Chapter 11 - Quotes about Private Banking Corporations Creating Money

Sir Mervyn King, Governor of the Bank of England 2012

"When banks extend loans to their customers, they create money by crediting their customers' accounts."

Irving Fisher 1935

"Only commercial banks and trust companies can lend money that they manufacture by lending it." [117]

Federal Reserve Bank Of Chicago

"The actual process of money creation takes place in commercial banks." [118]

Federal Reserve Bank Of Chicago

"Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU." [118]

The Chicago Plan Revisited, IMF Working Paper. 2012

"under the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries..." [112]

Chicago Federal Reserve 1961

"Banks do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts." [114]

John Kenneth Galbraith

"The process by which banks create money is so simple that the mind is repelled."

The New Economics Foundation 2014

"New money is principally created by commercial banks when they extend or create credit, either through making loans, including overdrafts, or buying existing assets." [115]

Bank of England 2014

"There are three main types of money: currency, bank deposits and central bank reserves. Each represents an IOU from one sector of the economy to another. Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves." [116]

Bank of England 2014

"Because fiat money is accepted by everyone in the economy as the medium of exchange, although the Bank of England is in debt to the holder of its money, that debt can only be repaid in more fiat money. The Bank of England promises to honour its debt by exchanging banknotes, including those no longer in use, for others of the same value forever. For example, even after its withdrawal on 30 April 2014, the £50 note featuring Sir John Houblon will still be swapped by the Bank for the newer £50 note, which features Matthew Boulton and James Watt." [116]

Federal Reserve Bank Of Chicago

"The 12 regional reserve banks aren't government institutions, but corporations nominally 'owned' by member commercial banks." [118]

Andy Chalkley  Checkbook Money is also called Commercial Bank Money. In this book, I have called it bank-credit. This is the Credit in bank accounts. It is entirely virtual as it only exists in computer registers. In most countries there is twenty or more times as much 'bank-credit' as there is government created cash currency, Legal Tender. Simple logic dictates that because there is twenty plus times as much Checkbook Money as there is cash, the Checkbook Money did not come from the Central Bank. Worldwide, the banks have created about 11.5 times more Bank-Credit than there is Cash Currency. Worldwide there is about 2.5 times more debt than money. [110] [111]

President Andrew Jackson 1837

"In the hands of this formidable power, thus organized, was also placed unlimited dominion over the amount of circulating medium, giving it the power to regulate the value of property and the fruits of labor in every quarter of the Union, and to bestow prosperity or bring ruin upon any city or section of the country as might best comport with its own interest or policy....Yet, if you had not conquered, the government would have passed from the hands of the many to the hands of the few, and this organized money power from its secret conclave would have dictated the choice of your highest officers and compelled you to make peace or war, as best suited their wishes. The forms of your government might for a time have remained, but its living spirit would have departed from it." [119]


[110] Simon Thorpe at http://simonthorpesideas.blogspot.com.au/2015/02/global-debt-is-now-25-times-total-money.html Simon Thorpe debt is ~2.5 times Money Supply

[111] UK Positive Money 3% of money is currency.

[112] sections I and II of J. Benes and M. Kumhof, The Chicago Plan Revisited, IMF Working Paper No.12/202, August 2012

[113] A Bank of England report of March 2014 - Money Creation in the Modern Economy.

[114] Chicago Federal Reserve, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion.

[115] Where Does Money Come From? (P6). The New Economics Foundation. Kindle Edition. Ryan-Collins, Josh; Tony Greenham; Richard Werner; Andrew Jackson (2013-09-24).

[116] www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q101.pdf

[117] Professor Irving Fisher, economist in his book 100% Money (1935)

[118] Federal Reserve Bank of Chicago, Modern Money Mechanics.

[119] President Andrew Jackson, in his farewell address of March 4, 1837 and talking about not having renewed the charter of the U.S. Central Bank.