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More Evidence that Banks Create Credit Out of Thin Air

Posted By admin On March 17, 2010 @ 5:19 am In Money Watch | Comments Disabled

Washington’s Blog [1]
March 17, 2010

provided [2] evidence that banks create credit out of thin air.

I’ve just found two more pieces of evidence:

(1)William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, said [3] in a speech last July:

Based on how monetary policy has been conducted for several decades, banks have always had the ability to expand credit whenever they like. They don’t need a pile of “dry tinder” in the form of excess reserves to do so. That is because the Federal Reserve has committed itself to supply sufficient reserves to keep the fed funds rate at its target. If banks want to expand credit and that drives up the demand for reserves, the Fed automatically meets that demand in its conduct of monetary policy. In terms of the ability to expand credit rapidly, it makes no difference

(2) On February 10th, Ben Bernanke proposed [4] the elimination of all reserve requirements:

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

Of course, Bernanke’s proposal is the exact opposite of the 100% reserve system proposed by [5]Nobel prize winning economist Milton Friedman and Laurence Kotlikoff, former Senior Economist for the President’s Council of Economic Advisers.

More Evidence that Banks Create Credit Out of Thin Air 040310banner3 [6]


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URLs in this post:

[1] Washington’s Blog: http://www.washingtonsblog.com/2010/03/more-evidence-that-banks-create-credit.html

[2] provided: http://www.washingtonsblog.com/2010/03/7-questions-about-public-banking.html

[3] said: http://www.newyorkfed.org/newsevents/speeches/2009/dud090729.html

[4] proposed: http://www.federalreserve.gov/newsevents/testimony/bernanke20100210a.htm#fn9

[5] proposed by : http://en.wikipedia.org/wiki/Full-reserve_banking#Debate_over_full_reserve

[6] Image: http://purewaterfreedom.com/

[7] Take the Power to Create Credit Away from the Giant Banks and Give It Back to the People: http://www.prisonplanet.com/take-the-power-to-create-credit-away-from-the-giant-banks-and-give-it-back-to-the-people.html

[8] The Giant Banks Are ALREADY State-Sponsored … So Why Not Create Public Banks to at Least Share the Gains, Help Out Main Street, and Grow Our Local Economies?: http://www.prisonplanet.com/the-giant-banks-are-already-state-sponsored-so-why-not-create-public-banks-to-at-least-share-the-gains-help-out-main-street-and-grow-our-local-economies.html

[9] Bank President Admitted that All Credit Is Created Out of Thin Air With the Flick of a Pen Upon the Bank’s Books: http://www.prisonplanet.com/bank-president-admitted-that-all-credit-is-created-out-of-thin-air-with-the-flick-of-a-pen-upon-the-banks-books.html

[10] More Banks — 11 in Brazil — Face Credit Downgrades: http://www.prisonplanet.com/more-banks-%e2%80%94-11-in-brazil-%e2%80%94-face-credit-downgrades.html

[11] The Fed Doesn’t Want Banks to Increase Lending: http://www.prisonplanet.com/the-fed-doesnt-want-banks-to-increase-lending.html

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