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Old 12-17-2006, 03:37 PM   #6 (permalink)
unlawflcombatnt
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Location: California
Money Creation

Much of our money supply creation comes from banks when they loan out money. Banks have an almost unlimited ability to create money through loans. They can loan out large multiples of the amount of money they have in "checkable" deposits. And when this "loaned" money is deposited in another bank as a checkable deposit, that bank can create still more money by loaning out multiples of their new checkable deposits. The only limits are how much banks are required to keep in reserve.

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