Not one in a thousand understand how banks create money. Watch the video in this link. That guy pretty well should know what he is talking about with his credentials. One quote from him: "Loans make deposits, not the other way around".
So money is created new at the time the loan is created. Then the new money freshly created from the new loan is deposited in that same bank. The bank creates the money for the deposit. That quote above should tell you everything you need to know about banks creating money from nothing. Much of what is called the money supply is created by commercial banks via new loans. A good share of the rest of it is created by the shadow banking industry. The much smaller amount is base money and probably some other stuff I am forgetting. There are hundreds of places you can read and learn about this, including the Fed's own web site as OldMcdonald quotes. Few people do. John
Edited by John Burns 12/12/2014 19:10
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