On this week’s Corruption Radio (October 17th) we bring to light how 95% of all money in circulation is created by commercial banks out of thin air.

How Much Debt Is Too Much?

What happens is you go to take out a loan for a car, home, or other large purchase. At the very moment you sign the loan agreement, committing yourself to pay bank the principle plus interest, the bank creates the principle by entering the amount into their computer screen. The money does not come from anywhere because it did not exist before you signed the loan application.

See, the bank considers your agreement to pay them back an asset, backed by the item you will purchase with the money. So they use this “asset” on one side of the transaction, and balance it on the other side of the transaction by creating the same amount of the principle in what is commonly called “checkbook money”. These are not physical paper dollars, but rather a commitment from the bank to pay that money when demanded. These electronic commitments transfer between banks and in most case cancel each other out so very little actual money changes hands. In other words, Chase bank will have outstanding commitments to Citibank and vice versa; only the small variance in commitment amounts causes actual transfer of money (and sometimes not even then).

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Scholars well versed in the theories of the Austrian School of economics were able to present a unique and credible perspective of the dot-com bust and high-tech meltdown. The maestro at the Federal Reserve had created mechanisms whereby easy credit became available to players in high-tech and information-sector enterprises. Almost any business idea that could be classified as being in the high-tech or information sectors became eligible for such loans.

THE FED: Federal Crime Syndicate

During the 1980s, there were several innovations in the telecommunications sector that supplied small business and the home market. These innovations enhanced productivity on the individual and commercial levels and gained the attention of government bureaucrats who saw an opportunity to “stimulate” the economy. The result was a malinvestment boom, as hordes of marginal entrepreneurs gained access to easy credit.

Read Entire Article at Mises.org