subject: Banks And Loans: The Reality Will Frighten You [print this page] The following is taken from Federal Reserve Banking System Publications.
Question 1: Do Banks create money when making a loan?
Answer: Yes: Commercial banks, however, lend in a different way. They create new
checkbook dollars and add them to a borrower's checking account. Because commercial banks create almost all new dollars, they play a special role in our financial system. "The Story of Banks," Federal Reserve Bank of New York, page 4.
Question 2: Do the commercial banks create money in the form of loans?
Answer: One institution, the commercial bank, creates new money, checkbook money, when it lends producers and workers borrowing from commercial banks. The banks put this new money into circulation. "The Story of Money," Federal Reserve Bank of New York, page 4.
Question 3: Do banks cause prosperity as well as recessions?
Answer: Yes, But bank credit isn't a one way street. It adds to our money supply, to be sure, but our money supply declines as bank credit is repaid. Banks, then, can "destroy" or "extinguish" money as well as create it. "Money: Master or Servant?" Federal Reserve Bank of New York, page 15.
Please pay close attention to this next question and its official answer:
Question 4: Do banks know that creating fiat money (loans) is the primary cause of the
total decline of the American economy and creating money is the fatal flaw in the Banking System ?
Answer: Yes, Of course, they (Banks) do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise by the amount of the loan. "Modern Money Mechanics" Federal Reserve Bank of Chicago Page 6
Question 5: Do banks monetize peoples negotiable instruments by crediting a banks
liability (Demand Deposit Account) proving that the bank owes the depositor for his promissory note?
Answer: Yes, The actual process of money creation takes place primarily in banks. As noted earlier, check liabilities of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers' accounts. "Modern Money Mechanics "Federal Reserve Bank of Chicago, Page 3.
Question 6: When a bank makes a loan for $9,000, is that newly created money and does
it get posted like a deposit does into someones checking account?
Answer: Yes, When a Bank make a $9,000 loan the bank accepts the promissory
note(s) of the borrower in exchange for credits to the borrowers transaction account
(demand Deposit). Bank Loans (Assets) and deposits (liabilities) both rise by $9,000. But the deposit credits constitute new additions to the deposits of the banking system. Modern Money Mechanics, Federal Reserve Bank of Chicago, Page 6.
Note: The Bank admits that the liabilities are Demand Deposits. The banks did not loan by taking money out of their own assets, as you and I must do if we loan money to a friend, for example. The banks loan that which they never owned. So, the ledgers of the banks, which they refuse to show in courts of law even when subpoenaed (which would allow people to demonstrate fraud), are proof that banks do not really loan anything. They only monetize. They means they loaned nothing from their own assets to begin with.
Question 7: Does the Feds banking system actually cause recessions or even depressions?
Answer: Yes, When the Federal Reserve sells securities, the supply of lendable
money is decreased. When the Federal Reserve sells government securities, the check paying for it is deducted from the account of the commercial bank on which it is drawn, but it is not deposited to the account of another commercial bank. Putting It Simply Federal Reserve Bank of Boston, Pages 16 and 17.
Note: The news media is telling a deceptively concealing truth about this diabolical Bank System. While the system is lowering the interest rates on the right hand, the real damage is being accomplished behind their back using their left hand. When this Banking System purchases bonds, negotiable instruments from the commercial sector (with or without their consent) it is diminishing the excess reserves account which is the entire basis of lending. The lending and/or money creating capabilities of the banks is being intentionally contracted to bring about this recession and all recessions. Why? Because banks, especially the big banking centers, make much more money by seizing homes in foreclosure.
Question 8: Does the Banking System create or publish any information to substantiate
the allegations contain in the above Answer?
Answer: Yes. According to the above cited booklet: Bank credit isnt a one way street. It adds to our money supply, to be sure, but our money supply declines as bank credit is repaid. Banks, then, can destroy or extinguish money as well as create it. Money: Master or Servant? Federal Reserve Bank of New York Page 15.
Put another way, when the Federal Reserve buys government securities, it is by the mere stoke of a pen putting new money into the banking system, money which itself can lead to the creation of even more new money. When the Federal Reserve writes a check, it is creating money. Putting it Simply, Federal Reserve Bank of Boston, Page 17.
Question 9: Why doesnt the United States Government, to relieve the pain and
sufferings of the American people just simply follow Article One, Section five and Paragraph eight of the United States Constitution and just simply create the necessary money to allow the economy to function properly (stopping this inflation)?
Answer: The Bureau of Engraving and Printing in Washington, D.C, a unit of the
treasury, is responsible for printing the nation's currency. But its order to print comes from the 12 Federal Reserve Banks, not the President or Congress. The Federal Reserve, not the Treasury, determines how much currency is printed, based mainly on estimates of
commercial banks and public cash demands. Under this arrangement, the government
can't print more Federal Reserve notes to pay its bills or debts. Since most U.S. money is
checkbook money, the printing presses have little to do with the buying power of money.
I Bet You Thought," Federal Reserve Bank of New York, page 12.
NOTE: This Banking System is actually dictating economic conditions to the government and to the people of these United States. The time has arrived that we the people exercise our God-given rights protected by the United States Constitution and demand that we have constitutional money system that benefits the people and not the Banking System. Remember it is our right to correct an out of control government. This Banking System is a socialistic system as opposed to our American concept of individual rights to life, liberty, property and the pursuit of happiness and our constitutional guarantees of freedom of speech, press, religion and assembly to redress and/or to correct improper government. Without private property, no individual rights are possible.
