Everything I said about how banking works is a FACT.
Again, if banks can "create money out of thin air", as you suggest, then why would there ever be a bank failure?
In fact, if you read the failed bank "autopsy" reports from the FDIC, private banks typically fail due to loan losses, not due to a run on the bank
by depositors --- in most instances. In this recent recession, many banks have failed due to sour loans for real estate speculation.
Which, again, begs the question - which you refuse to answer: If private banks can magically create money out of thin air, then why don't they do so
when loans go bad or when depositors withdraw funds (as in the case of a bank run)?
I'll answer the question, since you cannot.
Banks cannot magically create money out of thin air. They have assets, and they have liabilities, like any other business. Just look at any Annual
Report of any bank. They cannot magically conjure up money out of thin air to cover up loan losses, or to make up for a run on the bank. Not
possible. To suggest otherwise is comical, at best.
And let me be clear -- I am referring here to common, everyday banks such as the 4 mega-banks, such as Chase and Wells Fargo, as well as smaller
regional banks such as BB&T and Regions Bank, and even community banks.
I assure you that these banks do not create money out of thin air. There's no magician in the back room with his magic wand magically creating
dollar bills and coins out of thin air.
If private banks were to start printing their own money, they would be shut down by the Fed in short order.
Customers then pull out 100 million because the bank sucks. Uh-oh...bank now needs to come up with 100 million in real cash to cover their capital
reserve requirements for the 1 billion in loans/investments it was "covering" or they will be declared insolvent.
Banks don't operate in a wind tunnel, as your suggestion indicates. You are being far too simplistic. First, in a normal market environment, banks
are earning money on loans when those loans are repaid in full. The profits from these loans are in the form of interest earned.
Secondly, you forgot to mention that banks have assets of their own, completely unrelated to the deposits held from consumers. They have assets such
as cash (Yes, banks have their own cash), stock investments, real estate, buildings, equipment, loan receivables, etc.
Just look at the Balance Sheet of any major bank, and you will see quite clearly that they have significant Assets - oftentimes in the billions or
even trillions of dollars. If deposits are withheld, the bank still has Assets. They still have buildings, cash, stock investments, loan
i admit that i do not know exactly what you consider an academic source however, these above should help you better understand that which you clearly
do not. good luck.
Again, when you can provide me with a reputable academic source, I might listen. Web links to conspiracy web sites and pseudo-business writers are
not academic sources. Sorry.
We can agree to disagree. You will never convince me that banks like Wells Fargo and Chase have hocus-pocus magicians that magically conjure money
out of thin air. No, these banks are businesses. They are run by private bankers and hard-nosed business elites for a profit.