How Banks Create Money Out Of Thin Air

[decayingclown]

In what year did this bank problem start with the whole making of money out of thin air?

[indiana0jones7]

@decayingclown when the FED was created in 1913.

[decayingclown]

Is this why bank of america is at a little over $5 a share???

[onlybridget123]

...good1, kalinda

[LPmotionpictures]

Also, those "created money" are just paper assets, not REAL assets, until they cash it in, which sometimes other people don't pay and banks just lost lots of money.

[LPmotionpictures]

There's a huge misunderstanding... The banks seem to create $90,000 out of thin air but remember they still "owe" $100,000 to the one who deposited the money in the first place, it just can't be withdraw yet.

When the $90,000 goes to the borrower he uses it up, so the bank really risked $90,000 and they are $90,000 less in money, but they hope to make money off of interest.

[misterhed]

@LPmotionpictures

Nope, they actually just type 90,000 dollars of new money into existence and give the check to the borrower on the promise that it'll be payed back. Meanwhile the 90,000 dollars that was deposited before still stays in the bank, it doesn't go to the borrower.

[TheCashflowpartner]

Simple...Excellent



[365Y]

Corection to my alinia makes it more understanding in mind : but only the loan and interest of this loan - they have got back - is a new subject to create new loans ... so not a 90.000 to 81.000 to 72.900 ...

[365Y]

Wooowww ..but this is not a way banks make more money in real, but create asset from the rate of selling loans . The Part of this sold loan that your bank havend got back can not make into a new loan to others , but only the loan and interest of this loan is a object to make new loans . So ... this video does not give the real handling of your (100.000 ) desposit that banks do with your money in my opinion.

Much less shall generated than as you think it seems .

[lajeclow111]

Kalinda ur gold !! love u

[infectedsubincision]

ok is this stuff for real? does it happen in canada too?

[20127918547]

@infectedsubincision oh my lord, just think about what you just asked..

WHAT DO YOU THINK?

[NewWorldOrderElite]

In Soviet Russia you rob bank, in Capitalist America bank robs you!

[BirgirZ]

@NewWorldOrderElite there is no capitalism in america, for there is a monopoly on money and security and what not

[Screwbiedooo]

Things we are not taught in school - law and banking. This I believe is deliberate so the duplicity of the whole charade can continue on the back of our own general ignorance.

[Screwbiedooo]

The bankers should have been strung up decades ago - and we would not have the problems we have now i.e. a totalitarian agenda, middle/lower class impoverishment and global insecurity.

[i2shaheen2i]

why cant they just creat money out of nothing, instead of the way the do it know? i mean why do they HAVE to do it the way they do it now?

[InStIllRecords]

here i am printing money in my mind, i will lend this invisible dollar to you,in return i want real money/gold and land and laws and what the hell i except oil too.....peace from the Banksters....

[dharmaatdawn]

@InStIllRecords

Very cleaver indeed

[gardnerdavidf]

She in incorrect!!

Banks are not limited to loan only a portion of which  they have on deposit.

Banks actually create new "credit" money or "checkbook" money out if thin air to fund their loans.

Very few people seem to grasp this concept. It appears as though not even a PHD fully understands it.

Boy have the banks got us fooled!

[hardybrunchman]

Meanwhile the bank get a bailout with US taxpayer dollars and contiune to earn profits. So do those in bed with them, hense all the complication. I won't say they are the only ones but there is alot of dirty biz going on. All of this was not designed in a day but all interested partys are sitting pretty arn't they with very little chance of things being corrected as time goes on. Look @ all this there are so many frickin details we could go on and on about them and never hit the real issue.

[hardybrunchman]

Meanwhile the bank get a bailout with US taxpayer dollars and contiune to earn profits. So do those in bed with them, hense all the complication. I won't say they are the only ones but there is alot of dirty biz going on. All of this was not designed in a day but all interested partys are sitting pretty arn't they with very little chance of things being corrected as time goes on. Look @ all this there are so many frickin details we could go on and on about then and never hit the real issue.

[chotaboy66]

Fractional multiplication on deposits is not money creation its only a fictional expansion of money that multiples DOWN to zero eventually ,UNLESS new money is created , NOW Who really creates the new money folks or cant you think for yourselves.

Seriously after reading the comments here,Im over this type of blatant misinformation,no wonder the worlds economies are going to hell in a hand basket every one is deluded banks create money when they clearly don't. Your all missinforming each other .

[chotaboy66]

Banks don't create money they change ,expand and re issue money ,Kalinda Stevenson is misinforming you on who actually creates money,

I ask any of any of you indoctrinated individuals reading this ,if every nation is in debt,then who could possibly be the true creditor?

Ps: To save you time,If anyone proceeds to claim its offshore banks, Rothschild's ,Rockefeller's, or a bank in general you would be totally incorrect and indeed indoctrinated & duped by more LIES you believe to be true.

[voytecu]

Who gives them right to do that?!?!? What kind of law is allowing them to do so? It is is so akward it can not be truth! (isnt it?)

[philhaj2]

so if I loan 100K to the bank, they have a 100K reserve that allows them to loan out 900K. Let's say for example I withdraw my 100K + interest at the same time that the principal + interest has been reimbursed on that 900K loan.

Basically the bank's profit is 900K plus the interest on 900K, minus the interest on 100K, and they haven't invested a dime out of their pocket.

[philhaj2]

technically speaking, the bank could keep your full 100,000$ on reserve and make a 900,000$ loan outright from the beginning, right? I just wanna see if I understood this correctly.

[TheSecretDiary]

Thanks.

[MrDucqui]

good!can you give me a few lesson about english for banking.my mail

[pcgamesolution]

if you can't convince them,confuse them! PAUSE AT 2:35 if i deposit 90.ooo in a bank,the banks loans the 90% of it to a guy. the guy then pays back the bank the 90.000 PLUS INTEREST... now,here's the HUGE MISTAKE OF THE VIDEO: that 90.000 money the guy payed back to the bank DOESN'T GO to the bank,it goes BACK to my deposit,from where the bank taked that money to loan them to the guy. the bank only remainas with the INTEREST. in THIS process,the only thing created out of thin air is the INTEREST

[lesperio]

@pcgamesolution if ALL money is created at the banks..where do you get the money to pay the interest? Where is it coming from?

[ContaMuir17a]

I had to watch this and other videos several times before I understood what is really going on. This is appalling! This is not what I was taught about money. No body is teaching people what is really going on! I thought we were on a gold standard. This is not true. With this system the Federal Reserve Bank will keep us in debt forever or until all markets crash! Please visit my Repeal Federal Reserve Act play list 2 understand what I'm talking about. This is confusing, it takes a while 2 get it!

[gagandeep89]

@ContaMuir17a the gold standard was destroyed by the Rich bankers (rothschild etc) during the 1920s when there was a law passed by which all the people in the US had to give up on the gold they had and give it to the government....Fed Reserve was created by the same rich bankers and the fed today employs this system which has been explained in the video and is called the fractional reserve system....

[ContaMuir17a]

Ok, does this mean the banks print an additional $143,000 even though they only received $100,000? The omission of how this works makes your video unintelligible. It doesn't make sense the way you describe it. Obviously you know more about this than I but you're not explaining it very well.

[318551]

You are right, Every cent the US people are paying in income tax goes to London, that is the square mile of the city of London which is not a sovereignty of the UK. I believe Washington and Rome is involved in the same way. So all the income Tax you have paid, is about has much use as tits on a bull for the good of the US people.

Unfortunately those of you that are still asleep are aiding and abetting this treason and one day you Wake Up and hopefully it wont be too late!!

[nitrozero3]

@318551 why does the money go to london?

[Strawman1957]

@nitrozero3 Thats the City of London, Owned by the worlds Banksters. Watch Youtube The Money Masters

[artsychic2000]

it's your signature that creates the money. Without your signature backed by your labor they have nothing.

[publicanimal]

This is all true, money is debt plain and simple.

[mintoo2cool]

federal reserve "loans" money to treasury in exchange to the treasury bonds. the treasury bonds have to have some value. i think essentially the treasury bonds are assets of the US public. like schools public playgrounds etc. so when treasury gives the bonds to fed, its actually putting US public property as collateral againsts the fed loan. now US taxpayers not only have to pay the interests on the loan, which is impossible or loose its public properties to the owners of the bond.

[ShwangShwing]

Banks create money out of thin air? I thought they created money out of THICK air. LOL

[thethreestoners]

dumb bitch!!!!!!!!

[gogolando]

Ok, but paper money isn't really money and what those claim checks represtent is limmited. That is what you Keynsians dont undersand. And there is nothing magical about a printing press and a gun.

[KaptBlasto]

Look the point about "money" is, it has to circulate. It cannot necessarily sit as a pile somewhere.

[chickaboom73]

we cant stop them--anyone who does well *slits throat*

its the biggest scam in our lifetime, pure GREED, pure SIN.....

[ElDukerino1]

I think she's a little off here..the banks w/ the 10% reserve ratios don't make the money out of thin air because (contrary to her mistaken premise) they can only create new loans when more money is deposited back into their bank (not based on assets/outstanding loans).

It's the banks that are allowed to loan say 9:1 (i.e. 9x their investment) like the Federal Reserve bank where I believe the money is made out of thin air.

[catdog2two]

author is correct; apply first differential equation to solve this scenario and whether you go infinitesimally small or infinitely large you get the results she is claiming; In addition, the federal reserve explains this on their website too.

[Intrepid909]

Almost true.

Banks can't lend against "assets" like loans; they can only lend against deposits - i.e., liabilitities.  So he first loan is OK - it is 90% of your deposit. But the bank must wait for that $90,000 to be redeposited, THEN it can lend $81,000 etc. The bank (or the banking system) thus does create exactly the amount of money she claims - but only as the money lent out is redeposited.

Too bad. She is on to something big, but misunderstands how it works. With a PhD.yet.

[abdi3810]

love to shag her until to she gives birth to $1billion bill.

:D

[ibanez860]

hahaha once you realize that the banks are owned by the european financial powerhouses you see that all the economic downturs create BIG PROFIT MARGINS FOR THE ROCKEFELLERS AND ALL THE JP MORGANS>.>.... hahahahah americas stock market is controlled and manipulated by the european industrial/financial powerhouses...

[abdi3810]

And they, the people, are told on the CNN and BBC news that ''THERE ARE NO ALTERNATIVE". PEOPLE ARE PAYING UNNECCESATY INTEREST ON LOAN WHICH THE GOVERNMENTS TAKES OUT.

[magusofthemoon]

@ibanez860: i took you seriously upto the point where you used "hahahahah"

[ibanez860]

@magusofthemoon that is fine... its sad to realize but now all i can do is laugh.. jp morgan and rockefellers pump all our money into europe and london.. youll see the truth someday.. i laugh because i work at a financial institution and see this all day everyday all week on a small scale.. i dont care if you take me seriously or not.. "they" wouldnt want anyone to believce anywords i say... see ya have fun getting decieved and eating the lies ur fed everyday

[magusofthemoon]

@ibanez860

if the lies pay my bills and feed my family, i have no problems.

[ibanez860]

@magusofthemoon HahHa that is a fucking joke... if you realized how much profits were generated off the federal reserve that dont go back into our economy that are divided privately you would realize that life you live thats so great is quite pathetic.. you could do the things you really want to do... not sit on a computer.. money holds us all down.. we get taxed everywhere. esp from the fed with the discount rate on loans .. credit is already hard enough to establish

[magusofthemoon]

@ibanez860: my life is only pathetic if I believe it's pathetic, and I believe my life is great. Nothing the feds can do could change my mind.

[SuperNorthAmerica]

@magusofthemoon shut up you dumbassed moron keep living in your fantasy candy world candyass motherfucker.

[magusofthemoon]

@SuperNorthAmerica: I'm sorry if the feds have been making your life crap, but they've been treating me good. If you have a problem with it, go join the tea party.

"Super"NorthAmerica--->>>*fail­*

[mlh8723]

That's a very sly way of using my money, I don't like the banks one bit.

[Mexicanohonesto]

How much money does the FED create for weapons, drugs, and CEO corruption between banks to make transactions, how much? The way I see it, U.S citizens do not own the FED, like their constitution says 'Congress shall have the power to issue money and value the money (coin)'

If a mexican know this, chances are Mexican Central Bank is like the FED, except no dollars are created in the Mexican central Bank.

Ego oculis omnibus, Jugis Tawny et Mexico novum ordo imperium.

[ibanez860]

the FED is owned by private investors . not the government or congress.. the fed is owned by the rockfellers .

[abdi3810]

thanks god someone actually knows who owns the FED...

Bernanke's second reappointment means disaster to the American Working People.. Because this guy, chairman of FED-Bernanke-, actually misunderstood the conclusion of the Great Depression..

surely you cannot expect him to help jobs, do you?

[paulallen2006]

this argument is flawed. simply accounting would tell you this. if a bank receives a deposit (liability) and loans the money out and receives a promissory note(PN) in return (Asset) the only way it can receive additional funds is by holding the note and receiving the % pmt or selling the PN at a discount. Banks CANNOT use PN as collateral to ISSUE more money it is ILLEGAL. if that was the case banks would write out loans to their relatives, friends, even their pets and dead relatives.

[ParapaDrifter]

Interesting. Although I slightly understand what you are saying, is there a site where they debunk this video further? A 500 character comment is tough to explain your case fully. I don't want this to be true, but I will form my opinion by examining both sides of the issue.

My issue is that banks only seem to be middlemen. They are trying to create an industry based off of mathematics, not production. That to me is highly dubious.

In any event, I'd like for you to post a link for me.

[ibanez860]

i work at a financial institution in ohio . the bank makes money as she said.. off the initial loan..

you give them 100k.. they loan 91k..

they didnt create that 91k really bc when the person they make the loan to cashes that check.. 91k is coming out of an acct of the banks. a loan is a liability and an asset. they call it an asset as a play on words. banks cannot loan on assets however.

[ibanez860]

a telephone company had to pay for long distance phone lines and would rerent them to customers at higher prices.. they made the telephone lines seem like an asset because they were used to provide a service to there customers.

yet in actuality they stretcched the definition of an asset. in reality they were paying for the use of this asset. and in court (reality) they were charged for misrepresenting this "asset" on there general ledger.

[Rainy809]

Before 1933 money used to be backed by gold or silver coins. Now money is backed by nothing. It states in the Constitution Article I section 10: "no debts are to be repaid unless backed by gold or silver coins. That means credit, loans, etc. is illegal tender and is unconstitutional. American money has no value its just numbers on papers. Credit is created from thin air. Or maybe its backed by our labor. Then that should be called slavery shouldn't it.

[oggiedoggy]

Please never remove this; I am citing this page as a source for a paper.

[2cobber]

The reserve requirement applies to deposits, not assets. When the bank loans out 90K, that's not a deposit. Also, isn't a deposit carried on the books as a debit? Wouldn't the 90K debit and asset cancel each other out?

Just curious.

[portoqwerty]

THIS IS WHY WE ARE IN A RECESSION. banks create money not WEALTH. work and the production of goods create wealth. this is why we see inflation. this is why we still make the same amount of money but the price of everything goes up. bankers make millions of dollars by crunching numbers yet put nothing into the economy THIS IS THE PROBLEM WITH THE ECONOMY RIGHT HERE. THE LONGER THIS GOES ON THE WORSE THE AMERICAN DOLLAR WILL BE AND THE MORE AVERAGE AMERICANS WILL SUFFER WHILE THE RICH GET RICHER.

[ILoveGoodFellas]

I dont understand - If 100 People Collectively have $100K deposited in the bank, and the bank is loaning out $97K to other people for cars/mortgages, etc. - Then what about when, say, 23 people come to make a $23K withdrawal - And the bank loaned that money out already.

[wignut24]

well thats what happened during the depression of 1929. everybody went to withdraw their money and the banks didn't have any money to give them.

[ParapaDrifter]

actually, I think they are saying if 100k in bank. Bank can loan 900k

[virginiahammon]

There would be a "run on the bank," and the depositors would be protected up to $250,000 of their deposit through the FDIC (a government agency that collects premiums from banks to cover this insurance, but that is ultimately backed by taxpayers).

[nobster3]

To think that people in "positions" should look after the children of our nations. On this planet - it is obviously not the place. I think it is more like exploit anyone you can. Nice ! Don't beleive your preacher, teacher, banker or government minister

[luke2468013579]

This sound as if the banks are some greedy conspiracy.....what you need to think about is the people on the other ends of these loans...the entrepreneurs who use those loans to start businesses and give us jobs..the people who use them to buy a house and start a family...those loans r used to boost output increase prosperity and better all of our lives...geez why does everyone always hate on banks

[kdcruz75]

just see what the temle theies are doing with the money they created out of thinair...thye've destroyed jobs and businesses ...why is the majority in th e western world in debt ..when they have th ebiggest gdp ...where is te wealth going

banks don't create economies and businesses ..it is the sweat o f ordnary people includign businessmen..

study colobnial scrip and its role in the american war of independence

bansters should be lynched with the politicians who allowed them to usurp money

[portoqwerty]

Im with this guy. this right here is the reason the us banking industry owes china trillians of dollars notice she forgot to mention the banks then outsource the debt. this is finance not economics this is exactly what has fucked our economy not people with mortgages.

[ThompsonSalesCompany]

Yes, there is no limit to that amount of money that can be created. However, there is a limit to what the money is worth. For each new sum that is introduced into the money supply, it takes part of the value of the current money. The reason why a loaf of bread cost 10 cents 40 years ago and it costs nearly 3.50 now. The more money that is added, the less that all of it is worth.

[luke2468013579]

So do you mean that money is worth 1 and all the value of the goods in the worlds are worth 1...so that no matter how much of either there are they are always equal?...hence 1:1 ....coz if u do then i agree

[portoqwerty]

no he means inflation. she said in the video they create money not currency therefore they dont create wealth they put nothing into the economy except inflation. this is the reason we are in a recession.

[polygamous1]

see why america with its huge industrial complex is broke! its been robbed broke the Fed Res has NO reserves is Not fed is NOT under us gov control! a private bank that prints controls money n money supply in the economy can create booms low interest for u to borrow once they have enough people mortgaged to their eyebrows they recall the dept interest goes high resession follows n repossesions of u r properties by the Fed n other banks follows slowely theynow OWN america n control its government

[polygamous1]

2 so now ALL banks are allowed to loan 10 times the am0unt the have therefore when u pay 5% on the money u borrowed from th bank iosin fact 50% cause they can n do loan out 10 times the ammount they have but this is NOTHING in comparison to what they have accually did to the usa us gov. paid £20M. to start the Fed Res they then had 200M they then loanded that to themselfs n "bought" 90% of the Fed Res out of nothing the biggest deception/robberyin world history commited against the americans

[polygamous1]

i seen THE MONEY MASTERS the best explenation:

when goldsmiths in london used to safekeep people's gold giving them paper receipts for their gold most people never went back to get their gold they used the receipts instred the creation of peper money the goldsmiths found that over 92% of gold deposidors never went back for their gold hence the goldsmiths realised they had otther people's gold for safe keeping so they started loaning peper money on the gold that was NEVER theirsa factor of 10

[nate6474]

It is real the dollar is goign to be gone and all the bills will go becaues peaple will not go to work that trys to ask for the bills to be payed becaus ethey are not getting payed and all the thangs that you have that are not payed for you keep because it is 9 tenths of the law that you have it. so buy all the thangs on credit and you can keep it because there will be no more money to pay it off

[MelodicNightmare]

This explanation is terrible. The website is there just get ad money. I'm doing a breakdown of the Federal Reserve Publication "Modern Money Mechanics" which will explain the process much better.

[JLaw4RonPaul]

It is true that money is created out of thin air but this is a terrible video explanation and I hate the way the lady says "dorrors".

[04gtstang]

This lady doesnt know whats she is talking about....she sounds like she encourages this process. When infact the process is fatally flawed. She needs to watch the video "corrupt Banking system".

[jasy221]

Yes, money is not destroyed, the central Bank

just temporarily takes it out of circulation for a while, by holding it, but when the time is right, this money ends up back in circulation, and that is how Money supply and economic growth increase year on year, if china and japan cash in their treasury bonds they are holding for dollars and spend these trillions in the economy, the money supply will increase drastically, causing high inflation,only the fed keeping it out of circulation stops this.

[ScarecrowC]

LOL as an econ student I understand what u r saying but this example is about accouting and is flawed as she got the math wrong:

What she is saying if I start a bank account and have a $100 in it and I lend $90 of it to my friend, I still have $100 in my account.

Watch the vid again and look for the transaction showing the bank decreasing cash by 90k when it lends 90k, its not their and thats why she's *lol's* "Magically Created $90,000".

Make it as easy as it is not as hard as it can be!

[Antdemo]

if you deposit 100k you get 5% intrest

your 100k then gets loaned out from the bank, the bank takes 10% and has just made 10k then take 5% off 10k=5k, that 5k goes to your intrest, the bank now has 5k free

[jasy221]

Swang swing, what do you think the bank will do with the 10 million finite deposit, vsit their and llok at it, no it will multiply it another 10 times to 100 million and so on until it has created so much money, the central bank announces 6% inflation has occured and a recession is looming over the horizon, then during recession m3 will probably go down to 50 million and then the bank will multiply that ten times to 500 million until the next downturn what dont you understand about infinity.

[jasy221]

You apparently dont understand even the most basic economics, if money is destroyed why is there more and more money in the economy each year which leads to rising prices, i cant believe people have such a poor education about how this system works!

[jesuscheung]

I think money is creating faster than it is being destroy. So money supply increases and increases

[1GXG]

It is "oversimplified"...but O boy does it make you smile , its an eye opener for some , and an ambition of others !

[ShwangShwing]

Money is unlimmited only when the required reserve is 0%. With 10% reserve the money can get to 10 times the initial deposit, not more. Also when the the loan is paid, money is destroyed.

[jasy221]

I think you dont understand my friend, money is never destroyed, after the 10 times initial deposit is gained, that itself is loaned out ten times as well, that is why the money supply grows forever, money is unlimited, you cant have a reserve ratio of 0

you have to keep a little bit of money on hand for the depositers to spend, when the loans are paid money is created not destroyed.

"I sincerely believe, that if the people understood money and credit.... revolution by tommorow - Henry ford

[ShwangShwing]

Well, the money can't grow forever, that's for sure. There's a thing called money multiplier m. m=1/R where R is the reserve ratio. For example if the required reserve ratio is 10%, m = 1/10% = 1/(10/100) = 10. So if a bank has $1,000,000 in deposits the money grow to $10,000,000 from this bank, so the bank can only create $9,000,000, not infinity. It's basic mathematics. There's nothing complicated in that to understand.

[starsquid]

Everything beyond the first loan of $90 thousand, is utter nonsense. Go take a basic economics course and you'll see.

Money *is* a limited thing. However, money is not wealth, and wealth can be unlimited, all you have to do is realize that life is not a balance sheet. Aim for happiness, not dollars and you'll be 'richer' than most.

[westwaytv]

@starsquid The only 'utter nonsense' is what you've written. Go to the Fed's website, they outline money creation in exactly the same terms as the poster.

A little research goes a long way.