Posted 9 years ago on Oct. 24, 2011, 12:55 p.m. EST by FreeRadical
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A Process Recount of Fractional Reserve Lending - the Biggest Economic Scam
Since most do not need all their deposits at one time, banks lend out the deposits to generate profit for themselves.
The current reserve ratio for US banks is approximately 10%, although it has been much lower and more lucrative, and here is how it works.
Given a 10% reserve requirement and a $100 deposit, a bank can loan $90 to a borrower to cover a payment debt.
Conceivably, the receiver of the payment could deposit the $90 back into a bank, after which $81 could be loaned to a borrower to cover some other debt.
The deposit and lending process could continue until the $100 is exhausted and only $100 remains in the banks.
Although no new money was physically created in addition to the initial $100 deposit, new commercial bank money is created through loans.
When the reserve rate is 10%, as in the example above, the maximum amount of total deposits that can be created is $1000 and the maximum increase in the money supply is $900.
For simplicity, assuming the maximum benefit for a $100 deposit, banks have the potential to earn - nearly guaranteed - usury interest on $900 ! !
Is there any wonder how banks make $35 billion a quarter?
Had the original $100 been tagged and the $90 loaned been tied to the tag so that it could not be loaned repeatedly thereby creating imaginary money, then fractional lending may represent a legitimate establishment.
But as it stands, usury interest from fractional lending is acquired through the creation of imaginary commercial money, which is literally taking something from others (interest) based upon something that is not the bank's money in the first place (imaginary commercial money) and that is theft - it is a crime.
Usury interest on $900 is for a 10% reserve, however in the recent past the reserve rate has been as low as 5% and close to 2% so imagine usury interest on nearly $2000 or $4000 or $5000 from a $100 deposit - money from nothing is a basis of counterfeit (fraud - theft).
An Establishment of Opportunistic Crime Legitimized by Law and Perks of Marauders
Five Groups Who Should be Mad at Wall Street by BRETT ARENDS "5. Anyone investing in banks You have to laugh when people slam "greedy" Bank of America. Have you seen the stock price lately? For stockholders, this is a nonprofit. The only ones making money are the management and staff. It's the same at all the other banks. In the past five years, public filings show, the employees of Goldman Sachs have pocketed $80 billion in pay and benefits, including bonuses and other goodies. Over the same period, stockholders have lost $25 billion."
DOES ANYONE ELSE SEE A CLEAR ISSUE TO ADDRESS?!!