Why Do Banks Make So Much Money?


The Proof that Banks Create Money:

Banks make so much money because they can create money, effectively out of nothing, by lending. Every single pound in your bank account was created by a bank, not by your government.


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Positive Money is a not-for-profit research and campaign group. They work to raise awareness of the connections between our current monetary and banking system and the serious social, economic and ecological problems that face the UK and the world today. In particular they focus on the role of banks in creating the nation’s money supply through the accounting process they use when they make loans – an aspect of banking which is poorly understood. Positive Money believe these fundamental flaws are at the root of – or a major contributor to – problems of poverty, excessive debt, growing inequality and environmental degradation. For more information, please visit: http://www.positivemoney.org.uk/


Banks are the most heavily subsidised businesses
in the world, specially protected by governments.
While the money runs out for the rest of us,
the largest private banks still thrive. This
is because they get the biggest subsidy of
them all – the licence to print money.

Hard to believe? Martin Wolf, the Chief Economics
Editor at the Financial Times, said it recently:

“The essence of the contemporary monetary
system is the creation of money, out of nothing,
by private banks’ often foolish lending…”

You heard that right. Private banks create
money out of nothing! Then they loan it to
us and ask for interest on top!

If you’ve ever wondered why the bank buildings
around the world soar higher than any palace
or spire ever did, you now have the answer.

But the banks don’t simply print money using
secret printing presses in their basements.
They don’t have to. Like so many other things
these days, printing money has now gone digital.
With the popular use of debit cards, electronic
fund transfers, and internet banking, only
3% of the money in the UK is now made of paper
and metal coins. The other 97% is entirely
in computers. Electronic money is convenient
for everyone, but it’s especially convenient
for the private banks, since they own, run,
and control the entire digital money system.

And what do they do with this special privilege?
Do they channel new money, the blood supply
of the nation, towards the things we need
like hospitals, schools, universities and
public transport?

Not if it doesn’t make a profit for them.
Instead they use their licence to print money
to gamble on the financial markets and pushing
house prices out of reach of ordinary people
by pumping hundreds of billions of pounds
into risky mortgages. This is exactly how
the banks caused the financial crisis, and
now the rest of us are being asked to pay for it.

If we can’t afford to run hospitals and build
schools, can we really afford to subsidise
the financial industry? Should we have to
live with less so the bankers can have more?

This is ludicrous, and it’s time to put a
stop to it. The private banks can’t be trusted
to hold the reins to our entire economy.

We need to take away the bank’s power to create
money out of nothing.  This will stop them
from causing yet another financial meltdown
and allow us to afford the crucial services
that we as a society need.

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