The Problem With Private Bank Loans

Executive Summary

• Private banks lend out what is the government’s money-creation function and receive interest for something they cannot create on their own.

Introduction

Banks, like the Federal Reserve, are granted their powers by the US Government (as are other banks in other countries granted their powers by those governments). There is no reason for private banks to exist. As with issuing its own currency, any government can provide all banking to its citizens. Again, the government would have an interest in not having too much money in circulation versus demand. However, that would be the only limitation to issuing currency.