I was fortunate to be introduced to all of this at a seminar back in ’97 with Edward Griffin, the author of The Creature From Jekyll Island.  Great precise article on how money is created out of thin air.

“Last week my subcommittee held a hearing on fractional reserve banking and the moral hazard created by government (taxpayer) insured deposits.  Fractional reserve banking is the practice by which banks accept deposits but only keep a fraction of those deposits on hand at any time. In practice, nearly 100% of deposits are loaned out, yet depositors believe that they can withdraw the full amount of their deposit at any time. Loaned funds are then redeposited and reloaned up to the limit of the bank’s reserve requirements, compounding the effect…”

 

Click here for the full article:  http://bit.ly/Md0Ohh