Creature From Jekyll Island by G. Edward полностью

That is the way the monetary scientists discharge the commitmentto create money for their partners, the political scientists. Withoutthat service, the partnership would dissolve, and Congress wouldabolish the Fed.

When the System was created in 1913, it was anticipated thatthe primary way to manipulate the money supply would be tocontrol the "reserve ratios" and the "discount window." That isbanker language for setting the level of mandatory bank reserves(as a percentage of deposits) and also setting the interest rate onloans made by the Fed to the banks themselves. The reserve ratiounder the old National Bank Act had been 25%. Under the FederalReserve Act of 1913, it was reduced to 18% for the large New York 1. U.S. Cong., Senate, Special Committee on the Investigation of Silver, Silver, Part 5,76th Cong., 1st sess. (Washington, DC: GPO, 1939), April 7,1939, pp. 196-97.

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THE CREATURE FROM JEKYLL ISLAND

banks, a drop of 28%. In 1917, just four years later, the reserverequirements for Central Reserve-City Banks were further droppedfrom 18% to 13% (with slightly lesser reductions for smaller banks).

That was an additional 28% cut.1

It quickly became apparent that setting reserve ratios was aninefficient tool. The latitude of control was too small, and theamount of public attention too great. The second method, influencing the interest rate on commercial loans, was more useful. Here i,show that works:

Under a fractional-reserve banking system, a bank can createnew money merely by issuing a loan. The amount of new money itcreates is limited by the reserve ratio or "fraction" it is required tomaintain to cover its cash-flow needs. If the reserve ratio is 10%,then each $10 it lends includes $9 that never existed before. Acommercial bank, therefore, can create a sizable amount of moneymerely by making loans. But, once the bank is "loaned up," that isto say, once the bank has already loaned $9 for every $1 it holds inreserve, it must stop and wait for some of the old loans to be paidback before it can issue new ones. The only way to expand thatprocess is to make the reserves larger. That can be accomplished inone of three ways: (1) use some of the bank's profits, (2) selladditional stock to investors, or (3) borrow money from the Fed.

WHEN BANKS BORROW FROM THE FED

The third option is the most popular and is called going to the