The Private Banks have The License to Create Money -- Economic Collapse -- Stock Market Crash 4K Private banks can basically create new money as they wish.
That used to be the privilege of the mint of princes and governments.
It's a privilege to create money and therefore profits out of nothing.
This privilege has been in the hands of the financial industry for a long time, and in recent years, it's been unchecked.
It is not the central banks but the private banks that generate most of the money.
A process is also known as deposit money creation.
Money is created when someone goes to a bank to take out a loan; the bank opens an account and issues the funds.
It's then in a contract with the individual who's taken out the loan.
The bank hopes that the person will pay it back someday.
That means what the original impulse to create money comes from private banks. If someone has savings, their money is parked in a savings account.
The advantage for the bank is that a person can't just take it out.
When the bank issues a loan, it's created from nothing.
These two processes really don't have anything to do with each other even though it looks that way, and even though that's what the textbooks say.
This is how it works. A customer wants to take out a loan for ten thousand dollars; the bank has to deposit between one and three percent so at least a hundred dollars with the central bank.
That's it!
In return, the bank is allowed to transfer ten thousand dollars to the customer's account.
At the push of a button, the bank generates ten thousand dollars of electronic money from a hundred dollars, and in return, it collects the interest.
This creation of deposit money is a license to create money.
The banks are happy, of course, that they can do this because that gives them a free rein they get to keep the profits the seigniorage .
That's a few billion every year.
Who'd want to miss out on that; definitely not them.
90% of all our money just numbers on a computer in a
bank somewhere.
The banks make this money.
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