Hillsboro, TN | Birddy - 4/29/2022 14:00
You are incorrect, Banks loan out money that is on deposit from people like you and me.
They make a profit from charging 5% and paying you only 0.20% on your CD or savings.
The Federal Reserve is the one printing money, by adding to the money supply. The story is complex and hard to explain
in just a few sentences.
Higher interest rates are a good thing, for the widow with savings who keeps money on deposit at the bank, needs interest
on investments to help pay for food, drugs and just living.
Interest rates have been kept artificially too low for too long............
Fractional reserve banking, which you reference, is only part of the equation. Banks do loan some based on deposits, during stable, ordinary times. Are you familiar with how much they have to keep in "reserve" vs. what they loan based on deposits?
When the FED is trying to inject liquidity, a higher percentage of loans are issued with money out of thin air. As an example take the PPP "loan" program. Do you think banks that participated in that program lent based on their deposits? NO!
John Burns posted a link to a pdf. Its a good read. I suggest you read it if you haven't already. Its talking specifically about the Bank of England, but the Federal Reserve functions the same way here in the U.S.
Edited by ANewman 4/29/2022 23:24
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Increasing interest rate to stop inflation????
