And that money will move across between the accounts at the Bank of England. When that money has moved across, then the banks will consider that that payment has been settled.
Chaotically, they have to ease quantitatively. They have to lend as a lender of last resort. Throughout history, monetary systems were designed to give the dominant international power an advantage, and this power is fiercely defended and expanded on. And they flee in terror from an incredible bogey man. An American flag is burned at the height of the demonstration.
The money is just circulating through this system over and over again and if you think about it, a one pound coin could be used to make a billion pounds of payments if it was circulated a billion times.
So, a bank creates our nation's money supply as well as making loans for profit. The government cannot allow the banking system to fail because, if it did, over 97% of all money would disappear.
If you know what to do, you can make a lot of money from this. You can make a lot of money from this. Bruno, Virginia hurt somebody real bad, you oughta help her. The way in which you can look across Europe now and see that the new Prime Minister of Greece, not elected, essentially imposed, Papademos, former employee of Goldman Sachs.
Firstly, the fact that they create this money when they make loans, so it guarantees that we have to borrow all our money for the economy from the banks.
As such, to have a healthy growing economy, the government needs to put in place strategies to allow for ever-increasing debt.
So the journalist says to him: Now Mr. Bernanke, where did you get $160 billion to bail out AIG?
Is that tax money that the Fed is spending?
It's not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank.
So to lend to a bank we simply use the computer to mark up the size of the account they have with the Fed.
So it's much more akin, although not exactly the same, to printing money than it is to borrowing.
Banks create new money whenever they extend credit, buy existing assets, or make payments on their own account, which mostly involves expanding their assets.