Download Banking and Money Creation

Banking and Money Creation
Lesson 30
Section 25
The Monetary Role of Banks
• Financial Intermediary
• Bank Reserves
– Reserve Ratio
– Required Reserve Ratio
• Bank Runs
Bank Regulation
• Deposit Insurance
• Capital Requirements
– Excess of capital over
the required reserve
• Reserve
Requirements
• Discount Window
– Going to the Fed to
borrow
How Banks Create Money
• Money Supply
• Money Multiplier
• Loans
• Rothschild brothers of London,
writing to associates in New York in
1863: “The few who understand
the system will either be so
interested in its profits or be so
dependent upon its favours that
there will be no opposition from
that class, while the great body of
people, mentally incapable of
comprehending the tremendous
advantage that capital derives from
the system, will bear its burdens
without complaint, and perhaps
without even suspecting that the
system is inimical to their
interests.”
•
L. Tolstoy
– Money is a new form of slavery, and distinguishable from the old simply
by the fact that it is impersonal—that there is no human relation between
master and slave.
•
James Madison also understood it:
– History records that the money changers have used every form of abuse,
intrigue, deceit, and violent means possible to maintain their control over
governments by controlling money and its issuance.
•
London bankers themselves through their agent in the Hazard
circular in July of 1862:
– Slavery is likely to be abolished by the war power and all chattel slavery
abolished. This I and my European friends are in favor of, for slavery is but
the owning of labor and carries with it the care of the laborers, while the
European plan, led on by England, is that capital shall control labor by
controlling wages. The great debt that the capitalists will see to it is
made out of the war, must be used as a means to control the volume of
money. To accomplish this the bonds must be used as a banking basis. We
are now waiting for the Secretary of the Treasury to make this
recommendation to Congress. It will not do to allow the greenback, as it
is called, to circulate as money any length of time, as we can not control
that. But we can control the bonds and through them the bank issues