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Anonymous
ANSWERS: 4
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Banks use there depositors money, since they usually dont have a huge amount of money to sit on. If you want a real example of this and why it is bad all you have to do is look at the Great Depression, when everyone heard the stock market was crashing they all went to pull money out of the bank and the banks ran outta money because they only hold a certain amount. Basically supply and demand.
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Banks create curency out of thin air. Its an amazing bit of sleight of hand really, but think about it, legally a bank can loan up to 8 times what it has on deposit. So for every $100 you deposit they can lend a further $700 in currency that just comes out of thin air! Its our trust in the system that stops the whole thing from colapsing.
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Fractional banking requires a bank to only have 10% of their funds in cash. If they make a loan of $1000 they create $900 out of thin air. The $900 only exists as a computer entry. When the loan is repaid at from 8% upwards into the 20%+ interest the bank makes considerable funds yet paying about 1.5% interest to their depositors. As a point of interest, the USA (as well as almost all other countries) have no currency of their own. All currency used in the USA is borrowed from the Federal Reserve Corporation (not federal and not a reserve) owned mainly by the Rothschild banking corporation. The Roosevelt's, the Morgan's, and the Bush family (two of which have been president) also own large chunks of the Federal Reserve Corporation. Every dollar in your pocket is borrowed from the Fed, and are paying interest on that dollar. This is why the USA will never be out of debt.
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7-8-2017 Banks don't lend money. The note that you sign is money: it is worth 40% of face value, cash in fist.
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