inflation will eat at it in the bank. Interbank Loans and the Federal Funds Market First know this: Banks are in the business of making money. When corruption & deceit is so entrenched in a business it is best to take your tread else wear. Precious metals such as gold and silver which hold their value over time are harder to control since they can’t increase those supplies easily. It’s a measure of how good of slave you are. By … This increases the money supply. I believe that banking institutions are more dangerous to our liberties than standing armies. it is always a big deal what the interest rates are set at, because it affects the interest rates for consumers. Just a relic in thinking. Do you buy a car with cash? That means for every $100 deposited, the bank then turns around and lends out $98 to various investments. Huge trouble develops when the asset becomes worthless (many homes); someone needs to face all the losses. When the federal government is running a deficit caused by spending that exceeds revenue, it doesn’t borrow money from a bank. Banks keep on lending money, but where do they get it from? “Countries which lend money to other countries are, in general terms, the oil producing countries, Asian countries and some others such as Germany and Sweden.” At the moment enormous rescue packages are put together for countries and banks in Southern Europe with too much debt. If the economy gets into serious trouble and individuals are worried about their money in the banks then they will race to the bank to remove the money they deposited. Many famous Banksters & Leaders say & have said similar things….not in jest. The money gets repaid to the feds and the money supply tightens. If Banks could create money from nothing, what do they need you for? document.getElementById("comment").setAttribute( "id", "a7bd300d7679d480b30dda8463f2fe76" );document.getElementById("g767297f97").setAttribute( "id", "comment" ); Join thousands of subscribers who receive The Explorer Report each week. By Ken Belson. I would also add that throughout the process even if the bank fails due to any error. I don’t think so. This is called fractional lending. Assuming a borrower is honest and diligent, banks should have their money back in hand in approximately seven months. Feb. 5, 2003; People often think of zero interest the way physicists do the … So yes the bank was paid 2 times, and many more, but you still don’t own your home, your just the tenant it says so on your deed, and to prove it you pay the state rent each year, in taxes, you don’t even own your car, the state dose. The fractional reserve system works as long as there is confidence in the banks. The Bank has no further interest in the mortgage and no risk but they keep convincing you that they hold the note, in fact, they are engaged in fraud when they foreclose. So does the US Govt buy the printed money at the Feds cost to print or buy it off them @ face value. We should all remember that not everybody should be allowed to borrow too much $ to start with. Say thats all the money the bank had (for the sake of argument) then the bank has to borrow the money? Rest his soul. LG – Sorry to let you know, but money systems are fraudulent. (Such an arrangement isn’t very profitable, as the only profit for the sector to share is the differential between the interest paid on the original $1000 and the rate they all charge each other. Does he borrow it from other banks at interest? When people or businesses borrow from a bank it takes an IOU from them and deposits newly created money in an account. Understand This, And You’ll Be Ready To Make Money. It’s how banks make money – they loan out a portion of what has been deposited. Here are some additional items that may affect how much money the bank can create. A bond is a promise to make payments to whoever holds it on certain dates. all Monty Pythonish wink wink nudge nudge say no more SAY NO MORE. The trick is to get people to sign in the dotted line. 97% of the money in the economy today exists as bank deposits, whilst just 3% is physical cash. Banks are just glorified middle men that produce nothing & take as much as possible, because they can & no one or nothing can stop them. That is why globally governments and people are all in debt and there is NO money. The many Banksters & Government nutters & regulators would appear to be sitting on their butts in their mansions & laughing like hyenas at the good people suffering at the hands of these modern day white collar leeches who appear protected by many who sail in the Legal System & also the law makers. What I’d like to know is who gave privately owned banks the right to create a publicly owned asset – money? Bypass the banks. Now the homes goes into foreclosure. The feds keep a close eye on the availability of the money supply thru interest rates. Listen, I'll be cool...I promise not to use your email for spam! The Bank has now suspended its quantitative easing programme, but the government needs to borrow a great deal of money in the coming year. Do they borrow from bigger banks who borrow from bigger banks who borrow from the central bank who then prints the money? What do you think would happen if there was a global cyber attack on the finance institutions; witch resulted in destroying all credit & debit records? >>Of course, the whole system is dependent on a) the bank being responsible with lending, b) everyone not defaulting on their loans. The best borrowers get the ‘bank prime rate’ which is generally 2% higher than prime. For $1000 they will keep $150 and lend out $850. People are asking: “No new money was created (cash)”. Banks are paying people to borrow money. Remember we are in a one bank scenario (monopoly). If commercial banks didn’t engage in such promisory notes etc. Well Economist…..Not Golman Sachs fan we hope…….We hope you are helping the Government put the creators of GFS behind bars……heheheh….. The religious undertones of all of this are difficult to ignore. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered. Make sure you put everything in writing so everybody’s on the same page—money can ruin relationships, even if the dollar amounts are small. Thus, unchecked, banks feel free to take excessive risk. The theoretical maximum of course depends on whether the target reserve ratio is correct. Here is a video to explain it how banks create money better: But, if you understand how it operates, then you can navigate your way safely through most of the challenges. (I’ve stumbled on this looking for something else, but had to comment.) savings deposited into a bank result in an exponential increase in credit availability. I am glad that people on here are waking up to the reality that BANKS CREATE MONEY OUT OF THIN AIR as something which is repayable (ie. This scenario has most recently occurred in Greece, Cyprus and even some investment funds in the UK after Brexit. Abraham Lincoln rejected to borrow from bankers and funded the civil war with money printed by the government. In a matter of 15 years, depending on the interest rate, the banks would have profited 150k from the interest. But then wars, import/export requirements made it harder to sustain our economy without their intervention. In fact, by leaving your money in a bank account, you are actually losing value through inflation. If Mervyn King said it, he was probably being humourous (Central Banks all work on this principle and have done since we were all born). “But suppose THEY go down in value – through no fault of my own!” (The bank means that the economy might tank further and even the best companies will be hard-pressed to pay back debts .) But where do the central banks get their money from? Thanks for the informative article! & if governments around the world can support super & investment institutions they can support this as well. Then products and services expand as a result of the increased supply of money. The fact of the matter is that the whole banking system is a scam, we do not need banks, yet we wanted them…. And aren’t we all the suckers. Maybe you’d like to actually write something of value to contribute rather than your empty remarks. How do we bypass the banking system? If these two things happen eventually the system faces massive losses which is what we’re seeing in the current market. He was assasinated. ALL of the money “Siphoned” out of the system into ridiculous salaries and bonuses remains the property of the recipients involved. I’m really confused, could someone please explain this to me? for example if bank A takes a deposit of £10 and their is a reserve requirement of £1.