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Banks create money when issuing a loan. This is how fractional reserve banking works. They lend money they don't have (most of). This is institutionalized fraud
by arcanemachiner 14d ago
Banks create money when issuing a loan. This is how fractional reserve banking works. They lend money they don't have (most of). This is institutionalized fraud, and it's been standard operating procedure for centuries.
- conmod278 14d agoBut the fraction to be kept in reserve has been zero for 4-5 years.
- neilwilson 14d agoAlmost like the concept is complete bunkum. It’s been zero in the UK for hundreds of years.
- kennywinker 14d agothat.. doesn't make it better
- jurgenburgen 14d agoIt was replaced by other mechanisms. It’s not literally zero any kind of reserves.
- kennywinker 14d agoI’m not worried about the lack of reserve, i’m worried about the money shell game where private companies can drive inflation or deflation whichever serves their profit margins best. The 2008 global financial crisis was a result of this, so not a made up worry.
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- JumpCrisscross 14d ago> The 2008 global financial crisis was a result of this, so not a made up worry The GFC would not have been prevented by a reserve requirement. The problem didn't originate in the banking system, and transmission to the banking and payment systems wasn't reliant on leverage per se.
- kennywinker 14d ago> The GFC would not have been prevented by a reserve requirement. Who said anything about that? > The problem didn't originate in the banking system I guess i consider mortgage lending part of the banking system, but no matter - my point is it was created by financial institutions lending in ways that created money, helped their bottom line in the short term, and were unaccountable. That’s why i’m worried about how much of the US economy is created by private companies creating money out of thin air by loaning in loops.
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