BUT THAT IS NOT ALL!!!
THERE IS ALSO THE FRACTIONAL RESERVE SYSTEM
Under the fractional reserve system, the private banks can now take the GOVERNMENT BOND that they have bought by creating a deposit and use it as reserve to create more bank deposits.
HOW MUCH CAN THEY CREATE?
Under the 1967 Bank Act they could create 16 times the amount of their reserve. On page 10 of the book called "HOW THE CANADIAN MONEY SUPPLY IS AFFECTED BY VARIOUS BANKING AND FINANCIAL TRANSACTIONS", published by the Royal Bank of. Canada, they themselves show how this is done. Imagine what this means. It means that with one dollar of reserve with the BANK OF CANADA, the private banks can loan out $15 of cheque book money and collect 15% interest. This gives them $2.25 of interest on every dollar held in reserve.
10
|