The Miracle of Fractional Reserve Banking

In the US we use a system called fractional reserve banking. The average reserve rate is about 10%, so based on this figure when you deposit money into your bank they are allowed to retain 10% of that money and lend the other 90% to someone who wants a loan. So you never actually have the amount of money in your account that it says you do, though you can withdraw it at any time; they'll simply steal it from someone else's account. By these standards every dollar deposited has the ability to create 10 dollars. Say you deposit $100 into your checking account. The bank will keep $10 and lend out $90 to someone else, but you will still have your $100, so now there is $190 in existence. Then that person deposits the $90 and their bank lends out $81, so now there is $271 in existence. Do you see where this is headed?

Now, imagine the newly created Trillions of dollars falling down into the hands of the public and the banking system; being magnified by 5 to 10 times. That is how the savings of millions will be destroyed over the next few years. But Bernanke and other Central Bankers will continue with unlimited Bond-buying because they have absolutely no choice. They would rather kick the can down the road than face the music.