Originally posted by EarthCitizen07

Think about this for a moment: I take out a 30 year mortgage for a new house after I put down an initial deposit to the builder. I sign the promissory note, get my check and give it to the builder. The builder then cashes his check or most likely deposits the amount in his bank account.

This means the bank gave up a huge sum of money to the builder and has to wait 30 years for me to make all my payments in full to collect the principle plus interest. Sure the bank makes anywhere between 100 to 150 percent return on its initial investment but 30 years is a long time.

If the bank has to wait that long to collect, it means it DOES NOT have the money IT GAVE to the builder.

Actually, it didn't have the money before. Banks are allowed to do things which, if you tried to do them, would get you in maximum security Federal penitentiary.

In this case, create money.

Contrary to popular belief, the Federal Reserve does not directly create most of the money *directly* (in usual cases, other than QE), but it does influence the willingness and ability of private banks to create money by changing the profitability of doing so.

In this case, when the bank wrote the check to the builder, it in essence created the money by changing a number on the computer. The money created by this action happens to be legal tender and accepted by other banks as a consequence of being part of the Federal Reserve system. The builder could request the check to be paid in physical currency, and the bank would request those bills from the Federal Reserve and they would get them.

But if you take the money paid to the builder and redeposit in a bank, most of it can be loaned out again, thereby creating more money in the system than existed originally.

If you or I tried to do it, it would be called "counterfeiting" and you would be be visited by large humorless men.

The bank is not allowed to create unlimited amounts of money, this is what the 'reserve ratio' and capital requirements mean, and the government (theoretically) regulates and checks up on the banks that they aren't violating the rules. (of course the banks these days influence the creation and administration of these rules). In the old days, some or all of this had to be in gold or silver or instruments exchangeable into them. Yes, back in the supposed golden-era of free-market banking, banks had control over the money supply too, they created money out of thin air (literally printed their own physical money), and they were even more rapacious and sleazy than they are today, despite the gold standard.

Nicely done, hope more and more people join in closing their accounts. I have not used a bank in two years now and probably never will again if possible. Banks have been a problem in the u,k and the world for a good few years now. They just don't seem to give a toss. The only way they will stop is if they have no customers. Good luck to all that are willing to show them whats right

I closed by big bank accounts a few months back, and the weird thing is I realised with hindsight that I was having to travel 5 miles at least three times a week to feed money into this monster go to a credit union it is much better and stop feeding the big broken machine.

In this case, create money.

Contrary to popular belief, the Federal Reserve does not directly create most of the money *directly* (in usual cases, other than QE), but it does influence the willingness and ability of private banks to create money by changing the profitability of doing so.

In this case, when the bank wrote the check to the builder, it in essence created the money by changing a number on the computer. The money created by this action happens to be legal tender and accepted by other banks as a consequence of being part of the Federal Reserve system. The builder could request the check to be paid in physical currency, and the bank would request those bills from the Federal Reserve and they would get them.

But if you take the money paid to the builder and redeposit in a bank, most of it can be loaned out again, thereby creating more money in the system than existed originally.

If you or I tried to do it, it would be called "counterfeiting" and you would be be visited by large humorless men.

This is not entirely correct and it is confusing people. Man is far more simple than that. If you make a deposit in any bank - it can be loaned out to pay for something. Let's say a student loan. Your deposit creates a student loan and the student buys books and a bookstore takes that money and puts it in a bank creating another deposit. But that is the same money! Because there are two deposits at the same time - the money in the system has doubled. That's not all. Suppose the second deposit is loaned out to an investor. The guy takes out that loan and buys shares of a company in an IPO. The company takes the money and spends it on payroll. People who earn the payroll put the money in the bank. The money has tripled. But it is the same money. More over the investor has shares of the company - which can be secured for another loan to increase the speed of the money creation. So you see there was a chain of events and there were money created despite the fact of the presence of other entities. It is all legal. It is ancient as well. It did happen the same way in Rome 2K years ago. The money was gold. There was no difference. Electronics has not much to do with the process - with only one exception - it speeds up things.

Believe me - one way - or another - there is going to be a run on banks. It will be just because there is no interest rate and there is no incentive to keep the money there - and once the money is withdrawn - the FED will print. That will cause an increase in money withdrawal and create a vicious circle of printing and paper supply.

It will then crash the dollar and your savings in any Credit union will go down with a big PUFFFF.
You will see gas stations with no gas - and you will only be able to buy gas for much more than you used to. Maybe 10 times more, maybe a hundred?

If you have say 10,000 in your account - it can buy you a car today and even a home far in a country. But after that EVENT your 10,000 will not buy you a basket of goods at your local Vons store. No matter where you move your money - it will not be good, I promise you that. It is mathematically unavoidable.

Never banked with BoA - some of my relatives and co-workers do, and I've heard nothing good, even before this mess.

I'll spread info and suggestions to theem. Unfortunately my semi-grandparents (I... have a complicated family) will probably screw themselves just to spite me for being "liberal" I hate seeing people shoot themselves in the foot.

Bof A now has all of California's Unemployment in their greedy little hands.

TextTextI don't know if the rest of the country is aware of this, but California has recently sank all of the State's Unemployment into the good ole' BofA. You are now issued a Debit card, so if your on Unemployment in Cali (which around 20% of us are now) you can't bypass the crooks at Bank of America. I'm sure it will only be a matter of time before they misappropriate these funds. Any thoughts from the rest of the country?

If they make it difficult for you to withdraw your money you should be getting your money out of their hands.

If all the people take your money away from their banks, avoid taking loans from them whenever you can and you will be protesting louder than any OWS.

If all the people put their money on cooperative credit unions the players in power would change, and so would the system.