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Gold/Mining/Energy : ECHARTERS
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To: E. Charters who wrote (3694)11/22/2011 1:32:35 PM
From: grusum  Read Replies (2) of 3744
 
IOW, if 100 dollars is deposited they may loan out almost $2,000.00. This loan money is created by scrip. It never existed before. This is why lowering the interest rate increases the money supply.

reserves have to exchanged for something of value (loans) or they are worth nothing. if reserves are just 'helicopter dropped' they are counterfeit and create instant inflation. legit currency has value because it gets exchanged for something of value. so new dollars have no value until they are loaned out with the promise to repay with interest. the loaned money then gets exchanged again for products, or labor to make products. the new dollars have been imbued with value because they were created legitimately. and when dollars with value are added to the money supply, the number of dollars increases, but so does their total value, so there is no rise in general price levels from increasing the money supply, if it's done right.
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