Currently the average fractional reserve requirements for banks amount to under 10% which means that for every dollar (or equivalent) the banks have on deposit they can lend out at least ten such dollars – virtual dollars which they summon from nowhere – and on which they charge interest.
Just as incredibly, this fact – the key to understanding how the international financial system actually operates and why the world is in such a mess – is discussed virtually nowhere in mainstream circles: not in The Financial Times, not in The Economist, not in the broadsheets, not in Parliament, not in the City and not in the economics departments of most Universities.
Either the process is unknown in these circles therefore - a sign of mediocrity - or it is indeed understood but kept deliberately quiet - a sign of wickedness.
Dollars via the printing press is one way to create (fiat) money, but totally illusory money (blips on a computer) can be conjured by the whims of bankers. The Onion was correct. Our economy is an illusion.
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