How banks create credit

By Deputy editor Tim Bennett Oct 13, 2011

Tim Bennett

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Tim Bennett explains how credit is created, what the 'money multiplier' is, and how fractional reserve banking works.

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Published in Video tutorials | More articles by Tim Bennett

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  • 1. Colin Selig-Smith

    (15 October 2011, 12:38PM)  Complain about this comment

    Tim,

    You covered the creation of credit in this. You didn't cover the any of the problems which this causes.

    e.g.
    The corresponding creation of debt, the other side of the ledger.
    The fact that debt carries interest while credit does not, leading to literally unpayable debts.

    These two points explain exactly why our and the world economies are in such a mess. Will you be going over them in a future video?

    regards,
    Colin.

  • 2. Tim

    (18 October 2011, 10:33AM)  Complain about this comment

    Colin - this was just an introductory video so yes, I may well cover some more ground in a future one. Thanks for posting!

  • 3. Andrew T

    (25 October 2011, 01:42PM)  Complain about this comment

    Great starter video Tim. It makes you realise why economies are in such a mess! Maybe you ought to send the video to the Bank of England :)

  • 4. Rob

    (29 October 2011, 02:45PM)  Complain about this comment

    Excellent video Tim. I agree with Colin, the other side of the coin needs to be explained... sorry exposed! Here's a quote from Sir Josiah Stamp director of the Bank of England and second richest man in Britain in the 1920's:

    "The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."
    (Substitute a "flick of a pen" with "a few taps on a key board")

  • 5. Tom Collins

    (17 September 2012, 05:18PM)  Complain about this comment

    Isn't it true that some, if not all, Central Banks, are privately owned?

    I can think of two!

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