They call it rather nicely ‘fractional reserve lending’ and it used to be illegal because it appears our rulers were more honest once upon a time and saw it for what it was – a con. So the answer is, I don’t know (well I do – it’s something to do with people in high places colluding and profiteering).
But it’s still frankly unbelievable that a privately owned bank is able to lend money it doesn’t have, and nothing short of allowing them to counterfeit money. Yes they dress it all up in complicated jargon as to why it’s OK and tell us they have all sorts of ‘measures’ in place to stop runs on banks and underwrite people should there be a problem but here’s the bottom line; if you put money in a bank it’s technically no longer yours should they wish or need to keep it for some reason – it’s all in the small print that none of us read. If you don’t believe it – please do your own research.
And as we see this happens more and more where the banks just ‘steal’ peoples cash and shut ATMs. How can they do this? Because it’s in the small print so technically not theft! But of course that’s all it is. In my book I don’t care what small print you write so that people will not be aware of what you may do to them and their money – if you are not open, up front and transparent and make people aware of the fact I just made you aware of above by cloaking it in tonnes of tiny text – you are a tea-leaf – a pick-pocket by omission – or should I just cut the small print and jargon, be transparent and say a thief!
I mean think of it, if you or I were allowed to lend money we didn’t have – we could be rich too right!? OK so why are banks allowed to do this and no one else? Simple – because by allowing them to lend money they don’t have and profit from it – they can stay richer – stay banks, and this stops you or I or any other kind of high street store, organisation or company from becoming a lender and getting involved in this racket and shrink their profits. Why?.. because we could never offer such competitive lending rates so we would get nowhere.
But what’s wrong with letting banks lend money they don’t actually have in the vaults or own at all? Everything! If it were a state bank – that printed its own money and managed it carefully and responsibly (like any bank would actually do that) then I can see an argument for this, but a very flimsy one as why should any organisation lend money it doesn’t have period?.. it’s a recipe for disaster as at some point the borrowers will come at once.
But here’s what’s really wrong with it – it keeps all of us perpetually in high levels of debt while these PRIVATE banks cream (steal to be precise) yours and my money – that’s why. No private company – and that’s what banks are should be able to say “ahh… let me lend you money I don’t have oh and by the way – I want you to pay it back at 15% interest – because we can – and because we are allowed to make up digits and you aren’t.” It’s utterly rediculous. But of course this will never change since the Bible clearly says; the love of money is THE root of all evil and it’s not wrong!