Issuing loans is their business. They can’t just print to cover their payroll, like the central bank, or to create a welfare system, like a congressman.
Discussion
Issuing loans from nothing is still money printing, still inflated the supply, and allows them to make interest loaning out capital that they never owned.
If I give you a loan to buy a car, but I never owned the car (or its value), then you paying me rent for it through the loan is essentially fraud.
Yes this is how the banking system just works, but I’m saying it’s normal operation is a horrible system. 😁
Agree it’s horrible.
There’s 10 people on an island (that’s the whole economy), 1 central banker who makes the shells (currency) and 3 private bankers.
There’s 50 shells in existence but they have fractional reserve with 0% reserve requirements, and the central shell creator is the creator of last resort.
Each banker loans out 50 shells for housing. Now there’s 200 shells in the economy but only 50 actual shells. If the three customers are hard workers and high earners it’s not *possible* for them to earn enough to pay back their loans, cuz there’s not enough physical shells.
It’s easy to think that in the real world the problem is solved because it’s just numbers on a screen, but the only one that can add zeros in the end is the fed. If the bank could do it, then there’d never be an insolvent bank.