technically "available" at the same time, which is exactly the tension Nelson Nash pointed to when he said banks create money out of nothing.
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A: The five roles are depositor, borrower, lender, banker, and bank owner. Most people only ever play depositor and borrower over their entire lives, which means they never experience the profitable side of the banking relationship that the other three roles enjoy.
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A: No. Becoming your own banker through the Infinite Banking Concept means capitalizing a system, typically through a dividend-paying whole life insurance policy, that lets you control the financing and profitability side of banking for your own family. It does not involve an FDIC charter, regulatory approval, or the capital required to open an actual bank.
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A: Dividend-paying whole life insurance through a mutual company offers contractual guarantees, participating ownership in the insurer, and a dividend track record spanning over 120 years through every major economic crisis. That combination of guarantees, ownership, and consistency is difficult to replicate with market-correlated investment vehicles.
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A: Leveraging an asset you own can be a powerful tool, but it requires understanding exactly what you're borrowing against and why. The caution raised on the show is that not every opportunity to access cheap money is automatically a good idea, a plan matters more than a favorable interest rate spread.
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A: A credit score largely reflects how reliably you repay debt, information a lender needs to decide whether lending to you is profitable. It isn't a measure of your overall financial health; it's a profitability indicator built around the borrower and lender roles in the banking system.
