How Private Banks Work

Executive Summary

• Private banks are a type of parasite on the government’s money creation function.

Introduction

Private banks only exist because the government granted a concession of being able to create money. As such, they are completely unnatural and do something that is by right the government’s domain. Banks do not loan out money they obtain from someplace else. They create money. The government grants them this capability, a mechanism by which the private banks lie to their borrowers and the general population. Many people that work in banks have no idea banks create money from nothing. Most money is created by private banks, not the private central bank. Throughout history, private bankers have told a wide variety of lies about why private banks are necessary, and none of their arguments turned out to be true. Private bankers have a simple ruse. Convince the politicians and public to turn over the government’s ability to create money for them and allow them to charge any interest rate they want. Private bankers make their own false claims, but in great part, rely upon economists who are indoctrinated and promoted through career incentives to repeat false claims made by private bankers.