Fractional Reserve Banking

Fractional Reserve Banking is a process that creates new money and enables the expansion of an economy. This process allows banks to lend out money that does not exist as new loans while only holding a percentage of the deposits, often 10 percent, on reserve. A central bank is required to issue the new money for the borrower on behalf of the lending bank. The borrower can use the new money to build a house, set up a factory, or engage in productive activities that add to the assets in the economy. When the loan is repaid to the bank, the central bank can erase the debt on its books, and the economy has expanded.

Fractional reserve banking is a valuable process for economic development. However, it is a widely abused and corrupted process that creates "banksters" (banking gangsters). Instead of loan payments going to the depositors who worked and saved their money, banks take the payments of new money for themselves. This is an act of theft that goes to a few people, commonly called "the one percent." This creates a type of economic feudalism, with only a few people acquiring the new wealth in the economy, rather than it being widely distributed among the depositors who worked hard and saved.