Try and guess where I just read this...
"...loans and investments are not made as a result primarily of savings or deposits held by banks, or on the basis of those savings or deposits. On the contrary: it is loans that create deposits.
Loans are not a necessarily a gift from a saver setting aside a portion of their income in a savings account or lent on the international capital markets. Banks do not have to have savings or "reserves" to extend credit to others, and charge interest. Why? Because of another fundamental: that money for a bank loan does not exist until we, the customers, apply for credit. All that the bank needs to hold is the collateral (e.g. a guarantee against a property) to secure a loan.
In other words, far from the bank starting with a deposit or reserves, and then lending out money, the bank starts with our application for a loan (eg £300,000); the asset against which we guarantee or secure repayment, such as our property, and the promise to repay with interest. A clerk then enters the number into a ledger. Hey presto, £300,000 is deposited into the banking system!"
Nope, not on some Multicoloured Multifonted ReactoLoon Survivalist web site but in the fecking Guardian of all places
Jeremy Clarkson predicting the apocalyptic end of capitalism last week and a mainstream British newspaper trying to explain the debt-based money system this week. At this rate the Conspiraloon Alliance, like Woolworths, is going to be out of business before Christmas
Strange, strange times...