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Pittsburg, Kansas | This is the money creation FalcoFog talks about. It is a PDF file download from the Bank of England explaining how commercial banks create bank checking account money when they originate loans (and the money is subsequently destroyed as the loan principal is paid off - no the banks don't get to keep the principal they created).
Most of what we call money is actually bank created checking account money originated from loans. There is only about 3-5% of physical money in circulation.
In other words, if everyone tried to "get out of debt" and pay off their loans, without enough new people/entities taking out new loans, we literally would run out of money before all debts could be extinguished because there is more debt in the system than there is money (checking account and cash) to cover it. When loan amounts expand the money supply inflates. When loan volumes contract, money supply contracts. This can be seen very easily on the Feds own web site in charts. We are totally dependant on debt being issued for our money supply. Something the BOE paper fails to mention, but completely true. It is a system NOT designed for the benefit of the mass populace.
The same information can be gleened from the Federal Reserve web site, but they do not explain it in laymans terms like the BOE working paper does. My belief is they really prefer people not know how their monetary system works. Many people that work in banks, other than high level executives or those that stop to think about it, don't know.
http://www.bankofengland.co.uk/publications/Documents/quarterlybull... pdf download of Bank of England article. Banks work the same basically around the world.
Edit: I found a web page with it so you do not have to download the PDF to get the flavor. The download has the whole article.
http://www.bankofengland.co.uk/publications/Pages/news/2014/051.asp...
John
Edited by John Burns 5/27/2017 09:16
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Growth of money supply vs population size
