Saturday, June 13, 2015

Horse manure from the Bank of England

Money creation in the modern economy

In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

Nope, cannot work this way as principle is returned with interest.  Ultimately this approach creates deflation, as in the USA and UK today.

Money in the USA is created via helicopter drop about every 40 years, out last drop was the Nixon Shock.

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