{"id":762,"date":"2014-10-28T07:21:49","date_gmt":"2014-10-28T11:21:49","guid":{"rendered":"http:\/\/olduvai.ca\/?p=762"},"modified":"2014-10-28T07:21:49","modified_gmt":"2014-10-28T11:21:49","slug":"why-do-banks-want-our-deposits-hint-its-not-to-make-loans-washingtons-blog","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=762","title":{"rendered":"Why Do Banks Want Our Deposits? Hint: It\u2019s Not to Make Loans Washington&#8217;s Blog"},"content":{"rendered":"<p><a href=\"http:\/\/www.washingtonsblog.com\/2014\/10\/banks-want-deposits-hint-make-loans.html\">Why Do Banks Want Our Deposits? Hint: It\u2019s Not to Make Loans Washington&#8217;s Blog<\/a>.<\/p>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.<\/p>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:<\/p>\n<blockquote style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; quotes: none; font-style: italic; background-position: initial initial; background-repeat: initial initial; padding: 0px 3em 0px 3em; margin: 0px; border: 0px initial initial;\">\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">When a bank makes a loan, it simply adds to the borrower\u2019s deposit account in the bank by the amount of the loan. The money is not taken from anyone else\u2019s deposits; it was not previously paid in to the bank by anyone. It\u2019s new money, created by the bank for the use of the borrower.<\/p>\n<\/blockquote>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">The Bank of England said it in the spring of 2014, writing in its\u00a0<a style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; color: #0066cc; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px; border: 0px initial initial;\" title=\"quarterly bulletin\" href=\"http:\/\/www.bankofengland.co.uk\/publications\/Documents\/quarterlybulletin\/2014\/qb14q1prereleasemoneycreation.pdf\" target=\"_blank\">quarterly bulletin<\/a>:<\/p>\n<blockquote style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; quotes: none; font-style: italic; background-position: initial initial; background-repeat: initial initial; padding: 0px 3em 0px 3em; margin: 0px; border: 0px initial initial;\">\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">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.<\/p>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower\u2019s bank account, thereby creating new money.<\/p>\n<\/blockquote>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">All of which leaves us to wonder: If banks do not lend their depositors\u2019 money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank?<\/p>\n<p style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: transparent; vertical-align: baseline; background-position: initial initial; background-repeat: initial initial; padding: 0px; margin: 0px 0px 24px 0px; border: 0px initial initial;\">&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Do Banks Want Our Deposits? Hint: It\u2019s Not to Make Loans Washington&#8217;s Blog. Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books. Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959: When a bank makes a loan, it simply adds to [&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":[53,55,63,480,488],"class_list":["post-762","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-deposits","tag-bank-lending","tag-banks","tag-lending","tag-loans"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/762","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=762"}],"version-history":[{"count":0,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/762\/revisions"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}