Our international, deregulated banking magic may just lead to a banking collapse

Our international, deregulated banking system has a magic move to benefit their shareholders. They create money.

Here’s how it works for them: If an individual wants a great deal of money to purchase a house the banks “lend” it to them. Let’s say you go in and ask for $300 thousand and, deciding you can pay that amount off, they lend it to you. At that very moment they create your account they create the $300 thousand. It hasn’t been there before. They haven’t had to have that amount in their vaults but as soon as they have someone to pay that amount off it appears as a $300 thousand plus interest repayments, asset. If they do want to make some money they then sell your debt on for more money, usually to another bank.

And how does it work against them? Well, if there’s a major fall in house prices and/or the interest rates rise and the original purchaser can’t pay off the debt, or only a portion of it, then there’s the beginning of a banking collapse.

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