Well because multiple people 'have' the same money.



A deposit and loan are the same thing just viewed from a different perspective. When you deposit money in your bank account you are loaning that money to the bank. When a bank makes a loan they are depositing that money with you.



It requires money just as the mark-up in a shop requires money. This again doesn't require new money, it is simply money circulating through the economy funding economic activity. So the shop owner borrows money to buy stock. He adds a mark up to the cost of the stock that covers his costs and his profit. Part of his costs are the cost of borrowing the money. When he sells the stock he pays the interest on the loan. The bank then has its profit which it puts back into the economy via another loan, the money markets, dividends etc.



And you'd have a massive decrease in economic activity as deposited money will just be sat there losing value. We are currently seeing the effects of banks having to maintain larger reserves and restricting lending. This has reduced the money supply.
The massive (and unprecedented) progress made over the last 20/30 has been funded by the financial industry. Moving money efficiently around the world to where it can be used most productively. This is pretty much the purpose of investment banks.

Yes.

They get to buy their services with their big, tax payer funded, bonus payouts. So they do indeed get the chicks for free because you are paying for them instead.

Forget the fractional reserve system, thats from yesteryear.

Banks now just create money from nothing, then go into the interbank lending markets and loan the money needed to cover their reserve ratios. That's how Northern Rock was sunk, nobody would lend them the money.

They were borrowing money on the markets. That's just the same as me borrowing a fiver from you.

In my opinion understanding how money is created and destroyed is the number one political question.

Why do we let private banks control the money supply? Why do governments continue to borrow debt based money from private banks when they could create the money themselves?

Banking 101 www.positivemoney.org.uk/how-ban ... ce-sheets/ This is my understanding of how the banking system works at present. If anybody can point out any inaccuracies in the article I'd be interested to hear them.

Banking 101 www.positivemoney.org.uk/how-ban ... ce-sheets/ This is my understanding of how the banking system works at present. If anybody can point out any inaccuracies in the article I'd be interested to hear them.