"When a bank makes a loan to one of its customers it simply credits the customer's account with a higher deposit balance. At that instant, new money is created." [200]
"Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower's bank account, thereby creating new money." [200]
"The banks should be limited in their lending power to the amount deposited by their clients, while the issue of newer credit should be the function of public authority." [201]
"One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them." [200]
"I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people."
[Reginald McKenna, as Chairman of the Midland Bank, addressing stockholders in 1924.]
"Physical cash accounts for less than 3 per cent of the total stock of circulating money in the economy. Commercial Bank Money - credit and coexistent deposits - makes up the remaining 97 per cent." [202]
"The reality of how money is created today differs from the description found in some economics textbooks:
Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits." [200]
"And the households and companies who receive the money created by new lending may take actions that affect the stock of money - they could quickly 'destroy' money by using it to repay their existing debt, for instance." [200]
"Is it difficult to believe that the Central Bank with the blunt instrument of interest rate control can control private corporation lending habits. As inflation continues to flourish, their control appears to be a carefully controlled myth. These two bulletins have possibly been produced because smart non conventional and self taught economists are pushing the point that it is the Private Banking Corporations rather than the Central Bank that create the money. They may be doing this to 'legitimise' this practice that some believe to be fraudulent and not in the national interest. Creating money in the form of cash notes is illegal and called counterfeiting, however creating money that is equivalent to cash and lending it to people is apparently legal." [200]
"Our supply of money. . .is the result of creating money as loans based on the total reserves in the banking system." [203]
"...when money is lent by a bank it passes into the hands of the person who borrows it without anybody having less. Whenever a bank lends money there is therefore, an increase in the total amount of money available." [204]
"There is nothing left now for us but to get ever deeper and deeper into debt to the banking system in order to provide the increasing amounts of money the nation requires for its expansion and growth. An honest money system is the only alternative." [205]
"If Congress has the right [it doesn't] to issue paper money [currency], it was given to them to be used by...[the government] and not to be delegated to individuals or corporations." [206]