Money creation: who creates money?

debtcutter · 4 May 2012 at 3:22PM

IronWolf wrote: »

Also banks don't really do this intentially to somehow play the system, its just a result of how the system works.

OK one last post in here.

What do you mean they don't do it intentionally?

How do banks react to having reserve requirements increased?

Why is it that a really simple system is made to seem really complex?

What are the origins of fractional reserve banking, who started it and why did they start it?

It's just carried on from then, as it's been allowed to.

IronWolf · 4 May 2012 at 5:28PM

debtcutter wrote: »

OK one last post in here.

What do you mean they don't do it intentionally?

How do banks react to having reserve requirements increased?

Why is it that a really simple system is made to seem really complex?

What are the origins of fractional reserve banking, who started it and why did they start it?

It's just carried on from then, as it's been allowed to.

I mean the money being loaned and deposited through several banks, multiplying the money supply is not done intentionally in some devious scheme to increase the money supply purposely.

The origins of banking are noble as far as I can see. Why have wealth sitting in a vault when it can be loaned out to do something productive. The fractional reserve banking system allows people to keep their savings in a "safe" environment, gain interest on it, and it benefits the economy by enabling others to use that money with limited risk to the original depositer.

The problems over the last 5 years aren't caused by fractional reserve banking, rather its banks taking on too much risks with the money they loan out and the inadequate regulation of derivatives which are essentially insurance without insurance regulations governing them.