Guest Post by Martin Armstrong
A lot of people are now jumping on board to claim the problem is fractional banking and the creation of money is private that somehow is wrong and it should be handed to government. Money has ALWAYS been private for it is an agreement between two people to exchange whatever for some common item everyone else agrees to accept. That has been sea shells to gold. It has always been the people who decide. Even paper currency cannot circulate without the consent of the people.
Fractional banking has been around for hundreds of years. So why is it only now that this is the great evil? The answer is simply – it is a diversion and not the problem. Fractional banking is taking $1 in deposits and lending it out many times. The new rage is to tout this as the creation of money by banks. Yet banks cannot create this type of money to pay their bills or taxes because it is not really creating money out of thin air – it is merely leverage.
