Banks can only lend up to the total amount of deposits that we (the people who deposit their money into the bank) have placed in them minus the amount of reserves that they are forced to hold (10%).
So they can lend as much as 90% of the money they hold. That is not 'creating new currency', it is lending out the 'currency' that they hold.
What I think you might mean though is when a bank sells or buys already existing treasuries to the Fed. But even then the bond/bill/note/etc has already been issued by the treasury, which means at some point American dollars were used to purchase it, which took money out of our system. So even then the Treasury is still the one that 'created' them.
So that's the way the Fed and Congress sells it in their cartoons (ever seen that one?) But the reality is that a new deposit of $100 is held as 10% reserve and $900 is therefore available to lend, thus creating new, healthy productive currency in the form of digital credits.
We all know this is true without even studying the matter because none of us have ever been denied a loan for lack of deposits.
"Well your credit score is 1000 and you make $10k per week but we can't swing a $100k loan right now solely because 90% of our deposits are already out on loan."
In the old days a bank would write a physical check instead of a digital one and the vault teller would order physical currency to cover a small percent of cash outs. So these orders are
advancements. Now it's all digital and you don't endorse checks, you endorse your signature card which covers all direct deposits. But it's all the same really.
Sure did, I also studied the banking industry too. And the money system works like I described above. Banks don't create currency.
Right so I never said they did. I said you and I do when we take out the loans and the bank merely facilitates the loan. Congress is theoretically acting on mine and your behalf in the same manner and Treasury simply prints the notes with the proper seals, ink ect.
So I essentially said what Title 12 states about the world reserve currency: that the
issuing authority is the Board of Governors.
So for example, since the Fed is the issuing authority this is why we didn't just hear that Treasury just raised the interest rates.
In fact, Treasury currency in Title 31
may not bear interest.
This is also why we don't hear that the Treasury has executed such other elastic tools as Quantitative Easing, because Treasury is not the issuing authority. It's pretty simple stuff.
That's nice. I think you might want to reread what I wrote without the preconceived notions you seem to have on what I said in whatever other post that was I brought up the conspiracy theories surrounding the banking system here in America.
I think you might want to reread what elastic currency is. From the one line, it is a way for the Federal Reserve to sell a preexisting bond, which again was printed by the Treasury.
I am not sure what it is that you are trying to get at here though, I am not sure if we will get there if you think that anyone but the Treasury can create new currency in our monetary system.
So, according to the Encyclopedia of Banking and Finance 9th edition...elastic currency is simply what we know ours to be:
"Currency which can be expanded or contracted based on commercial needs."
Elasticity is secured by basing the volume of circulating currency on the volume of credit. Currently, the currency is a bill for a Dollar in the form of an elastic bank note. A Bill of Credit. The issuing authority is the Board of Governors. This note has
900% Elasticity as I described because it is what is held as a 10% reserve.
So the currency expands as business expands in just the way I described, in the form of loans.
No business is shipping goods with capital for example. The truck driver uses a loan in the form of a company credit card for fuel right?
So then, simply trying to kind of lump what I'm telling you into the "conspiracy theory" relm is easily demonstrably false because literally anyone on earth has access to our Statutes at Large codified online in a searchable US Code and its all current right there at your fingertips. So like you can verify when I say what Fed and Treasury has authority to issue easily in sections that are only a paragraph. Like I can't grasp how that could possibly be a conspiracy theory when is so easily fact checked in like 90 seconds.
It's not like back in the day when we had to physically visit a Federal Repository and read print. Although most of that is also scanned in as pdf.
Am I reading this right, are you saying that inflation is caused by people defaulting on loans? Because there is many reasons for inflation.
I think you are getting into the weeds a bit here man.
Ok so no, I'm not saying that. I'm saying inflation is simply an increase in the total supply of currency for whatever reason.
I think you are confusing inflation with
price increases that can come with inflation especially if wages and salaries don't increase proportionately.
Other supply/demand issues that are not inflation can affect prices also like gasoline. Refineries are over 90% capacity and demand is exceeding domestic supply. The price increases here really hasn't much to do with inflation so much as regs on new refineries and lack of domestic crude supply going to refineries already at near capacity. Like ordering a refinery to make more when they're already at peak capacity isn't really going to help as much as say, allowing more refineries.
But who would invest in one? It takes like 10 years to see a return and the stated goal is to do away with petroleum fuels in 5-10 years so there's market speculation also contributing to price increases which has nothing to do with inflation.
All of which was originally produced by the Treasury and not banks.
So printing and engraving
is Treasury. So you're technically correct that they
produce physical currency. But the issuing authority is not Treasury for world reserve currency bills.
To see the currency that Treasury actually has authority to
issue you need to look in Title 31, sections 5111 and 5115.
The notes in 5115 for example are not elastic, and currently are fixed in the amount of 300 million.
www.law.cornell.edu
; March 6, 1934 (48 Stat. 991); June 30, 1941 (55 Stat. 395); May 25, 1943 (57 Stat. 85); June 12, 1945 (59 Stat. 237); June 19, 1968 (82 Stat. 189); Nov. 10, 1978 (92 Stat. 3672); March 31, 1980 (94 Stat. 140); Dec. 6, 1999 (113 Stat. 163