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The question you get at concerning whether banks create money independent of the FED is … you know I think the answer is dependent on your perspectives. Per the money-multiplier effect it is true that a bank creates money … in a sense.
I'm just wondering how these two things connect together. Do banks actually get new money from the Federal Reserve when they issue a loan, or do they merely change some numbers on a computer?
What the Fed does do is purchase bonds (depending on the duration until the instrument matures changes its name) from the US Government, and then issues the money that is about the amount of bonds they purchased.
False. The Federal Reserve system is not a singular "thing"; it is a collection of banks with a central hub. The bank members buy the bonds from the government then transfer them to the hub where upon it issues the cash. The Fed itself acts as the carburetor for how much of those bonds will be converted into cash.
Just watch the following video friend. Banks can and do create money from nothing. They collapse when bank runs happen or large amount of debtors default on their loans, that affects the banks in a drastic way because they rely on the debtor to pay off those debts which they have created with no real financial backing.
The money the banks are creating doesn't really exist. This money doesn't really have the backing of our government past the set limits on the insurance program. The Stock Market also creates fake money that doesn't really exist. Boy, we are a gullible society