How Banks Are Mini Feds

Executive Summary

• Capitalist banking uses the credit of the government and privatizes the gains, while not being responsible for losses.

Introduction

To this site, a “mini Fed” is sometimes what we call a private bank. The reason is that as the Fed a bank can create as much money as it likes. The reason why the faux reserve requirement is not required to be observed is explained in the entry on this website called reserves. We think this helps draw the parallel appropriately of money creation in banks, as being essentially what the Fed can do. However, after coining this term, we ran into the same term used in the book Banking on the People by Ellen Brown. However, Ellen Brown calls any state bank a mini Fed. Both are good uses of such a term. However, in the case of the BND, this “mini Fed” or state bank has the interests of the state as a primary concern. So in this way, it is not at all like the Fed as the Fed is virtually consumed with private banking interests.

Our Logic for the Term

In our use of the term, a private bank or mini Fed, is very similar to the Fed in that it both creates as much money as it wants from nothing and like the Fed, has zero and in fact, in many cases negative concern for the public interest.