Banks are the creators of the money supply.
Banks create money out of thin air.
Banks are thought of as deposit taking institutions that lend money. The legal reality is that banks don’t take deposits and banks don’t lend money.
A deposit is not actually a deposit. It’s not a bailment. It’s not held in custody. At law the word “deposit” is meaningless.
The law courts and various judgments have made it very clear that if you “give” your money to a bank, even though it’s called a “deposit”, this money is simply a loan to the bank.
So there is no such thing as a deposit. It is a loan to the bank. So banks borrow their money from the public.
“Surely they are lending money?” you say.
Not at all. Banks don’t “lend” money.
Banks — again at law it’s very clear — they are in the business…
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