{"id":16541,"date":"2016-01-16T11:14:06","date_gmt":"2016-01-16T16:14:06","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16541"},"modified":"2016-01-16T11:14:06","modified_gmt":"2016-01-16T16:14:06","slug":"a-loophole-allows-banks-but-not-other-companies-to-create-money-out-of-thin-air","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16541","title":{"rendered":"A Loophole Allows Banks \u2013 But Not Other Companies \u2013 to Create Money Out of Thin Air"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/www.washingtonsblog.com\/2016\/01\/loophole-allows-banks-not-companies-create-money-thin-air.html\" target=\"_blank\">A Loophole Allows Banks \u2013 But Not Other Companies \u2013 to Create Money Out of Thin Air<\/a><\/h3>\n<div class=\"entry-meta\"><strong>One of the Main Causes of Our Economic Problems<\/strong><\/div>\n<div class=\"entry-content\">\n<p>The central banks of the United States, England, and German \u2013 as well as 2 Nobel-prize winning economists \u2013 have all shown that\u00a0<a href=\"http:\/\/www.washingtonsblog.com\/2014\/03\/bank-england-admits-loans-come-first-deposits-follow.html\">banks create money out of thin air<\/a>\u00a0\u2026 even if they have no deposits on hand.<\/p>\n<p>The failure of most governments and most mainstream economists to understand this fact \u2013 they instead believe the myth that people make deposits at their bank, and these deposits are then lent out to new borrowers \u2013 is the\u00a0<a href=\"http:\/\/www.washingtonsblog.com\/2014\/03\/bank-england-admits-loans-come-first-deposits-follow.html\">main<\/a>\u00a0<a href=\"http:\/\/www.washingtonsblog.com\/2012\/06\/the-biggest-myth-preventing-an-economic-recovery.html\">cause<\/a>\u00a0of our rampant inequality and economic problems.<\/p>\n<p>But how do banks actually make loans before they have sufficient deposits on hand?<\/p>\n<p>Economics professor Richard Werner \u2013 the creator of quantitative easing \u2013 noted in September that the field of economics has been\u00a0<a href=\"http:\/\/www.sciencedirect.com\/science\/article\/pii\/S1057521915001477\">lost in the woods for an entire century<\/a>\u00a0because it has failed to understand how banks actually create money.<\/p>\n<p>Professor\u00a0<a href=\"http:\/\/www.sciencedirect.com\/science\/article\/pii\/S1057521914001434\">wrote an academic paper<\/a>\u00a0in 2014 concluding:<\/p>\n<blockquote><p>What banks do is to simply reclassify their accounts payable items arising from the act of lending as \u2018customer deposits\u2019, and the general public, when receiving payment in the form of a transfer of bank deposits, believes that a form of money had been paid into the bank.<\/p>\n<p>***<\/p>\n<p>The \u2018lending\u2019 bank records a new \u2018customer deposit\u2019 and informs the \u2018borrower\u2019 that funds have been\u2018deposited\u2019 in the borrower\u2019s account.\u00a0 Since neither the borrower nor the bank actually made a deposit at the bank\u2014nor, in connection with this transaction, anyone else for that matter, it remains necessary to analyse the legal aspects of bank operations. In particular, the legality of the act of reclassifying bank liabilities (accounts payable) as fictitious customer deposits requires further, separate analysis.<\/p><\/blockquote>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>A Loophole Allows Banks \u2013 But Not Other Companies \u2013 to Create Money Out of Thin Air One of the Main Causes of Our Economic Problems The central banks of the United States, England, and German \u2013 as well as 2 Nobel-prize winning economists \u2013 have all shown that\u00a0banks create money out of thin air\u00a0\u2026 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[63,124,11754,536,3731,3953,5510],"class_list":["post-16541","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banks","tag-central-banks","tag-loophole","tag-money","tag-money-creation","tag-richard-werner","tag-washingtons-blog"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16541"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16541\/revisions"}],"predecessor-version":[{"id":16542,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16541\/revisions\/16542"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}