Fractional reserve banking and how it started

Hi,

I've read about frb and seem to understand how it works, but i dont understand how it could have started.
It states that Mr.A puts $100 in Bank A. Bank A keeps 10% of it and can loan out the other $90. But when Mr.A writes checks of $90, the bank then must give the receiver of those checks the $90, leaving them with only $10. So how do they make new money?

The normal banks don't make new money!

The national banks 'create' the money and lend it into the system and the governments make the change and 'sell' it for notes.

"Money itself isn't lost or made, it's simply transferred"

- Gordon Gekko

reply to post by konstansis


They make new money "on the books" by loaning money back and forth one to the other...if I have made loans worth 800 bucks that I'm getting payments back on, and I only had 100 bucks as assets that I based my loaning spree on...then if they all get paid back orderly-like my assets have gone from 100 bucks before to (800 bucks plus interest) after...
This is the general idea, I believe...do you feel what I'm saying, anyway?

reply to post by nine-eyed-eel


well, i understand how it works. but not how it started. If a bank had 100 bucks, and lends 90 bucks to me by putting it in my account, then when i take it out my account at a cash machine, i am then holding the 90 bucks, so it would have HAD to come out fo the inital 100.