Fractional Reserve Lending (FRL): is the process whereby banks lend out more money than they hold. In other words, they only hold a (small) fraction of the money they have lent. For example, consider a bank with which its actual money only accounts for 25% of its total loans and has artificially created 75% of its money, then this amounts to an artificial quadrupling of its money. Since all banks practice FRL, and everyone keeps their money in a bank, our money supply is artificially inflated by banks to a huge extent. Economist Murray Rothbard describes banks and their associated FRL as:
"The bank creates money out of fresh air, and does not, like everyone else, have to acquire money by production and selling of services. In short, the bank is already and at all times bankrupt; but its bankruptcy is only revealed when customers get suspicious and precipitate 'bank runs'. No other business experiences a phenomenon like a 'run'. No other business can be plunged into bankruptcy overnight simply because its customers decide to repossess their own property. No other business creates fictitious new money, which will evaporate when truly gauged." ~ Rothbard in 'What has the government done to our money' (pg. 45).This New Zealand website estimates that 98% of the countries money has been create by banks through FLR.
See inflation for a discussion on what it is and why it hurts the small people the most.
Inflation:
Quantitative Easing (aka printing money): QE is the printing of money. Horrible term which was created to distract people from even attempting to understand what the hell the government banks were up too. This comedy video aptly describes it.
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