With the current banking system in such a state with the number of loans approved dropping like a stone, I was under the impression that banks had to lend money to make money.

http://www.informationclearinghouse.info/article18205.htm

Having watched the video at the start of the article, it really does seem that banking as we know it is rather fooked up at the moment, and it will take something massive to get it working again properly.

Banks need to lend money because they have created a system where the only way to make money is to exponentially increase debt, but the bubble is popping, don't woory though because the banks will figure out other ways to fleece the people.

Surviving is more important than making money. The banks need to sure themselves up atm. They figure the ones left standing will make money in the next round. So they stash the cash for now.

I've seen things like that before - it is socialist, ante freedom, free market communist propaganda.

Blaming banks, estate agents and BTLers etc is merely 'shooting the messenger'

The root of the problem is having a centralised, managed credit market in the first place (central bank) Incidently, and I wonder what these idiots are moaning about, because we already have their 'solution' - and it is a first class **** up. Did you know that a central bank is one of the TEN PLANKS OF THE COMMUNIST MANIFESTO?

Banks are no different to you or me or any other merchant. They buy and sell goods in the market to earn a living. It happens that their particular stock is credit. Despite what this propaganda video tells you here is the TRUTH: Banks DO NOT create money. They only borrow it and lend it out again at a slightly higher price (no different to a retailer) ONLY GOVERNMENT CREATES MONEY. Inflation is created by government deficit spending, and only government can stop it.

That doesnt make sense. I thought banks create money using the fractional reserve system. The requirement to only have 10% of the cash on their books available gives them the opportunity to loan out the remaining 90%. In effect this 90% is "NEW" money since if customers dont come for their money all at once it doesnt matter if they use the remaining 90% to fund new loans/invest etc..
Therefore each deposit you make gives the banks the opportunity lend x9 times the amount that you gave them, and as long as everyone pays everyone back at a steady rate everyones happy.

It also works the other way, i.e. if you borrow money from them. They then have say .. 10k on their books that you promise to pay them with interest. They use that amount as credit on their books. Even though they havent recieved it all back from you they take it as money they have to lend. Since they only need 10% of real cash at hand. So they go off and effectively make money with your future repayment (invest/lend etc..) and a while everyones happy. The banks have effectively introduced new money into the economy.

The banks at present have cash flow problems. In effect if too many people default on their loans then they are stuck. The figures dont add up since the money they think their going to get is not their anymore and legally they cant pretend that it's there in the future. Subsequently the whole system unravels because there isnt the money to back their exposure. The banks start to hoard as much cash as possible and therefore dont want to loan to anyone just so they can survive. That is the credit crunch. All caused by their ability to create money based on debt.

Basically banks make "new money" at the stroke of a pen.

Is that not true?

Yes but you have also to consider what a deposit is. Suppose the bank lends its friend £1000, he deposits it back in the bank, now they can lend him another £10,000, which he deposits back in the bank, so no they can lend him £100,000 which he deposits back in the bank.

They in effect have the right to create an infinite amount of credit and not x10.

Yes they do.

Banks create money, anyone can do it it isn't exactly hard.

Knock off the disinformation already would ya?

Banks do create money, everytime they make a loan. See the signature below !