John Kenneth Galbraith Quotes

The modern banking system manufactures money out of nothing.

If you've taken Econ 101, you know that the quantity of money rises only when the banking system makes a net loan.

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.

Tangible currency (coins and dollar bills) together make up less than 3 percent of the U.S. money supply. The other 97 percent exists only as data entries on computer screens, and all of this money was created by banks in the form of loans.

The Fed has one power that is unique to it alone: it enables the creation of money out of thin air. Sometimes it makes vast new amounts. Sometimes it makes lesser amounts. The money takes a variety of forms and enters the system in various ways. And the Fed does this through techniques such as open-market operations, changing reserve ratios, and manipulating interest rates, operations that all result in money creation.

And let the Fed sell bonds to bring bank reserves back down to required reserve levels, so we have restraint on bank lending and bank issuances of liability.

There is no limit to the amount of money that can be created by the banking system, but there are limits to our productive facilities and our labor supply ...

Banks lend by creating credit. They create the means of payment out of nothing

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve.

Commercial banks - that is, fractional reserve banks - create money out of thin air. Essentially, they do it in the same way as counterfeiters.

In fact, without any exaggeration, the current mechanism of money creation through credit is certainly the "cancer" that's irretrievably eroding market economies of private property.

The amount of currency in circulation is not changing. The money supply is not changing in any significant way.

The whole profit of the issuance of money has provided the capital of the great banking business as it exists today.

Modern money is almost altogether credit money.

I think the Fed is not designed to have effective tools to deal with the economy. It should settle for just controlling the money supply. And - if it insists, it can worry about inflation.

The government, in my judgment, cannot create money; the government can give its note, like an individual, and the prospect of its being paid determines its value.

There is always the potential for a central bank to engage in discretionary monetary policy and to break the one-to-one link between changes in foreign reserves and changes in the money supply.

My gracious, here I am the new chairman ... and I haven't the faintest idea of how you control the money supply. Yet everyone thinks I have it at my fingertips.

The Federal Reserve bank buys government bonds without one penny

A paper monetary standard means there are no restraints on the printing press or on federal deficits.

The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.

I am afraid the ordinary citizen will not like to be told that the banks can and do create money. And they who control the credit of the nation direct the policy of Governments and hold in the hollow of their hand the destiny of the people

Whether a bank lent one million, ten million, or a hundred millions, they would not permanently alter the market rate of interest; they would alter only the value of the money they issued.

Having examined the nature of fractional reserve and of central banking, and having seen how the questionable blessings of Central Banking were fastened upon America, it is time to see precisely how the Fed, as presently constituted, carries out its systemic inflation and its control of the American monetary system.

If two parties, instead of being a bank and an individual, were an individual and an individual, they could not inflate the circulating medium by a loan transaction, for the simple reason that the lender could not lend what he didn't have, as banks can do. Only commercial banks and trust companies can lend money that they manufacture by lending it.