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No that is false. The money supply is endogenous. Its tied to the health of the economy and the amount of debt the private sector is willing to take on. Fract
by bubbleRefuge 13y ago
No that is false. The money supply is endogenous. Its tied to the health of the economy and the amount of debt the private sector is willing to take on. Fractional reserve banking is a myth. Bankers do steal by using banks to create money for themselves. Research the S&L crisis and also the 08 crisis. They don't directly print money for themselves b/c regulators will catch them. They do it in an obfuscated way by creating fraudulent loans and charging 'legal' fees in the process.
- ef4 13y agoI don't dispute that banks create money and greatly affect the money supply. Under normal conditions, the banks stay pretty close to their reserve requirement, so a hacker suddenly creating a gigantic new loan at a bank is likely to push them over the limit and draw attention, either immediately or when somebody tries to move the money to another institution. But at present, many banks do have big excess reserves, so getting away with it is more plausible. It essentially becomes a loan the bank didn't really intend to make.