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<p>[QUOTE=&quot;fatima, post: 1208997, member: 22143&quot;]The Federal Reserve system couldn&#039;t exist without this ability.&nbsp; Here is a very simple example of how this works.&nbsp;&nbsp; </p><ul> <li>You have $1000, take it down to your local Federal Reserve bank, Bank A, and deposit it.</li> <li>The bank sets aside $100 of this money for reserve requirements and then loans the other $900 to Sally.</li> <li>Sally takes the $900 over to Bank B and deposits it. </li> <li>Bank B sets aside $90 and and loans the other $810 to John</li> <li>John takes the $810 back to Bank A and deposits it.&nbsp; </li> <li>Bank A sets aside $81 and loans out $729 to Jane</li> </ul><p>And so forth and so on.&nbsp;&nbsp; So just from your $1000 deposit in this simple example, these two banks created $2,439, put it into circulation and are earning interest on this $2,439 which they created out of thin air.&nbsp;&nbsp; Now suppose you come back and take your $1000 out of this bank.&nbsp; What happens?&nbsp; They don&#039;t go and ask for that loaned money to be returned.&nbsp; Instead the bank will simply go to the Federal Reserve and ask for them to cover the $1000.&nbsp; They will automatically do this for any bank in good standing.&nbsp; &nbsp;&nbsp; Since they can print money at will, there is no issue.&nbsp; Bank A will have to pay the Federal Reserve interest.&nbsp; However that interest is current at the big sum of 0.25%.&nbsp; (in some cases it&#039;s 0%)</p><p><br /></p><p>Now take this example and multiply it by all the deposits out there.&nbsp; This is how the Banks create money and which they do every day.&nbsp;&nbsp; This is but one example.&nbsp; They have in fact taken it one step further and simply eliminated the requirement for you to even make the deposit.&nbsp; Why bother with that, when they can get the money for free from the Federal Reserve?</p><p><br /></p><p>In the days before the Federal Reserve, back when the US issued currency their hands were much more tied.[/QUOTE]</p><p><br /></p>

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